-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OwRmbh0bKmOsCGvUFy1anohdLSxhxunIF26VwQUNMX8zJ2raNu/5OxFbhBjBwek1 LGN7h3fGD2J3bBTvcs012w== 0000912057-97-009547.txt : 19970321 0000912057-97-009547.hdr.sgml : 19970321 ACCESSION NUMBER: 0000912057-97-009547 CONFORMED SUBMISSION TYPE: F-4 PUBLIC DOCUMENT COUNT: 49 FILED AS OF DATE: 19970320 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUN INTERNATIONAL HOTELS LTD CENTRAL INDEX KEY: 0000914444 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 980136554 STATE OF INCORPORATION: C5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-23665 FILM NUMBER: 97559952 BUSINESS ADDRESS: STREET 1: 1415 EAST SUNRISE BLVD STREET 2: 10TH FLOOR CITY: FORT LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: 9547132500 MAIL ADDRESS: STREET 1: 1414 EAST SUNRISE BLVD CITY: FORT LAUDERDALE STATE: FL ZIP: 33304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUN INTERNATIONAL NORTH AMERICA INC CENTRAL INDEX KEY: 0000083394 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 590763055 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-23665-01 FILM NUMBER: 97559953 BUSINESS ADDRESS: STREET 1: 1415 EAST SUNRISE BLVD. CITY: FT. LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: (954) 713-2620 MAIL ADDRESS: STREET 1: 4651 SHERIDAN ST STREET 2: SUITE 355 CITY: HOLLYWOOD STATE: FL ZIP: 33021 FORMER COMPANY: FORMER CONFORMED NAME: GRIFFIN GAMING & ENTERTAINMENT INC DATE OF NAME CHANGE: 19950810 FORMER COMPANY: FORMER CONFORMED NAME: RESORTS INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CARTER MARY PAINT CO DATE OF NAME CHANGE: 19680724 F-4 1 FORM F-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1997. REGISTRATION STATEMENT NO 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM F-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER) COMMONWEALTH OF THE BAHAMAS 7011 98-013655 DELAWARE 7011 59-0763055 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
SEE TABLE OF ADDITIONAL REGISTRANTS SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. CORAL TOWERS 1133 BOARDWALK PARADISE ISLAND, THE BAHAMAS ATLANTIC CITY, NJ 08401 (242) 363-2516 (609) 344-6000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES OF INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES OF SUN INTERNATIONAL HOTELS LIMITED) SUN INTERNATIONAL NORTH AMERICA, INC.)
MANDY E. MILLER, ESQ. SUN INTERNATIONAL HOTELS LIMITED 10TH FLOOR, 1415 E. SUNRISE BLVD. FT. LAUDERDALE, FL 33304 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------------ COPIES TO: JAMES M. EDWARDS, ESQ. CHARLES D. ADAMO, ESQ. CRAVATH, SWAINE & MOORE SUN INTERNATIONAL HOTELS LIMITED 825 EIGHTH AVENUE CORAL TOWERS NEW YORK, NY 10019 PARADISE ISLAND, THE BAHAMAS
-------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION SECURITIES TO BE REGISTERED BE REGISTERED UNIT(2)(3) PRICE(2)(3) FEE(4) 9% Senior Subordinated Notes due 2007 (1).................................. $200,000,000 100% $200,000,000 $60,606
(1) The Guarantees by Sun International Bahamas Limited, Paradise Acquisitions Limited, Paradise Island Limited, Paradise Enterprises Limited, Island Hotel Company Limited, Paradise Beach Inn Limited, Sun International Management Limited, GGRI, Inc., Resorts International Hotel, Inc. and Sun Cove, Ltd. of the payment of principal, premium, if any, and interest on the Notes are also being registered hereby. Pursuant to Rule 457(n), no registration fee is required with respect to such guarantees. (2) Estimated solely for the purpose of calculating the registration fee. (3) Exclusive of accrued interest, if any. (4) Calculated pursuant to Rule 457. -------------------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS
PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER NAME, ADDRESS AND TELEPHONE NUMBER OF JURISDICTION OF CLASSIFICATION IDENTIFICATION ADDITIONAL REGISTRANTS ORGANIZATION CODE NUMBER NO. - -------------------------------------------------- --------------------- ------------------- ----------------- Sun International Bahamas Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Paradise Acquisitions Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Paradise Island Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Paradise Enterprises Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Island Hotel Company Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Paradise Beach Inn Limited Coral Towers Paradise Island, The Bahamas Commonwealth of The (242) 363-2516 Bahamas 7011 Not Applicable Sun International Management Limited Coral Towers Paradise Island, The Bahamas British Virgin (242) 363-2516 Islands 7011 Not Applicable GGRI, Inc. 10th Floor, 1415 E. Sunrise Blvd. Ft. Lauderdale, FL 33304 (954) 713-2500 Delaware 7011 22-2962648 Resorts International Hotel, Inc. 1133 Boardwalk Atlantic City, NJ 08401 (609) 344-6000 New Jersey 7011 21-0423320 Sun Cove, Ltd. 10th Floor, 1415 E. Sunrise Blvd. Ft. Lauderdale, FL 33304 (954) 713-2500 Connecticut 7011 36-4041616
SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. CROSS REFERENCE SHEET SHOWING THE LOCATION OF INFORMATION REQUIRED BY PART I OF FORM F-4
NO. CAPTION LOCATION OR CAPTION IN PROSPECTUS --- ------------------------------------------------------ ------------------------------------------------------ 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus............................ Outside Front Cover 2. Inside Front and Outside Back Cover Pages of Prospectus.......................................... Inside Front Cover Page; Back Cover Page; Available Information; Enforceability of Civil Liabilities 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information................................... Prospectus Summary; Risk Factors; Business; Selected Financial and Operating Data; The Exchange Offer 4. Terms of the Transaction.............................. Outside Front Cover; Prospectus Summary; The Exchange Offer; Description of Notes; Risk Factors; Tax Consequences 5. Pro Forma Financial Information....................... Prospectus Summary; Pro Forma Consolidated Statements of Operations; Selected Financial and Operating Data; Consolidated Financial Statements 6. Material Contacts With the Company Being Acquired..... Not Applicable 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters....... Not Applicable 8. Interests of Named Experts and Counsel................ Legal Matters 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities...................... Not Applicable 10. Information with Respect to F-3 Companies............. Prospectus Summary; Risk Factors; Business; Use of Proceeds; Capitalization; Selected Financial and Operating Data; Pro Forma Consolidated Statements of Operations; Management's Discussion and Analysis of Financial Condition and Results of Operations; Management; Tax Consequences; Consolidated Financial Statements 11. Incorporation of Certain Information by References.... Incorporation of Certain Documents by Reference 12. Information with Respect to F-2 or F-3 Registrants.... Not Applicable 13. Incorporation of Certain Information by Reference..... Not Applicable 14. Information With Respect to Foreign Registrants other than F-2 or F-3 Registrants......................... Not Applicable 15. Information With respect to F-3 Companies............. Not Applicable 16. Information With Respect to F-2 or F-3 Companies...... Not Applicable
NO. CAPTION LOCATION OR CAPTION IN PROSPECTUS --- ------------------------------------------------------ ------------------------------------------------------ 17. Information With Respect to Foreign Companies Other Than F-2 or F-3 Companies........................... Not Applicable 18. Information if Proxies, Consents or Authorizations Are to Be Solicited..................................... Not Applicable 19. Information if Proxies, Consents or Authorizations Are Not to Be Solicited in an Exchange Offer............ Management; Principal Shareholder
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED MARCH 20, 1997 PRELIMINARY PROSPECTUS $200,000,000 9% SENIOR SUBORDINATED NOTES DUE 2007 IN EXCHANGE FOR 9% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2007 OF SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. THE EXCHANGE OFFER [LOGO] WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED -------------------------- Sun International Hotels Limited, an international business company organized under the laws of the Commonwealth of The Bahamas (the "Company" or "Sun International"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("SINA" and, together with the Company, the "Issuers"), as joint and several obligors, hereby offer, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"), to exchange an aggregate principal amount of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 (the "Exchange Notes") of the Issuers, which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement (as defined herein) of which this Prospectus constitutes a part, for a like principal amount of 9% Senior Subordinated Notes due 2007 (the "Outstanding Notes" and, with the Exchange Notes, the "Notes") of the Issuers with the holders (the "Holders") thereof. The terms of the Exchange Notes are identical in all material respects to the Outstanding Notes except for certain transfer restrictions and registration rights relating to the Outstanding Notes and except that, if the Exchange Offer is not consummated by , 1997, the interest rate borne by the Outstanding Notes will increase by amounts specified herein until the Exchange Offer is consummated. The Exchange Notes are offered hereunder in order to satisfy certain obligations of the Issuers under the Purchase Agreement dated March 5, 1997 (the "Purchase Agreement") among the Issuers, the Guarantors (as defined herein) and the initial purchasers of the Outstanding Notes (the "Initial Purchasers") and the Registration Rights Agreement dated as of March 5, 1997 (the "Registration Rights Agreement") among the Issuers, the Guarantors and the Initial Purchasers. The Exchange Notes evidence the same debt as the Outstanding Notes and are issued under and are entitled to the same benefits under the Indenture (as defined herein) as the Outstanding Notes. In addition, the Exchange Notes and the Outstanding Notes are treated as one series of securities under the Indenture. The Exchange Notes will be unconditionally guaranteed (the "Guarantees") on a senior subordinated basis by the Company's Subsidiaries (as defined herein) (the "Guarantors"). The Exchange Notes will mature on March 15, 2007, unless previously redeemed. Interest on the Exchange Notes is payable semi-annually on March 15 and September 15 of each year commencing on September 15, 1997. The Exchange Notes will be redeemable, in whole or in part, at the option of the Issuers, at any time on or after March 15, 2002, at the declining redemption prices set forth herein, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages (as defined herein). In addition, in the event of a Change of Control Triggering Event (as defined herein), each holder of Exchange Notes may require the Issuers to repurchase such holder's Exchange Notes in whole or in part at a repurchase price of 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any. See "Description of Notes-- Certain Covenants--Repurchase of Notes at the Option of the Holder Upon a Change in Control". The Issuers will be required, subject to certain exceptions, to pay Additional Amounts (as defined herein) in respect of certain taxes, duties, assessments or governmental charges imposed by or on behalf of the government of The Bahamas. If the Issuers are required to pay such Additional Amounts, they may at their option redeem all the Exchange Notes at the principal amount thereof plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any. See "Description of Notes--Payment of Additional Amounts". On or prior to March 15, 2000, the Issuers may redeem at anytime or from time to time up to $70 million of the aggregate principal amount of the Exchange Notes originally issued at a redemption price of 109% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Public Equity Offerings (as defined herein), PROVIDED, HOWEVER, that at least $130 million in aggregate principal amount of the Exchange Notes remain outstanding following such redemption. The Exchange Notes and the Guarantees will constitute general unsecured obligations of the Issuers and the Guarantors, respectively, and will be subordinated in right of payment to all Senior Debt (as defined herein) of the Issuers and the Guarantors, respectively. As of the date of this Prospectus, after giving effect to the issuance of the Outstanding Notes and the use of proceeds therefrom, the Company on a consolidated basis had no Senior Debt outstanding. However, see "Business--The Properties and Current Expansion Projects" and "--Existing Revolving Credit Facility". SEE "RISK FACTORS" BEGINNING ON PAGE 19 OF THIS PROSPECTUS FOR A DESCRIPTION OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OUTSTANDING NOTES IN THE EXCHANGE OFFER. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------- NO GAMING REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. -------------------------- The date of this Prospectus is , 1997 The Issuers are making the Exchange Offer in reliance on the position of the staff of the Securities and Exchange Commission (the "Commission") as set forth in certain no-action letters addressed to other parties in other transactions. However, the Issuers have not sought their own no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Based upon these interpretations by the staff of the Commission, the Issuers believe that Exchange Notes issued pursuant to this Exchange Offer in exchange for Outstanding Notes may be offered for resale, resold and otherwise transferred by a holder thereof other than (i) a broker-dealer who purchased such Outstanding Notes directly from the Issuers to resell pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an "affiliate" (as defined in Rule 405 of the Securities Act) of the Issuers without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business and that such holder is not participating, and has no arrangement or understanding with any person to participate, in the distribution of such Exchange Notes. Holders of Outstanding Notes accepting the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may not rely on the position of the staff of the Commission as set forth in these no-action letters and would have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. A secondary resale transaction in the United States by a holder who is using the Exchange Offer to participate in the distribution of Exchange Notes must be covered by a registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the Securities Act. Each broker-dealer (other than an "affiliate" of the Company) that receives Exchange Notes for its own account pursuant to the Exchange Offer may be an "underwriter" within the meaning of the Securities Act and must acknowledge that it acquired the Outstanding Notes as a result of market-making activities or other trading activities and will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Issuers have agreed that, for a period of 180 days after the Expiration Date (as defined herein), they will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution". Any broker-dealer who is an affiliate of the Issuers may not rely on such no-action letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transactions. See "The Exchange Offer". There is currently no market for the Exchange Notes. Although the Initial Purchasers have informed the Issuers that they currently intend to make a market in the Exchange Notes, they are not obligated to do so, and any such market-making may be discontinued at any time without notice. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes. The Outstanding Notes are, and the Exchange Notes are expected to be, eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. The Issuers do not intend to apply for listing of the Exchange Notes on any securities exchange or for quotation through the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). Any Outstanding Notes not tendered and accepted in the Exchange Offer will remain outstanding and will be entitled to all the rights and preferences and will be subject to the limitations applicable thereto under the Indenture. Following consummation of the Exchange Offer, the holders of Outstanding Notes will continue to be subject to the existing restrictions upon transfer thereof and the Issuers will have no further obligation to such holders (other than the Initial Purchasers) to provide for the registration under the Securities Act of the Outstanding Notes held by them. To the extent that Outstanding Notes are tendered and accepted in the Exchange Offer, a holder's ability to sell untendered Outstanding Notes could be adversely affected. It is not expected that an active market for the Outstanding Notes will develop while they are subject to restrictions on transfer. 3 The Issuers will accept for exchange any and all Outstanding Notes that are validly tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on the date the Exchange Offer expires, which will be , 1997 (the "Expiration Date"), unless the Exchange Offer is extended by the Issuers, in their sole discretion, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. Tenders of Outstanding Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted for payment by the Issuers. The Exchange Offer is not conditioned upon any minimum principal amount of Outstanding Notes being tendered for exchange. However, the Exchange Offer is subject to certain conditions which may be waived by the Issuers and to the terms and provisions of the Registration Rights Agreement. The Exchange Notes bear interest from the last interest payment date of the Outstanding Notes to occur prior to the issue date of the Exchange Notes or, if no such interest has been paid, from March 10, 1997. Holders of the Outstanding Notes whose Outstanding Notes are accepted for exchange will not receive interest on such Outstanding Notes for any period subsequent to the last interest payment date to occur prior to the issue date of the Exchange Notes, if any, and will be deemed to have waived the right to receive any interest payment on the Outstanding Notes accrued from and after such interest payment date or, if no such interest has been paid, from March 10, 1997. AVAILABLE INFORMATION Sun International is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), applicable to foreign issuers, and in accordance therewith files reports, including annual reports on Form 20-F, and other information with the Commission. Sun International makes available to its shareholders annual reports containing audited financial statements within 105 days of the end of each fiscal year and publishes quarterly reports containing selected financial data for the first three quarters of the fiscal year within 60 days from the end of such fiscal quarter (in each case, prepared in accordance with generally accepted accounting principals in the United States ("U.S. GAAP")). Sun International is exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders. However, Sun International furnishes shareholders with statements with respect to annual or extraordinary meetings of shareholders, as well as such other reports as may from time to time be authorized by the Board of Directors or be required under law. SINA is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy and information statements and other information with the Commission. Such reports, proxy and information statements and other information of Sun International and SINA, as applicable, may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of the Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611; and 7 World Trade Center, Suite 1400, New York, New York 10048. Copies of such reports, proxy and information statements and other information of Sun International and SINA, as applicable, may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a Web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. Copies of such materials filed by Sun International can also be inspected at the offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, on which the ordinary shares of Sun International are listed. Copies of such materials filed by SINA can also be inspected at the offices of the American Stock Exchange, Inc. ("AMEX"), 86 Trinity Place, New York, New York 10006, on which certain notes of SINA are listed. This Prospectus constitutes a part of a registration statement on Form F-4 (together with all amendments thereto, the "Registration Statement") filed by the Issuers and the Guarantors with the Commission under the Securities Act. The Prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. Reference is hereby made to the Registration Statement and related exhibits and schedules filed therewith for further information with respect to the 4 Issuers and the Guarantors and the Exchange Notes offered hereby. Statements contained herein concerning the provisions of any document are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION INCORPORATED HEREIN) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM, IN THE CASE OF DOCUMENTS RELATING TO SUN INTERNATIONAL, SUN INTERNATIONAL HOTELS LIMITED, 1415 EAST SUNRISE BLVD., 10TH FLOOR, FT. LAUDERDALE, FLORIDA 33304, ATTENTION: SECRETARY (TELEPHONE: (954) 713-2500), AND, IN THE CASE OF DOCUMENTS RELATING TO SINA, SUN INTERNATIONAL NORTH AMERICA, INC., 1133 BOARDWALK, ATLANTIC CITY, NEW JERSEY 88401, ATTENTION: SECRETARY (TELEPHONE: (609) 344-6000). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997. ENFORCEABILITY OF CIVIL LIABILITIES The Company is a Bahamian international business company incorporated under the International Business Companies Act, 1989 of the Commonwealth of The Bahamas (the "Companies Act"). Certain of the directors and executive officers of the Company reside outside the United States. A substantial portion of the assets of such persons and of the Company is located outside the United States. As a result, in the opinion of Harry B. Sands and Company, Bahamian counsel to the Company, it may be difficult or impossible to effect service of process within the United States upon such persons, to bring suit in the United States or to enforce, in the U.S. courts, any judgment obtained there against such persons predicated upon any civil liability provisions of the U.S. federal securities laws. It is unlikely that Bahamian courts would entertain original actions against Bahamian companies, their directors or officers predicated solely upon U.S. federal securities laws. Furthermore, judgments predicated upon any civil liability provisions of the U.S. federal securities laws are not directly enforceable in The Bahamas. Rather, a lawsuit must be brought in The Bahamas on any such judgment. Subject to consideration of private international law, in general, a judgment obtained after due trial by a court of competent jurisdiction, which is final and conclusive as to the issues in contention, is actionable in Bahamian courts and is impeachable only upon the grounds of (i) fraud, (ii) public policy and (iii) natural justice. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by Sun International (File No. 1-4226) with the Commission pursuant to the Exchange Act are incorporated herein by reference: 1. Sun International's Annual Report on Form 20-F for the year ended December 31, 1995 (the "1995 Sun 20-F"); and 2. Sun International's Current Reports on Form 6-K, as amended, dated January 30, 1996, February 2, 1996, March 21, 1996, May 2, 1996, June 4, 1996, July 25, 1996, August 19, 1996, August 22, 1996, September 6, 1996, October 1, 1996, November 12, 1996, December 16, 1996, December 17, 1996, February 10, 1997, February 27, 1997 and March 11, 1997. The following documents heretofore filed by SINA (File No. 1-4748) with the Commission pursuant to the Exchange Act are incorporated herein by reference: 1. SINA's Annual Report on Form 10-K for the year ended December 31, 1996 (the "1996 SINA 10-K"). Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. In addition, (i) all annual reports on Form 20-F filed by Sun International and, to the extent designated therein, any reports on Form 6-K filed by Sun International pursuant to Sections 13(a), 13(c) or 5 15(d) of the Exchange Act and (ii) all documents filed by SINA pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the consummation of the Exchange Offer shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents or reports, to the extent not superseded by documents or reports subsequently filed. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS This Prospectus includes "forward looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. In particular, any statements, express or implied, concerning future operating results or the ability to generate revenues, income or cash flow to service the obligations under the Notes are forward looking statements including, without limitation, certain statements under the captions "Prospectus Summary", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business". Although the Issuers believe that the expectations reflected in such forward looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Issuers' expectations are disclosed in this Prospectus, including, without limitation, under the caption "Risk Factors". All forward looking statements by the Issuers are expressly qualified by such cautionary statements. 6 PROSPECTUS SUMMARY THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE MORE COMPLETE INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS, INCLUDING THE MORE DETAILED INFORMATION IN THE CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO. ALL SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES ("U.S. GAAP"). UNLESS OTHERWISE INDICATED, ALL REFERENCES TO THE "COMPANY" OR "SUN INTERNATIONAL" INCLUDE THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES (INCLUDING SINA), ALL REFERENCES TO "SINA" INCLUDE SINA AND ITS CONSOLIDATED SUBSIDIARIES AND ALL REFERENCES TO THE "ISSUERS" (EXCEPT AS USED UNDER THE CAPTION "DESCRIPTION OF NOTES") INCLUDE THE ISSUERS AND THEIR RESPECTIVE CONSOLIDATED SUBSIDIARIES. IN ADDITION, ALL REFERENCES TO "SINA" REFER TO SUN INTERNATIONAL NORTH AMERICA, INC. BOTH BEFORE AND AFTER ITS NAME CHANGE (AS DISCUSSED BELOW). THE COMPANY GENERAL Sun International Hotels Limited ("Sun International" or the "Company") is an international resort and gaming company which develops and manages premier resort and casino properties. The Company, through its subsidiaries, currently operates resort hotels and casinos in The Bahamas, Atlantic City, Connecticut, the Indian Ocean and France. In December 1996, the Company acquired Griffin Gaming & Entertainment, Inc., a Delaware corporation ("GGE"), pursuant to a merger (the "Merger") in which GGE became a wholly owned subsidiary of the Company. Following the Merger, GGE's name was changed to Sun International North America, Inc. Sun International currently operates 11 hotels containing approximately 3,900 rooms and seven casinos with an aggregate of over 270,000 square feet of gaming space containing more than 6,300 slot machines and 380 table games. The Company's largest property is the Atlantis Resort & Casino ("Atlantis"), a 1,147-room resort and casino located on Paradise Island, The Bahamas. Following its acquisition in May 1994, Atlantis was redeveloped into an ocean-themed destination resort through a $140 million capital expenditure program (the "Initial Development Program"). Seeking to capitalize on the success of Atlantis, Sun International recently commenced construction of an approximately $450 million expansion of the property (the "Paradise Island Expansion"). The Paradise Island Expansion will substantially increase the Company's room base on Paradise Island with the construction of a new 1,200-room deluxe hotel and casino and the expansion of Atlantis' ocean-themed adventure environment. As part of its continued development of Paradise Island, in September 1996 the Company acquired the 562-room Holiday Inn Pirate's Cove (the "Pirate's Cove Hotel") adjacent to Atlantis for approximately $12 million in cash plus the assumption of approximately $22.6 million of indebtedness. In addition to the Paradise Island Expansion, the Company is planning an approximately $20 million renovation of the Pirate's Cove Hotel to create a moderately-priced hotel within the Atlantis complex (the "Pirate's Cove Renovation"). SINA (formerly GGE), which through subsidiaries owns the Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel"), was acquired by Sun International in December 1996. The Resorts Casino Hotel has approximately 660 guest rooms, a 70,000 square foot casino, an 8,000 square foot simulcast parimutuel betting and poker area and related facilities and is located on the Boardwalk. During 1997, the Company expects to begin enhancing the existing Resorts Casino Hotel through the construction of additional parking, the renovation of approximately 500 of the hotel rooms and various improvements to the public areas (the "Atlantic City Renovation"). Thereafter, the Company intends to develop a significant addition to the existing property, creating a highly themed resort with significantly increased room base and casino capacity (the "Atlantic City Expansion"). The Mohegan Sun Casino in Montville, Connecticut (the "Mohegan Sun Casino"), which was developed for the Mohegan Tribe of Indians of Connecticut (the "Mohegan Tribe") by a partnership in which Sun International owns a 50% interest, opened in October 1996. The Mohegan Sun Casino has a Native American theme and consists of approximately 150,000 square feet of gaming space and features approximately 2,670 slot machines, 180 table games and parking for 7,200 cars. 7 STRATEGIC POSITIONING Over the last two years, the Company has positioned itself as one of the leading gaming and resort operators on the east coast of North America. The redevelopment of Paradise Island in 1994 established the Company's presence in the North American market, while the opening of the Mohegan Sun Casino in October 1996 enhanced this presence with a property in the densely populated Northeastern marketplace. With the recent acquisition of the Resorts Casino Hotel in Atlantic City, management believes that Sun International is now the only company to operate significant gaming resorts in multiple jurisdictions on the east coast of North America, and is well positioned to be the leading gaming and resort company operating outside of Las Vegas. THE PROPERTIES AND CURRENT EXPANSION PROJECTS THE BAHAMAS Sun International, through its wholly owned Bahamian subsidiary, Sun International Bahamas Limited ("Sun Bahamas"), owns approximately 570 acres or almost 70% of Paradise Island. Following the acquisition of its Paradise Island operations in May 1994, Sun International embarked upon the Initial Development Program, which included the refurbishment of all 1,147 guest rooms, the construction of new specialty food and beverage facilities, an upgrading of the 30,000-square foot casino (the "Atlantis Casino") and the creation of a 14-acre saltwater marine life habitat. The marine life habitat features the world's largest open air aquarium, showcasing over 100 species of marine life, waterfalls, lagoons, adventure walks and a clear tunnel submerged in a predator lagoon through which visitors can walk and be surrounded by sharks, sea turtles, stingrays and other marine life. The Initial Development Program was substantially completed by December 1994, after only seven months of construction during which the resort remained open. Results of Atlantis since completion of the Initial Development Program have exceeded management's expectations. For the year ended December 31, 1995, Atlantis achieved average occupancy and average daily room rates of 85% and $122, respectively. The Company improved upon these results in 1996 by realizing an average occupancy of 87% and an average daily room rate of $158. The Company believes that these results are the highest the property has achieved during the last ten years. In addition to Atlantis, the Company's Paradise Island operations include the Ocean Club Golf & Tennis Resort (the "Ocean Club"), a luxury resort hotel with 59 guest rooms, the Paradise Paradise Beach Resort ("Paradise Paradise"), a 100-room beachfront resort hotel catering to value-conscious tourists, the Pirate's Cove Hotel, and a championship 18-hole golf course. The Atlantis Casino features approximately 830 slot machines and 70 table games in 30,000 square feet of gaming space. Paradise Island has extensive existing infrastructure and is easily accessible from the densely populated eastern United States. There are regularly scheduled airline flights from south Florida and New York City to either Paradise Island or neighboring Nassau, having flight times of approximately 50 minutes and two and one-half hours, respectively. THE PARADISE ISLAND EXPANSION AND THE PIRATE'S COVE RENOVATION The further development of Paradise Island is the cornerstone of the Company's expansion plans, and its approximately 220 acres of undeveloped property provide the Company with an opportunity to expand Paradise Island into a master planned and highly themed destination resort centered around spectacular Bahamian beaches and the wonders of the ocean. The Company recently commenced construction of the Paradise Island Expansion and expects to complete the project by late 1998 at a cost of approximately $450 million. The Company does not expect the construction of the Paradise Island Expansion to interfere materially with its operations at Atlantis. The Paradise Island Expansion will include the construction of a 1,200-room deluxe hotel and new casino. It is also intended to increase convention and meeting facilities and to expand the ocean-themed environment of Atlantis with the addition of numerous marine attractions. Upon completion of the Paradise Island Expansion, guests will be able to explore an elaborate ocean-themed environment containing lagoons, waterfalls, adventure rides and exotic marine life exhibits. Consistent with a strategy of offering accommodations that appeal to broad market segments within a single master planned destination resort, the Company acquired the Pirate's Cove Hotel on Paradise Island 8 located adjacent to Atlantis. The Company intends to implement the approximately $20 million Pirate's Cove Renovation, which is expected to be completed during the first half of 1999, in order to position this property as Atlantis' moderately priced unit. During construction of the Paradise Island Expansion, the Company intends to use a portion of this property to house many of the construction staff. Upon successful completion of the Paradise Island Expansion and the Pirate's Cove Renovation, the Company will operate an integrated 3,000-room resort complex appealing to all market segments which will include approximately 1,200 deluxe rooms, 1,100 mid-market rooms and 700 moderately priced rooms. After completion of these projects, the Company will continue to own approximately 190 acres of undeveloped land on Paradise Island with extensive beach and golf course frontage. See "Business--The Properties and Current Expansion Projects--The Bahamas" and "--Existing Revolving Credit Facility". The Company continues to explore additional development opportunities on Paradise Island. Following the completion of the Paradise Island Expansion and the Pirate's Cove Renovation, management's growth plan includes the potential development of additional resort properties on Paradise Island, each appealing to a distinct target market. For example, management anticipates that additional expansion opportunities will exist to develop room capacity that caters to budget-oriented customers at lower price points than those currently offered at Atlantis. In addition, management believes that similar expansion opportunities exist in the luxury end of the market with a further build-out of the Ocean Club. Other potential development projects may include residential villas, timeshare developments, marinas and golf course communities. Any further development projects on Paradise Island are expected to be constructed on the approximately 190 acres of undeveloped land remaining after the Paradise Island Expansion, which includes extensive beach and golf course frontage, or on additional tracts of land that may be acquired from time to time. In connection with the Paradise Island Expansion and in order to stimulate the Company's further investment in The Bahamas, the Government of the Commonwealth of The Bahamas and the Company reached an agreement in 1995 granting the Company certain tax relief and investment credits. See "Business--Certain Matters Affecting the Company's Bahamas Operations--Heads of Agreement". ATLANTIC CITY SINA is a holding company which, through its indirect wholly owned subsidiary Resorts International Hotel, Inc. ("RIH"), is principally engaged in the ownership and operation of the Resorts Casino Hotel in Atlantic City. The Resorts Casino Hotel has approximately 660 guest rooms, a 70,000 square foot casino, an 8,000 square foot simulcast parimutuel betting and poker area and related facilities and is located on the Atlantic City Boardwalk. During 1997, the Company expects to begin enhancing the existing Resorts Casino Hotel by way of the Atlantic City Renovation, which will include the construction of additional parking, the renovation of approximately 500 of the hotel rooms and various improvements to the public areas. The planning for the Atlantic City Renovation has just recently begun, and the costs and schedule therefor have not yet been determined. THE ATLANTIC CITY EXPANSION In 1998, the Company expects to begin planning the Atlantic City Expansion. The Atlantic City Expansion is expected to consist of a new development on land adjacent to the existing Resorts Casino Hotel, including additional hotel rooms and development of a highly themed casino and entertainment complex. The new development would be integrated with the existing Resorts Casino Hotel, and when completed during 2000, management believes that it should be one of the first Las Vegas style gaming entertainment complexes in Atlantic City. The size and scope of the Atlantic City Expansion depends, in part, upon the amount of additional land the Company is able to acquire. In addition, the Company's ability to carry out the Atlantic City Expansion depends on a number of other factors, including completion of necessary planning, receipt of adequate financing and certain state and local approvals. See "Risk Factors-- Risks Associated with New Projects and Expansion--Atlantic City Expansion". 9 CONNECTICUT Sun International, through its wholly owned subsidiary, Sun Cove Limited ("Sun Cove"), has a 50% interest in, and is a managing partner of, Trading Cove Associates, a Connecticut general partnership ("TCA"), which developed and manages the Mohegan Sun Casino for the Mohegan Tribe in Montville, Connecticut. Under a seven-year management agreement that commenced in October 1996 between TCA and the Mohegan Tribe (the "TCA Management Agreement"), TCA manages the Mohegan Sun Casino in exchange for payments ranging from 30% to 40% of pretax income, depending upon profitability thresholds. As a result of the Company's interest in TCA, the Company will receive a portion of these management fee payments and in addition will receive a return on the capital it provided to the project. See "Business--The Properties and Current Expansion Projects--Connecticut". Construction of the Mohegan Sun Casino began in early October 1995, and the facility commenced operations in October 1996. According to market research reports, in 1995 there were approximately 2.4 million adults residing within 50 miles, 10.2 million adults residing within 100 miles and 21.8 million adults residing within 150 miles of the Mohegan Sun Casino. The Mohegan Sun Casino is located approximately 10 miles west of Foxwoods Resort & Casino ("Foxwoods"), which the Company believes to be one of the most profitable casinos in the world. The Mohegan Sun Casino is readily accessible from the interstate highway system through its own four-lane access road with a direct exit from Connecticut Route 2A (a four-lane expressway), which connects to I-395, approximately one mile from the Mohegan Sun Casino. I-395 connects to I-95, the main highway that connects Boston, Providence and New York City, approximately nine miles away. This road network allows customers to drive directly into the property from the interstate highway system without encountering a traffic light. The Company believes that the location, ease of access and distinctive northeastern Indian theme of the Mohegan Sun Casino should enable it to capture a significant share of the gaming market in the northeastern United States. While the Mohegan Sun Casino commenced operations during the slow season, since its opening on October 12, 1996 through December 31, 1996, the property achieved an average daily win per slot machine of $317 and recorded net revenues of $97 million and earnings before bingo operations (which are not managed by TCA) and interest, taxes, depreciation and amortization of $22.8 million. INDIAN OCEAN Sun International owns 22.8% of Sun Resorts Limited, a Mauritian company which is publicly traded on the Mauritius Stock Exchange ("Sun Indian Ocean"). Sun International manages each of Sun Indian Ocean's six resort hotels pursuant to management contracts for which it receives management fees calculated as a percentage of revenue, adjusted operating income and development expenditures. Sun Indian Ocean is regarded as one of the premier resort operators in the Indian Ocean and owns five beach resort hotels in Mauritius and one in the Comoros, with a total of approximately 1,400 rooms. Mauritius and the Comoros are tropical islands located in the Indian Ocean approximately 1,200 miles and 200 miles, respectively, from the east coast of mainland Africa. The resorts in Mauritius and the Comoros are marketed primarily to tourists from Europe and southern Africa. Two of the five Mauritian resorts offer deluxe accommodations and are acknowledged by the European travel trade to be among the finest beach resorts in the world. The other three Mauritian resorts and the hotel in the Comoros cater to mid-market and budget travellers. Sun Indian Ocean owns five of the 16 major hotels in Mauritius, representing approximately 36% of the room inventory among properties with more than 80 rooms. FRANCE Sun International owns an effective 25% of Societe de Participation et d'Investissements dans les Casinos, a private French company ("Sun France"), which owns four locals-oriented casinos in France, located in Nice and Chamonix and in the Marseilles districts of Cassis and Carry-le-Rouet. Sun International provides various services to Sun France's four casinos under a technical assistance agreement pursuant to which the Company receives a fixed fee equivalent to approximately $800,000 per year (at current exchange rates). Sun International's principal partners in Sun France are Chargeurs, S.A. ("Chargeurs"), Accor S.A. ("Accor") and the Barriere family, the latter two of which have broad experience in the French domestic gaming and international lodging industries. Sun France operates in excess of 20,000 square feet of gaming space containing approximately 530 slot machines and 60 table games. 10 HISTORY AND OWNERSHIP The Company was established in 1993 in order to acquire the Paradise Island Resort and Casino and related operations, which acquisition was completed in May 1994. In May 1995, the Company acquired from Sun International Investments Limited ("SIIL") its equity interests in Sun Indian Ocean and Sun France and SIIL's project development and management businesses. In December 1996, the Company acquired GGE (now SINA) pursuant to the Merger. SIIL, which controls approximately 49% of the Company's Ordinary Shares (as defined herein), is a private holding company in which each of Caledonia Investments plc ("Caledonia"), Safmarine & Rennies Holdings Limited ("Safren") and a trust for the family of Mr. Solomon Kerzner, Chairman and Chief Executive Officer of the Company, controls approximately a one-third equity interest. See "Principal Shareholder". The mailing address of the Company's principal executive offices is Sun International Hotels Limited, Executive Offices, Coral Towers, Paradise Island, The Bahamas. The telephone number is (242) 363-2516. RECENT EVENTS THE MERGER On December 16, 1996, the Company consummated the Merger. As a result of the Merger, the Company issued 3,441,208 ordinary shares, par value $0.001 per share, of Sun International ("Ordinary Shares") to former holders of GGE stock and has assumed obligations to issue an additional 671,905 Ordinary Shares in connection with options and warrants of GGE. In connection with the Merger, the Company received interim casino authorization (an "ICA") from the New Jersey Casino Control Commission (the "NJCCC"), which allows the Company to operate the Resorts Casino Hotel pending receipt of qualification (a "Plenary License") as a Holding Company, as such term is defined in the New Jersey Casino Control Act (the "NJCCA"). In connection with the Merger, GGE's name was changed to Sun International North America, Inc. See "Risk Factors--Consummation of the Merger Prior to Receipt of Plenary License". TENDER OFFER AND CONSENT SOLICITATION A portion of the proceeds from the issuance of the Outstanding Notes were used to finance a tender offer (the "Tender Offer") to purchase approximately $125 million aggregate principal amount of outstanding 11% Mortgage Notes due 2003 and approximately $35 million (approximately $13 million of which is owned by an affiliate of the Company) aggregate principal amount of outstanding 11 3/8% Junior Mortgage Notes due 2004 (collectively, the "Mortgage Notes"), each issued by Resorts International Hotel Financing, Inc., a wholly owned subsidiary of SINA ("RIHF"). In addition, in connection with the Tender Offer, RIHF solicited (the "Solicitation") consents to certain amendments to the indentures governing the Mortgage Notes and to certain other transactions. As a result of the Tender Offer, only $6.5 million aggregate principal amount of Mortgage Notes remain outstanding. In addition, as a result of the Solicitation, the Mortgage Notes that remain outstanding are unsecured and various provisions, restrictive covenants and "events of default" have been eliminated from their respective indentures. PROPOSED AMENDMENTS TO REVOLVING CREDIT FACILITY Sun Bahamas currently has a revolving credit facility in place pursuant to which certain banks led by The Bank of Nova Scotia and The Royal Bank of Scotland have committed to provide revolving loans of up to $250 million (the "Existing Revolving Credit Facility"). The Existing Revolving Credit Facility is guaranteed by, and secured by a pledge of the assets of, the Company and each of its subsidiaries, except SINA and its subsidiaries. Prior to the consummation of the Tender Offer and the Solicitation, the assets of SINA and its subsidiaries, namely the Resorts Casino Hotel and related assets (the "Atlantic City Assets"), were pledged to support the Mortgage Notes. As a result of the Tender Offer and the Solicitation, however, SINA and its subsidiaries are now able to pledge the Atlantic City Assets in connection with a bank facility. 11 The Company is currently engaged in discussions with The Bank of Nova Scotia and Societe Generale USA to increase the size of the Existing Revolving Credit Facility to $375 million and make additional amendments thereto. These amendments are expected to include lower interest rates and provide the Company with more flexibility than the Existing Revolving Credit Facility. See "Business--Existing Revolving Credit Facility". 12 THE EXCHANGE OFFER SECURITIES OFFERED................ Up to $200,000,000 principal amount of 9% Exchange Senior Subordinated Notes due 2007. The terms of the Exchange Notes are identical in all material respects to the Outstanding Notes except for certain transfer restrictions and registration rights relating to the Outstanding Notes and except that, if the Exchange Offer is not consummated by , 1997, the interest rate borne by the Outstanding Notes will increase 0.5% per annum every 90 days until the Exchange Offer is consummated (up to a maximum amount of 2.0% per annum). THE EXCHANGE OFFER................ The Exchange Notes are being offered in exchange for a like principal amount of Outstanding Notes. The issuance of the Exchange Notes is intended to satisfy obligations of the Issuers contained in the Registration Rights Agreement. The Exchange Notes evidence the same debt as the Outstanding Notes and will be issued, and holders thereof are entitled to the same benefits as holders of the Outstanding Notes, under the Indenture. TENDERS, EXPIRATION DATE; WITHDRAWALS...................... The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, or such later date and time to which it is extended by the Issuers in their sole discretion. Tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date. Any Outstanding Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. See "The Exchange Offer" for a description of the procedures for tendering the Outstanding Notes. FEDERAL INCOME TAX CONSEQUENCES... The exchange pursuant to the Exchange Offer will not result in any income, gain or loss to the Holders who participate in the Exchange Offer or to the Issuers for federal income tax purposes. See "Tax Consequences". USE OF PROCEEDS................... There will be no proceeds to the Issuers from the exchange pursuant to the Exchange Offer. EXCHANGE AGENT.................... The Bank of New York is serving as Exchange Agent (the "Exchange Agent") pursuant to the Exchange Offer.
13 THE EXCHANGE NOTES The terms of the Exchange Notes are identical in all material respects to the Outstanding Notes except for certain transfer restrictions and registration rights relating to the Outstanding Notes and except that, if the Exchange Offer is not consummated by , 1997, the interest rate borne by the Outstanding Notes will increase 0.5% per annum every 90 days until the Exchange Offer is consummated (up to a maximum amount of 2.0% per annum). SECURITIES OFFERED................ $200,000,000 aggregate principal amount of 9% Exchange Senior Subordinated Notes due 2007. INTEREST RATE; PAYMENT DATES...... Interest on the Exchange Notes will accrue at the rate of 9% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing September 15, 1997. MATURITY DATE..................... March 15, 2007. GUARANTEES........................ The Exchange Notes will be unconditionally guaranteed (the Guarantees) on an unsecured senior subordinated basis by the Company's Subsidiaries (the Guarantors). OPTIONAL REDEMPTION............... The Exchange Notes are redeemable, in whole or in part, at the option of the Issuers at any time on or after March 15, 2002, at the declining redemption prices set forth herein, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any. In addition, the Exchange Notes are subject at any time to Required Regulatory Redemptions. In addition, notwithstanding the foregoing, on or prior to March 15, 2000, the Issuers may redeem at any time or from time to time up to $70 million of the aggregate principal amount of the Exchange Notes originally issued at a redemption price of 109% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; PROVIDED, HOWEVER, that at least $130 million in aggregate principal amount of the Exchange Notes remain outstanding following each such redemption. See "Description of Notes -- Optional Redemption" and "-- Required Regulatory Redemption". CHANGE OF CONTROL................. In the event of a Change of Control Triggering Event, Holders of the Exchange Notes will have the right to require that the Issuers repurchase the Exchange Notes in whole or in part at a redemption price of 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the date of repurchase. See "Description of Notes -- Certain Covenants -- Repurchase of Notes at the Option of the Holder Upon a Change of Control". WITHHOLDING TAX................... The Issuers will, subject to certain limitations and exceptions set forth herein, pay to each Holder such additional amounts as may be necessary so that every net payment of principal of and premium, if any, and interest and Liquidated Damages on the Exchange Notes, after deduction or withholding for or on account of any future tax, assessment or other governmental charge imposed upon such Holder, or by reason of the making of such payment, by The Bahamas, or any political subdivision or taxing authority
14 thereof or therein, will not be less than the amount provided for in the Exchange Notes. In addition, if as a result of any change in the laws or regulations of The Bahamas, or any political subdivision or taxing authority thereof or therein, enacted after the date of this Prospectus, the Issuers are required to pay additional amounts as defined herein under "Description of Notes -- Payment of Additional Amounts", the Issuers may at their option redeem all, but not less than all, of such Exchange Notes at the principal amount thereof together with accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the date of such redemption. RANKING........................... The Exchange Notes and the Guarantees will constitute general unsecured obligations of the Issuers and the Guarantors, respectively, and will be subordinated in right of payment to all existing and future Senior Debt of the Issuers and the Guarantors, respectively. As of the date of this Prospectus, after giving effect to the issuance of the Outstanding Notes and the use of proceeds therefrom, the Company on a consolidated basis had no Senior Debt outstanding. The Indenture prohibits the Issuers and the Guarantors from incurring, assuming or guaranteeing any Indebtedness that is subordinated to any Senior Debt and senior in right of payment to the Exchange Notes or the Guarantees, as applicable. See "Description of Notes -- Subordination". CERTAIN COVENANTS................. The Indenture contains certain covenants, including limitations on the ability of the Issuers and the Subsidiaries to: (i) incur additional Indebtedness; (ii) incur certain liens; (iii) engage in certain transactions with affiliates; (iv) make certain restricted payments; (v) agree to payment restrictions affecting Subsidiaries; (vi) engage in unrelated lines of business; or (vii) engage in mergers, consolidations or the transfer of all or substantially all of the assets of the Issuers or the Subsidiaries to another person. In addition, in the event of certain Asset Sales (as defined herein), the Company will be required to use the proceeds to reinvest in the Company's business, to repay certain debt or to offer to purchase Exchange Notes at 100% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the date of purchase. See "Description of Notes -- Certain Covenants". USE OF PROCEEDS................... The Issuers will not receive any proceeds from the Exchange Offer.
15 CONSEQUENCES OF EXCHANGING OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER The Issuers are making the Exchange Offer in reliance on the position of the staff of the Commission as set forth in certain no-action letters addressed to other parties in other transactions. However, the Issuers have not sought their own no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Based upon these interpretations by the staff of the Commission, the Issuers believe that Exchange Notes issued pursuant to this Exchange Offer in exchange for Outstanding Notes may be offered for resale, resold and otherwise transferred by a holder thereof other than (i) a broker-dealer who purchased such Outstanding Notes directly from the Issuers to resell pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an "affiliate" (as defined in Rule 405 of the Securities Act) of the Issuers without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that such Exchange Notes are acquired in the ordinary course of such holder's business and that such holder is not participating, and has no arrangement or understanding with any person to participate, in the distribution of such Exchange Notes. Holders of Outstanding Notes accepting the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may not rely on the position of the staff of the Commission as set forth in these no-action letters and would have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. A secondary resale transaction in the United States by a holder who is using the Exchange Offer to participate in the distribution of Exchange Notes must be covered by a registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the Securities Act. Each broker-dealer (other than an "affiliate" of the Company) that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it acquired the Outstanding Notes as a result of market-making activities or other trading activities and will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Issuers have agreed that, for a period of 180 days after the Expiration Date, they will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution". Any broker-dealer who is an affiliate of the Issuers may not rely on such no-action letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transactions. See "The Exchange Offer". RISK FACTORS For a discussion of certain factors that should be considered in connection with an investment in the Notes, see "Risk Factors". 16 SUMMARY FINANCIAL AND OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA) The following table summarizes selected consolidated financial and operating data of the Company for the years ended December 31, 1995 and 1996 and certain balance sheet data as of December 31, 1996. The data is presented on an actual basis for the years ended December 31, 1995 and 1996 and as of December 31, 1996 and on a pro forma basis for the year ended and as of December 31, 1996 to give effect to the Merger, as adjusted to give effect to the issuance of the Outstanding Notes and the consummation of the Tender Offer. The summary information provided on an actual basis is derived from the Consolidated Financial Statements that have been audited by Arthur Andersen LLP, independent public accountants, and are included elsewhere in this Prospectus. The pro forma financial data, as adjusted for the issuance of the Outstanding Notes, is provided for informational purposes only, is unaudited and is not necessarily indicative of future results or what the operating results would have been had the transactions actually been consummated as of the beginning of the periods indicated. The following Summary Financial and Operating Data should be read in conjunction with the Consolidated Financial Statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus.
YEAR ENDED DECEMBER 31, YEAR ENDED ------------------------ DECEMBER 31, 1996 1995 1996 PRO FORMA, AS ADJUSTED ------------ ---------- ---------------------- STATEMENT OF OPERATIONS DATA: Total net revenues................................... $213,940 $240,116 $532,061 Operating income..................................... 22,990 34,258 64,603 Equity earnings from affiliates...................... 2,313 2,530 2,530 Net income((1))...................................... 18,359 45,722 50,500 Net income per Ordinary Share before accretion((1))((9))................................. $0.87 $1.58 $1.54 Weighted average number of Ordinary Shares........... 21,194 28,915 32,805 Ratio of earnings to fixed charges((2)).............. 2.9x 13.5x 2.6x OTHER FINANCIAL DATA: EBITDA((3)).......................................... 33,226 45,700 77,445 (4) Depreciation and amortization........................ 10,236 11,442 21,586 Capital expenditures: Maintenance........................................ 6,061 11,353 19,502 Expansion.......................................... 40,739 68,123 79,649 ------------ ---------- -------- Total............................................ 46,800 79,476 99,151 Ratio of EBITDA to interest expense(3)(5)............ -- -- 3.7x Ratio of long-term debt to EBITDA(3)(6).............. -- -- 2.6x ATLANTIS OPERATING DATA: Average number of rooms.............................. 1,147 1,147 Average occupancy.................................... 85% 87% Average daily room rate.............................. $122 $158 Average number of slot machines...................... 811 813 Win per slot machine per day......................... $115 $117 Average number of table games........................ 68 64 Win per table game per day........................... $1,851 $1,826 ATLANTIC CITY OPERATING DATA:((7)) Average number of slot machines...................... 2,218 2,350 Win per slot machine per day......................... $236 $214 Average number of table games........................ 81 81 Win per table game per day........................... $2,495 $2,413 CONNECTICUT OPERATING DATA:((8)) Average number of slot machines...................... -- 2,575 Win per slot machine per day......................... -- $317 Average number of table games........................ -- 180 Win per table game per day........................... -- $2,251
17
AS OF DECEMBER 31, 1996 -------------------------- ACTUAL AS ADJUSTED ------------ ------------ BALANCE SHEET DATA: Cash and cash equivalents, including restricted cash.......................... $122,864 $156,029 Total assets.................................................................. 1,122,619 1,160,863 Total debt((1)(0))............................................................ 263,365 306,522 Shareholders' equity.......................................................... 702,989 700,041
- ------------ (1) Pro forma net income and pro forma net income per share do not reflect an after-tax loss of $2,948 and $0.09 per share, respectively, on the extinguishment of debt resulting from the Tender Offer. (2) For the purposes of computing the ratio of earnings to fixed charges, (i) earnings represent income (loss) from continuing operations before income taxes plus fixed charges exclusive of capitalized interest, and (ii) fixed charges consists of interest, whether expensed or capitalized, and amortization of deferred financing fees. There were no preference shares outstanding for any period. Accordingly, the ratio of earnings to combined fixed charges and preferred stock dividends is identical to the ratio of earnings to fixed charges. In addition, in the 1996 pro forma calculation of the ratio of earnings to fixed charges, earnings include $8,744 related to payments under the Showboat Lease and interest expense includes $8,804 related to the Showboat Notes. See footnote 4. Had this ratio been calculated excluding these amounts, the ratio would have been 2.9x. (3) EBITDA represents income from operations before interest, taxes, depreciation and amortization. EBITDA should not be construed as an alternative to operating income or any other measure of performance determined in accordance with U.S. GAAP or as an indicator of the Company's operating performance, liquidity or cash flows generated by operating, investing and financing activities. The Company has included the information concerning EBITDA as management understands it is used by certain investors as one measure of cash flow. This line item enables comparison of the Company's performance with the performance of other companies that report EBITDA. (4) SINA owns land upon which the Showboat Casino Hotel in Atlantic City is situated. This land is leased to Atlantic City Showboat, Inc. ("ACS") pursuant to a 99-year net lease dated October 26, 1983 (the "Showboat Lease"). The lease payment was $8,744 for 1996. SINA has outstanding $105,333 of First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000 (the "Showboat Notes"), which are non-recourse and secured by a mortgage and collateral assignment of the Showboat Lease. Interest on the non-recourse Showboat Notes consists of a pass-through of the lease payments under the Showboat Lease. EBITDA on a pro forma basis for the year ended December 31, 1996 excludes $8,744 in other revenues related to payments under the Showboat Lease. (5) In calculating this ratio $8,744 in other revenues related to payments under the Showboat Lease is excluded from EBITDA and $8,804 of interest related to the Showboat Notes is excluded from interest expense. (6) In calculating this ratio $105,333 of long-term debt related to the Showboat Notes is excluded, and $8,744 in other revenues related to payments under the Showboat Lease is excluded from EBITDA. (7) The Company did not own or operate the Atlantic City properties until December 1996. (8) The Mohegan Sun Casino commenced operations in October 1996. (9) Prior to the Company's equity offering in March 1996 (the "Equity Offering"), the holders of the Company's Series A Ordinary Shares had a put right requiring the Company to purchase any such shares tendered at a price of $17.50 per share (subject to certain adjustments). Prior to the termination of such put right concurrently with the consummation of the Equity Offering, the Company accreted the difference between the original issue price and the put right price by charging amounts to equity based on the effective interest method. (10) Total debt includes $105,333 representing the non-recourse Showboat Notes. 18 RISK FACTORS THIS PROSPECTUS CONTAINS, IN ADDITION TO HISTORICAL INFORMATION, "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND THE MATTERS SET FORTH IN THIS PROSPECTUS GENERALLY. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, HOLDERS OF OUTSTANDING NOTES SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE EXCHANGING ANY OF THE OUTSTANDING NOTES. CONSEQUENCES OF FAILURE TO PROPERLY TENDER OLD NOTES PURSUANT TO THE EXCHANGE OFFER Holders of Outstanding Notes who do not exchange their Outstanding Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the following restrictions on transfer with respect to their Outstanding Notes; (i) the remaining Outstanding Notes may be resold only if registered pursuant to the Securities Act, if any exemption from registration is available thereunder, or if neither such registration nor such exemption is required by law, and (ii) the remaining Outstanding Notes will bear a legend restricting transfer in the absence of registration or an exemption therefrom. The Company does not currently anticipate that it will register the Outstanding Notes under the Securities Act. To the extent that Outstanding Notes are tendered and accepted in connection with the Exchange Offer, any trading market for remaining Outstanding Notes could be adversely affected. Issuance of the Exchange Notes in exchange for the Outstanding Notes pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of such Outstanding Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of the Outstanding Notes desiring to tender such Outstanding Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes for exchange. Outstanding Notes that are not tendered or that are tendered but not accepted by the Company for exchange, will, following consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof under the Securities Act and, upon consummation of the Exchange Offer, certain registration rights under the Registration Rights Agreement will terminate. CONSUMMATION OF THE MERGER PRIOR TO RECEIPT OF PLENARY LICENSE In connection with its acquisition of SINA, Sun International applied to the NJCCC for a Plenary License. Prior to the Merger, the Company received an ICA from the NJCCC, which permitted it to consummate the Merger before receipt of a Plenary License. In granting an ICA to the Company, the NJCCC found that the Company is qualified to act as a Holding Company on a preliminary basis, pending a final determination. In addition, as part of its ICA approval, the NJCCC approved the Company's selection of former New Jersey Governor Thomas H. Kean as the ICA trustee (the "ICA Trustee") to act in accordance with the NJCCA. Because the Company elected to consummate the Merger pursuant to an ICA, the NJCCA required the Company to place the Securities (as defined in the NJCCA) of SINA into a "stand by" trust (the "ICA Trust") with the ICA Trustee as trustee. If the NJCCC determines that there is reasonable cause to believe that the Company should not be granted a Plenary License, the ICA Trust will become activated and the ICA Trustee will take control of the SINA Securities pending a final determination by the NJCCC with respect to the Company's application for a Plenary License, with the exception that the Company could request that the NJCCC direct the ICA Trustee to dispose of the SINA Securities prior to the final qualification determination. In the event the Company's application for a Plenary License is denied, the ICA Trustee will be obligated to dispose of all SINA Securities held in the ICA Trust. The Company would then only be entitled to receive the lesser of (i) the fair market value and (ii) the price paid by the Company for the SINA Securities. Transaction costs paid by the Company in respect of the Merger would not be recoverable by the Company regardless of the price at which the SINA Securities held in the ICA Trust were sold. There can be no assurance that the Company would not sustain substantial losses from the sale of SINA Securities from the ICA Trust in the event the Company's application for a Plenary License 19 was denied. See "Business -- Certain Matters Affecting the Company's Atlantic City Operations--Regulation, Gaming Taxes and Fees". RISKS ASSOCIATED WITH NEW PROJECTS AND EXPANSION GENERAL The ability of the Company to take advantage of business opportunities and to further develop existing businesses will depend upon a number of factors, including the availability of financing, terms and covenants in its credit facilities, the ability of the Company, its key employees and, in certain cases, its partners to obtain governmental licenses, approvals and permits (including gaming and liquor licenses and permits and approvals relating to land use, construction and zoning) and, in some cases, the ability to find, and maintain relationships with, suitable development and business partners. The failure to obtain required licenses, permits or approvals in a timely manner or the loss or suspension of any such license, permit or approval may delay, restrict or prevent one or more projects, including the Paradise Island Expansion, from opening or from opening as scheduled or the Company from being the developer, manager or operator of one or more such projects. DEVELOPMENT, CONSTRUCTION AND RELATED RISKS The Paradise Island Expansion is expected to be completed by late 1998 and the Pirate's Cove Renovation is expected to be completed during the first half of 1999. Development projects such as these, however, are inherently subject to significant development and construction risks, including, but not limited to, labor disputes, shortages of material and skilled labor, weather interference, unforeseen engineering problems, unforeseen environmental problems, fire, natural disasters, geological problems, construction, demolition, excavation, regulatory and/or equipment problems and unanticipated cost increases, any of which could give rise to delays or cost overruns. Pre-existing environmental conditions, if any, on development sites can result in material liabilities and additional costs, as well as delays. The foregoing factors may delay or prohibit the construction or opening of one or more such projects or any future projects undertaken by the Company. The Paradise Island Expansion is being constructed across a lagoon from the existing Atlantis. While the Company does not expect any material adverse impact on Atlantis during the construction of the Paradise Island Expansion, no assurances can be given that disruption to the operations of Atlantis will not occur. ABILITY TO COMPLETE PROJECTS ON TIME AND WITHIN BUDGET The anticipated construction costs and completion date for the Paradise Island Expansion are based on estimates and plans prepared by the Company and its consultants. Although negotiations are in the final stages, the Company has not yet entered into a construction contract with respect to the Paradise Island Expansion. The planning for the Pirate's Cove Renovation has not yet begun. No assurances can be given that current budgets and estimates will prove to be accurate. In addition, no assurance can be given that the Paradise Island Expansion will be completed by late 1998, that the Pirate's Cove Renovation will be completed during the first half of 1999, or that construction costs for the Paradise Island Expansion or the Pirate's Cove Renovation will not exceed budgeted amounts. Failure to complete the Paradise Island Expansion or the Pirate's Cove Renovation or to complete any of such projects within the budget or on schedule may have a material adverse effect on the results of operations and financial condition of the Company. There can be no assurance that any development project, including the Paradise Island Expansion and the Pirate's Cove Renovation, will become operational as scheduled, or at all, or ultimately result in profitable operations. If any development project is not successful, the Company would be required to write off costs or investments associated with such project. NEED FOR ADDITIONAL FINANCING The development of resorts and casinos is capital-intensive. In connection with the Paradise Island Expansion and the Pirate's Cove Renovation and any other future development projects, it may be 20 necessary for the Company to raise additional financing, including by accessing the capital markets. Although the Company has the Existing Revolving Credit Facility in place, the banks' commitments thereunder are subject to satisfaction of a number of conditions precedent. No assurances can be given that the Company will be able to satisfy such conditions precedent at the time that funding under the Existing Revolving Credit Facility is needed or that the Company will be able to comply with the covenants and other terms of the credit agreement. While the Company intends to amend the Existing Revolving Credit Facility, there can be no assurances given that it will be able to do so, or, if successful in so doing, whether the Company will be able to satisfy the conditions to borrowing or comply with all the covenants expected to be contained therein. Also, there can be no assurance that the Company will be able to raise any additional financing which will become necessary in connection with the Paradise Island Expansion, the Pirate's Cove Renovation or any future development projects. In this regard, the credit agreement under the Existing Revolving Credit Facility contains, and the Company's future credit facilities may contain, restrictive covenants, which may prevent or restrict additional indebtedness. See "Business - -- Existing Revolving Credit Facility", and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity, Capital Resources and Capital Spending". ATLANTIC CITY EXPANSION In 1998, the Company expects to begin planning of the Atlantic City Expansion. The Company's ability to successfully complete this project at an acceptable cost is subject to all the risks and uncertainties described above as well as being particularly subject to uncertainty due to the preliminary status of the project. In addition, the Company has not yet selected architects, contractors and other professionals for the project, nor has construction and related financing been arranged. The Company's inability to complete design and other plans for the project or secure necessary financing would prevent the commencement of construction. In addition to its need for additional financing and lack of formal plans, the size and scope of the Atlantic City Expansion depends, in part, upon the amount of additional land the Company is able to acquire. RECENT OPERATING RESULTS OF SINA Two factors negatively affected SINA's operating results in 1996 -- heightened competition for patrons in the Atlantic City market and severe weather conditions during the first quarter of 1996. There can be no assurance that such factors will not continue to exist or reoccur and that the effect on the Company will not be material. As competition for patrons has intensified, promotions -- complimentary services, cash giveaways and events -- have increased. In 1996 certain competitors of SINA increased complimentaries and cash giveaways dramatically. Although SINA did increase its promotions somewhat during the first quarter of 1996 and more significantly during the second quarter of 1996, it elected not to keep pace with the industry's increased promotions due to the belief that the resulting increase in gaming win would not be sufficient to justify the incremental costs incurred. Consequently, SINA's market share of revenues suffered. Also, expansions at two competing Atlantic City properties were completed in May 1996 which, together, added approximately 1,100 hotel rooms and approximately 60,000 square feet of gaming space to the Atlantic City market. Several other companies have announced plans to expand existing or construct new casino/hotels in Atlantic City. Also, the severe weather experienced during the first quarter of 1996 adversely affected operations in that period as the principal means of transportation to Atlantic City is by automobile or bus. The impact of inclement weather is more severe on the Resorts Casino Hotel than on competing properties, which currently have more covered parking and covered terminals for bus patrons. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Results of Operations". 21 COMPETITION GENERAL The resort and casino industries are characterized by a high degree of competition among a large number of participants and are largely dependent on tourism. The Company competes with resorts both with and without gaming and with gaming facilities generally, including land-based casinos, riverboat, dockside and cruise ship on-board casinos and other forms of gaming, as well as other forms of entertainment. A number of the Company's competitors are larger and have greater financial and other resources than the Company. In addition, a number of jurisdictions have recently legalized gaming and other jurisdictions are considering the legalization of gaming. The Company cannot predict what effect a continued proliferation of gaming and the resulting increase in competition could have on the Company's ability to compete effectively in the future. The Company believes that the ability to compete effectively in the resort and gaming industries, particularly the destination resort and gaming industries, is based on several factors, including the scope, quality, location and accessibility of resort and gaming facilities and amenities, the effectiveness of marketing efforts, customer service, the relative convenience of available transportation, service and the quality and price of rooms, food and beverages, convention facilities and entertainment. THE BAHAMAS The Company's Paradise Island operations compete with cruise ships and other hotels and resorts, particularly those on Paradise Island and New Providence Island in The Bahamas as well as those on Grand Bahamas Island and other Caribbean islands. Future casino developments in other locations are also a potential source of competition for the Company's Paradise Island operations. The introduction of additional casino gaming, particularly land-based gaming in the United States and especially the eastern regions of the United States, could reduce the number of tourists visiting The Bahamas and could be a substantial source of competition for Atlantis. See "Business -- Competition -- The Bahamas". ATLANTIC CITY Competition in the Atlantic City casino/hotel market is very strong. Casino/hotels compete on a number of different bases, including promotional allowances given to customers, entertainment, advertising, services provided to patrons, caliber of personnel, attractiveness of the hotel and casino areas and related amenities, and parking facilities. The Resorts Casino Hotel competes directly with 11 casino/hotels in Atlantic City which, in the aggregate, contain approximately 1,000,000 square feet of gaming area, including simulcast betting and poker rooms, and almost 10,000 hotel rooms. In addition, several gaming companies have announced plans to enter the Atlantic City market. The Company also competes to a lesser degree with gaming operations run by federally recognized Indian tribes in New York and New England, and other Indian tribes in the northeastern United States are seeking federal recognition in order to establish gaming operations that would further increase the competition facing the Company. See "Business -- Competition -- Atlantic City". CONNECTICUT The Mohegan Sun Casino is marketed primarily to the day-trip customer. Management believes it competes primarily with Foxwoods and, to a lesser extent, with casinos in Atlantic City, some of which have greater resources and name recognition than the Company or the Mohegan Tribe. Currently, Foxwoods is the only casino in operation within 150 miles of the Mohegan Sun Casino site. Foxwoods is located approximately 10 miles from the Mohegan Sun Casino site and is currently the largest gaming facility in the United States in terms of the number of slot machines, with more than 4,500 slot machines currently in operation. In addition, Foxwoods offers a number of amenities that the Mohegan Sun Casino does not currently offer, including hotels and extensive non-gaming entertainment facilities. Foxwoods has been in operation for more than four years and the Company believes that Foxwoods' successful operation has enabled it to build financial resources that are currently substantially greater than those of the Mohegan 22 Tribal Gaming Authority, an agency of the Mohegan Tribe (the "Mohegan Gaming Authority"), or the Mohegan Tribe. Currently, outside Atlantic City, casino gaming in the northeastern United States may be conducted only by federally recognized Indian tribes operating under the Indian Gaming Regulatory Act of 1988, as amended ("IGRA"). In addition to the Pequot Tribe, which operates Foxwoods, a federally recognized tribe in Rhode Island and a federally recognized tribe in Massachusetts are each seeking to establish gaming operations in their respective states. The Oneida Tribe, which operates a gaming facility in upstate New York, is seeking to expand its operations. In addition, a number of Indian tribes in the northeastern United States are seeking federal recognition in order to establish gaming operations. The Company cannot predict whether any of these tribes will be successful in establishing gaming operations and, if established, whether such gaming operations will have a material adverse effect on the operations of the Mohegan Sun Casino. In addition, a number of states, including Connecticut, have explored legalizing casino gaming by non-Indians in one or more locations. In November 1995, the Connecticut state legislature rejected a proposal submitted by the Pequot Tribe to develop a casino in Bridgeport, Connecticut. The Pequot proposal had been submitted in response to a request for proposals made by the State of Connecticut. Under the tribal-state compact between the Mohegan Tribe and the State of Connecticut, if Connecticut were to legalize any gaming operations other than pursuant to IGRA (I.E., by an Indian tribe on Indian land) with slot machines or other commercial casino games, the Mohegan Tribe would no longer be required to make payments to the State of Connecticut related to slot machine revenues. The Company is unable to predict whether the Connecticut state legislature will accept any other casino proposal and, if any such proposal results in a casino being constructed and opened, whether such casino will have a material adverse effect on the Mohegan Sun Casino. See "Business -- Competition -- Connecticut". OTHER EXISTING OPERATIONS Sun Indian Ocean owns, and the Company manages, resort hotels in Mauritius and the Comoros. As vacation destinations, these resorts are in competition with other locations offering vacations to tourists from Europe, southern Africa and parts of Asia. In Mauritius, there is also competition from other resorts on the island. In the Comoros, however, there are no competing resorts at the current time. Sun France owns, and the Company provides technical assistance to, casinos located in Nice, Chamonix and in the Marseilles districts of Cassis and Carry-le-Rouet. Casino licenses in France may be issued only in resort towns or locations with natural spa facilities. Currently, the Company considers there to be approximately eight casinos that are in direct competition with the Sun France casinos. If additional casino licenses were granted in the resort locations in which Sun France operates and such casinos were built, Sun France's casinos would face direct competition from those casinos. See "Business -- Competition -- Other Existing Operations". CONTROL BY PRINCIPAL SHAREHOLDER SIIL controls approximately 49% of the Ordinary Shares of the Company and, accordingly, is able to effectively control the outcome of substantially all matters requiring shareholder approval, including the election of the Company's directors, thereby controlling the management, policies and business operations of the Company. Pursuant to the terms of a heads of agreement, dated August 1993, as amended (the "Heads of Agreement"), among the Company, SIIL and the Government of the Commonwealth of The Bahamas, SIIL has agreed, among other things, to maintain voting power in the Company of not less than 45% until six months after completion of the Paradise Island Expansion and thereafter to control a majority of the Board of Directors of the Company for an additional five years. The requirement that SIIL maintains this level of voting power could have an adverse effect on the Company's ability in the future to obtain certain types of financing and could also have an adverse effect on the Company's ability to expand its business through acquisitions. See "Principal Shareholder" and "Business -- Certain Matters Affecting the Company's Bahamas Operations". 23 REGULATORY AND POLITICAL FACTORS GENERAL The operation of gaming facilities is generally subject to extensive governmental regulation. Regulatory authorities typically require various registrations, licenses, findings of suitability and approvals to be held by operators of gaming facilities. The regulatory authorities in these jurisdictions generally have broad discretion in the granting, renewal, suspension and revocation of licenses and require that such registrations, licenses, findings and approvals be renewed or updated periodically. In addition, gaming debts may not be legally enforced in certain foreign jurisdictions or in certain jurisdictions within the United States and, therefore, the Company may be unable to collect gaming debts from patrons of its casinos who reside in such jurisdictions. The Company and the necessary key personnel are currently qualified to operate in all the jurisdictions in which the Company operates. No assurances can be given, however, that any new or permanent licenses (including the Plenary License), permits or approvals that may be required by the Company, its key employees and its partners, if applicable, in the future will be granted or that its existing licenses, permits and approvals will be renewed or will not be suspended or revoked in the future. Due to the extensive regulatory environments in which the Company operates, the various countries in which it operates and its dependence on tourism, the Company's operations may be materially and adversely affected by developments with respect to inflation, interest rates, government policies, price and wage controls, labor relations, land use controls, environmental controls, exchange control regulations, exchange rates, taxation, expropriation, political and social instability and other political or economic developments in or affecting the jurisdictions in which it operates and from which it draws tourists. Gaming operators generally are subject to significant taxation and fees. Such taxes and fees are subject to increase at any time. The Company pays substantial taxes and fees with respect to its gaming operations and will likely incur similar taxes and fees in any other jurisdictions in which it conducts gaming operations in the future. Any material increase or the adoption of additional taxes or fees could have a material adverse effect on the Company. DIVESTITURE RISK The NJCCA imposes substantial restrictions on the ownership of securities of the Company and its subsidiaries. A holder of Notes may be required to meet the qualification provisions of the NJCCA relating to financial sources and/or security holders. However, as it did in approving the issuance of the Outstanding Notes and the Exchange Offer, the NJCCC can waive the qualification provisions of the NJCCA for Institutional Investors (as defined in the NJCCA). The Indenture provides that if the NJCCC requires a holder of Notes (whether the record or beneficial owner) to qualify under the NJCCA and such holder does not so qualify, then such holder must dispose of his interest in the Notes within 30 days after receipt by the Issuers of notice of such finding that such holder does not so qualify, or the Issuers may redeem such Notes at the lower of the outstanding principal amount or their value calculated as if the investment had been made on the date of disqualification of such holder (or such lesser amount as may be required by the NJCCC). For a more complete description of the regulatory and political factors affecting the Company's operations, see "Business -- Certain Matters Affecting the Company's Bahamas Operations", "-- Certain Matters Affecting the Company's Connecticut Operations" and "-- Certain Matters Affecting the Company's Atlantic City Operations". CERTAIN MATTERS PERTAINING TO CHAIRMAN The Company's Chairman, Mr. Solomon Kerzner, has been subject to an investigation in connection with events that occurred in 1986 in the Transkei, a former "tribal homeland" that was regarded by South Africa as an independent country but not recognized by the international community. The investigation relates to an alleged improper payment made to Chief George Matanzima, then Prime Minister of the Transkei who was overthrown by a military coup in 1988. In April 1994, as part of South Africa's new 24 constitutional process, the Transkei was reincorporated into South Africa and the Attorney General of the Transkei is now an official of the South African judicial system. In October 1995, Mr. Kerzner, although not officially notified, learned that the Attorney General of the Transkei had requested that the South African police investigate the 1986 payment. A March 1996 report of the investigating police officer, made available to the attorneys for the companies involved in accordance with South African law, states that, by allowing the payment to be made, Mr. Kerzner acted without any personal benefit in an effort to protect what Mr. Kerzner believed to be legitimate rights of the companies involved which were being threatened by Matanzima. Such report also describes Matanzima's action as being tantamount to commercial extortion. Notwithstanding such report, however, any decision regarding the case, including whether to bring charges against Mr. Kerzner or others, rests in the sole discretion of the Attorney General of the Transkei. Mr. Kerzner recently commenced an action in the South Africa courts to end the 10-year investigation. In this action, Mr. Kerzner has maintained that the prolonged investigation is in violation of his constitutional rights and he is seeking redress from the court to have the matter closed. On March 10, 1997, the High Court in Umtata issued an injunction against the Attorney General of the Transkei prohibiting him from charging Mr. Kerzner or taking any other action in connection with a possible charge pending the resolution of Mr. Kerzner's constitutional claims. The High Court is currently scheduled to hear a portion of Mr. Kerzner's claims on May 8, 1997. A date to hear the entire matter has not yet been set. While the Company and Mr. Kerzner believe that there is no merit to any potential charge, there can be no assurances that Mr. Kerzner's case will prevail and that a charge will not be brought and the licensing qualifications of the Company or Mr. Kerzner adversely affected. To date, the Transkei events, which occurred over ten years ago, have not affected the ability of the Company or Mr. Kerzner to be licensed in the jurisdictions in which the Company operates. After disclosure to all applicable licensing authorities of the facts surrounding the Transkei matter, and following investigations, the Company and Mr. Kerzner hold gaming licenses in The Bahamas and Connecticut and the Company holds gaming licenses in France and an ICA in New Jersey. TCA MANAGEMENT AGREEMENT Management fees payable to TCA pursuant to the TCA Management Agreement and payments with respect to certain monies loaned by the Company to the Mohegan Gaming Authority are subordinate in right to the required payments on $175 million of the Mohegan Gaming Authority's Senior Secured Notes due 2002 (the "Mohegan Senior Notes"). The ability of the Mohegan Gaming Authority to meet its payment obligations and its debt service requirements, including with respect to the amounts loaned by the Company to the Mohegan Gaming Authority and payment of management fees to TCA, will be entirely dependent upon the future performance of the Mohegan Sun Casino, which is subject to financial, economic, political, competitive, regulatory, environmental and other factors, many of which are beyond its control. The National Indian Gaming Commission ("NIGC") has the power to require modifications of management agreements with respect to casinos owned by Indian tribes if those agreements are at variance with applicable law or regulations, or to void agreements if the management company fails to comply with the terms of the agreement or applicable laws or regulations. In addition, management agreements can be renewed or extended by the parties only with the approval of the NIGC. If the NIGC were to determine that a person or entity holding a Substantial Interest (as defined herein) in a gaming management agreement was unsuitable, prior approval of the management agreement could be revoked, subsequent approvals or renewals could be blocked, and certain required gaming licenses could be suspended, rescinded or denied. The voiding or modification of the terms of the TCA Management Agreement could have a material adverse effect on the results of operations and financial condition of the Company. LIMITED RECOURSE AGAINST TRIBAL ASSETS Although the Mohegan Tribe and the Mohegan Gaming Authority have sovereign immunity and may not be sued without their consent, the Mohegan Tribe and the Mohegan Gaming Authority have granted a limited waiver of sovereign immunity and consent to suit in connection with the TCA Management 25 Agreement and amounts loaned by the Company to the Mohegan Gaming Authority. In addition, the Mohegan Gaming Authority has granted a limited waiver of sovereign immunity and consent to suit with respect to the enforcement of the obligation to repay the Mohegan Senior Notes. In the event that such waiver of sovereign immunity is held to be ineffective, TCA and the Company could be precluded from judicially enforcing their rights and remedies. Generally, however, waivers of sovereign immunity have been held to be enforceable against Indian tribes such as the Mohegan Tribe. POSSIBLE ENVIRONMENTAL LIABILITIES The Mohegan Sun Casino site was formerly occupied by United Nuclear Corporation ("UNC"), a naval products manufacturer of, among other things, nuclear reactor fuel components. UNC's facility was officially decommissioned on June 8, 1994, when the Nuclear Regulatory Commission ("NRC") confirmed that all licensable quantities of special nuclear material ("SNM") had been removed from the Mohegan Sun Casino site and that any residual SNM contamination was remediated in accordance with the NRC-approved decommissioning plan. From 1991 through 1993, UNC commissioned an environmental consultant to perform a series of environmental assessments on the Mohegan Sun Casino site, including extensive soil investigations and groundwater monitoring. The environmental assessments detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. Extensive remediation of contaminated soils and additional investigations were then completed. Although the Mohegan Sun Casino site currently meets applicable remediation requirements, no assurance can be given that the various environmental assessments with respect to the Mohegan Sun Casino site revealed all existing environmental conditions, that any prior owners or tenants of the Mohegan Sun Casino site did not create any material environmental condition not known to the Mohegan Gaming Authority, that future laws, ordinances or regulations will not impose any material environmental liability or that a material environmental condition does not otherwise exist on the Mohegan Sun Casino site. Future remediation may be necessary if excavation and construction exposes contaminated soil which has otherwise been deemed isolated and not subject to cleanup requirements. Such remediation could adversely impact the results of operations of the Mohegan Sun Casino and therefore the results of operations and financial conditions of the Company. In addition, the Environmental Protection Agency ("EPA") has named a predecessor to SINA as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA" or "Superfund"), for the cleanup of contamination resulting from past disposals of hazardous waste at a site to which the predecessor, among others, sent wastes in the past. At this time, the Company is unable to determine the extent of its liability, if any, at this site. See "Business--Environmental Matters". SUBORDINATION OF NOTES The payment of principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes and the Guarantees are, to the extent set forth in the Indenture, subordinated in right of payment to the prior payment in full of all Senior Debt of the Issuers and Guarantors, as applicable. As of the date of this Prospectus, after giving effect to the issuance of the Outstanding Notes and the use of proceeds therefrom, the Company on a consolidated basis had no Senior Debt outstanding. During the continuance of any default (beyond any applicable grace period) in the payment of principal, premium, interest or any other payment due on Senior Debt, and, in certain circumstances, during the continuance of non-payment defaults, no payment of principal, interest or Liquidated Damages on the Notes may be made by the Issuers or the Guarantors. In addition, upon any distribution of assets of the Issuers or the Guarantors upon any dissolution, winding up, liquidation or reorganization, the payment of the principal, interest and Liquidated Damages on the Notes or the Guarantees is subordinated to the extent provided in the Indenture to the prior payment in full of all Senior Debt of the Issuers or the Guarantors, as applicable. See "Description of Notes -- Subordination". By reason of this subordination, in the event of the Issuers' dissolution, holders of Senior Debt may receive more, ratably, and Holders of the Notes may receive less, ratably, than the other creditors of the Issuers. 26 REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL; AVAILABILITY OF FUNDS In the event of a Change of Control Triggering Event, each Holder of Notes will have the right to require that the Issuers repurchase the Notes held by such Holder in whole or in part at a redemption price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any to the date of purchase. If a Change of Control Triggering Event were to occur, there can be no assurance that the Issuers would have sufficient funds to pay such redemption price for all Notes tendered by the Holders thereof. The Issuers' ability to pay such redemption price is, and may in the future be, limited by the terms of the Existing Revolving Credit Facility or other agreements relating to indebtedness that constitute Senior Debt. See "--Subordination of Notes". The occurrence of certain of the events that would constitute a Change of Control Triggering Event may constitute a default under the Existing Revolving Credit Facility. Future indebtedness of the Issuers may contain prohibitions of certain events which would constitute a Change of Control Triggering Event or require the Issuers to offer to redeem such indebtedness upon a Change of Control Triggering Event. Moreover, the exercise by the Holders of Notes of their right to require the Issuers to purchase the Notes could cause a default under such future indebtedness, even if the Change of Control Triggering Event itself does not, due to the financial effect of such purchase on the Issuers. Finally, the Issuers' ability to pay cash to Holders of Notes upon a purchase may be limited by the Issuers' then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. ABSENCE OF PUBLIC MARKET The Exchange Notes will constitute a new issue of securities with no established trading market. The Issuers do not intend to list the Exchange Notes on any national securities exchange or to seek the admission thereof to trading in the National Association of Securities Dealers Automated Quotation system. The Issuers have been advised by the Initial Purchasers that, following completion of the Offering, the Initial Purchasers presently intend to make a market in the Exchange Notes. However, the Initial Purchasers are not obligated to do so and any market-making activities with respect to the Exchange Notes may be discontinued at any time without notice. The Outstanding Notes are, and the Exchange Notes are expected to be, eligible for trading in the PORTAL market. However, no assurance can be given that an active public or other market will develop for the Exchange Notes or as to the liquidity of or the trading market for the Exchange Notes. If a trading market does not develop or is not maintained, holders of the Exchange Notes may experience difficulty in reselling the Exchange Notes or may be unable to sell them at all. If a market for the Exchange Notes develops, any such market may be discontinued at any time. If a public trading market develops for the Exchange Notes, future trading prices of the Exchange Notes will depend on many factors, including, among other things, prevailing interest rates, the Company's results of operations and the market for similar securities. Depending on prevailing interest rates, the market for similar securities and other facts, including the financial condition of the Company, the Notes may trade at a discount from their principal amount. FRAUDULENT TRANSFER CONSIDERATIONS The obligation of each of the Guarantors of the Notes may be subject to review under state, federal or foreign fraudulent transfer laws. Under state and federal laws, if a court, in a lawsuit by an unpaid creditor or representative of creditors of a Guarantor, such as a trustee in bankruptcy or such Guarantor as debtor-in possession, were to find that at the time such obligation was incurred, such Guarantor, among other things, (a) did not receive fair consideration or reasonably equivalent value therefore and (b) either (i) was insolvent, (ii) was rendered insolvent, (iii) was engaged in a business or transaction for which its assets constituted unreasonably small capital, or (iv) intended to incur or believed that it would incur debts beyond its ability to pay as such debts matured, such court could avoid such Guarantor's obligation under its guarantee, and direct the return of any payments made under the guarantee to such Guarantor or to a fund for the benefit of its creditors. Moreover, regardless of the factors identified in the foregoing clauses (i) through (iv), such court could avoid such obligation, and direct such repayment, if it found that the obligation was incurred with intent to hinder, delay, or defraud such Guarantor's creditors. In that event, 27 the holders of Notes would have to look for repayment to other Guarantors whose guarantee obligations had not been avoided. The measure of insolvency for purposes of the foregoing will vary depending upon the law of the jurisdiction being applied. Generally, however, an entity would be considered insolvent if the sum of its debts is greater than all of its property at a fair valuation or if the present fair salable value of its assets is less than the amount that will be required to pay its probable liability on its existing debts as they become absolute and matured. DEPENDENCE ON KEY PERSONNEL The Company depends upon the efforts and skills of Mr. Solomon Kerzner, its Chairman and Chief Executive Officer. See "Management". Mr. Kerzner is also the Chairman of World Leisure Group Limited, a British Virgin Islands corporation ("WLG"), which indirectly controls through intermediate entities approximately one-third of the outstanding equity of SIIL, and is also a beneficiary of a Kerzner family trust which owns WLG. The loss of the services of Mr. Kerzner or his inability to devote sufficient attention to the operations of the Company could have a material adverse effect on the Company's ability to develop potential business opportunities. According to Mr. Kerzner's employment contract with the Company, he is obligated to devote at least two-thirds of his working time to the operations of the Company until July 1, 1998. In addition, Mr. Kerzner has agreed, subject to certain specified exceptions, that during the term of his employment he will not directly or indirectly engage in any business competitive with the business of the Company in any part of the world outside southern Africa and that he will bring all business opportunities relevant to the business of the Company to the attention of the Company and permit the Company exclusively to exploit such opportunities. There is no assurance that two-thirds of Mr. Kerzner's working time will be sufficient to enable the Company to develop its business. DEPENDENCE ON AIR SERVICE Most patrons of the Company's resorts on Paradise Island and virtually all the patrons of Sun Indian Ocean's hotels arrive by air. Although the Company considers the current level of air service to The Bahamas, Mauritius and the Comoros to be adequate, any interruption or reduction of air service to The Bahamas or Mauritius and the Comoros could have an adverse effect on the Company. SEASONALITY AND WEATHER The Company's business has historically been seasonal, with the largest number of patrons visiting The Bahamas, Mauritius and the Comoros during late December and the first three months of the calendar year. Accordingly, revenues and operating profits for the Company have historically been higher during the first calendar quarter than in successive quarters. In addition, The Bahamas, Mauritius and the Comoros are subject to tropical weather and storms which, if severe, can interrupt the normal operations of the Company and affect tourism. Similarly, inclement weather can adversely affect the operations of the Company's Atlantic City properties as the principal means of transportation to Atlantic City is by automobile or bus. Higher revenues and earnings are typically realized from the Atlantic City operations during the middle third of the year. See "--Recent Operating Results of SINA". USE OF PROCEEDS The Issuers will not receive any cash proceeds from the issuance of the Exchange Notes offered hereby. In consideration for issuing the Exchange Notes as described in this Prospectus, the Issuers will receive in exchange Outstanding Notes in like principal amount, the terms of which are identical in all material respects to those of the Exchange Notes. The Outstanding Notes surrendered in exchange for the Exchange Notes will be retired and cancelled and cannot be reissued. Accordingly, the issuance of the Exchange Notes will not result in any change in the indebtedness of the Issuers. Proceeds to the Issuers from the sale of the Outstanding Notes were approximately $194.0 million after deduction of the Initial Purchasers' discount and estimated offering expenses. The proceeds were 28 used to finance the Tender Offer and the Solicitation and to pay related fees and expenses, with the remaining funds to be utilized for general corporate purposes. THE COMPANY Sun International was established in 1993 in order to acquire the Paradise Island Resort and Casino and related operations, which acquisition closed on May 3, 1994. In May 1995, the Company acquired from SIIL its equity interests in Sun Indian Ocean and Sun France and SIIL's project development and management businesses. SIIL, which controls approximately 49% of the Company's equity, is a private holding company in which each of Caledonia, Safren and WLG controls approximately a one-third interest. During 1996, the Mohegan Sun Casino was developed for the Mohegan Tribe by TCA, a partnership in which the Company, through its wholly owned subsidiary, Sun Cove, owns a 50% interest. In December 1996, the Company acquired GGE (now SINA). SINA is a holding company which, through RIH, its indirect wholly owned subsidiary, is principally engaged in the ownership and operation of the Resorts Casino Hotel. The Ordinary Shares of Sun International are listed for trading under the symbol "SIH" on the New York Stock Exchange (the "NYSE"). As of December 31, 1996, there were 32,707,462 Ordinary Shares issued and outstanding, including 3,441,208 Ordinary Shares which were issued in connection with the Merger. The mailing address of the Company's principal executive offices is Executive Offices, Coral Towers, Paradise Island, The Bahamas. The telephone number is (242) 363-2516. The following chart represents a summary of the Company's organizational structure: [LOGO] - ------------ (1) Own and operate the Company's Paradise Island operations. (2) Issuer of the Mortgage Notes. (3) Owns and operates the Resorts Casino Hotel. (4) Connecticut general partnership which developed and manages the Mohegan Sun Casino. (5) Owns and operates the Company's Mauritius and Comoros properties. (6) Owns and operates the Company's casinos in France. 29 CAPITALIZATION (IN THOUSANDS) The following table sets forth, as of December 31, 1996, the total capitalization of the Company on an actual basis and as adjusted to give effect to the issuance of the Notes and the consummation of the Tender Offer.
AS OF DECEMBER 31, 1996 ------------------------ HISTORICAL AS ADJUSTED ---------- ------------ Long-term debt: (1) Existing Revolving Credit Facility (2)................................................ $ 0 $ 0 Notes................................................................................. -- 199,084 11% Mortgage Notes.................................................................... 132,500 -- 11 3/8% Junior Mortgage Notes......................................................... 23,427 -- Capitalized lease obligations......................................................... 2,105 2,105 Other (3)............................................................................. 105,333 105,333 ---------- ------------ Total long-term debt................................................................ 263,365 306,522 Less: current portion................................................................. (747) (747) ---------- ------------ Long-term debt, net................................................................. 262,618 305,775 Shareholders' equity (4)................................................................ 702,989 700,041 ---------- ------------ Total capitalization................................................................ $ 965,607 $ 1,005,816 ---------- ------------ ---------- ------------
- ------------ (1) For a description of the Company's long-term debt, see Note 9 of Notes to Consolidated Financial Statements. (2) At December 31, 1996, the amount available under the Existing Revolving Credit Facility was $250,000. (3) Represents the non-recourse Showboat Notes. (4) As adjusted reflects the after-tax loss of $2,948 on the extinguishment of debt resulting from the Tender Offer. 30 SUN INTERNATIONAL HOTELS LIMITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS The accompanying pro forma consolidated statements of operations present pro forma information for the Company and SINA giving effect to the Merger using the purchase method of accounting, as adjusted to give effect to the issuance of the Outstanding Notes and the consummation of the Tender Offer. The pro forma consolidated statements of operations of the Company are based on the historical consolidated statements of operations of the Company and SINA for the year ended December 31, 1996. The accompanying pro forma consolidated statements of operations for the year ended December 31, 1996 have been presented as if the Merger and the issuance of the Outstanding Notes occurred and the Tender Offer was consummated on January 1, 1996. The pro forma adjustments are based on currently available information and upon certain assumptions that management of the Company believes are reasonable under the circumstances. The accompanying pro forma consolidated statements of operations are provided for informational purposes only and are not necessarily indicative of the results that will be achieved for future periods. In addition, the accompanying pro forma consolidated statements of operations do not purport to represent what the Company's results of operations would actually have been if the Merger and the issuance of the Outstanding Notes in fact had occurred and the Tender Offer had been consummated on January 1, 1996. The accompanying pro forma consolidated statements of operations and the related notes thereto should be read in conjunction with the Company's consolidated financial statements. No pro forma consolidated balance sheet is provided because SINA was a consolidated subsidiary of the Company at December 31, 1996. 31 SUN INTERNATIONAL HOTELS LIMITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
HISTORICAL ADJUSTMENTS SUN HISTORICAL AND PRO FORMA, INTERNATIONAL SINA ELIMINATIONS AS ADJUSTED ---------------- ---------- ------------ ----------- Revenues: Gaming................................................ $77,342 $258,672 $336,014 Rooms................................................. 67,243 16,010 83,253 Food and beverage..................................... 60,372 27,867 88,239 Tour operations....................................... 15,048 15,048 Management fee income................................. 8,896 8,896 Other................................................. 23,317 19,663(1) 42,980 ------- ---------- ----------- Gross Revenues.......................................... 252,218 322,212 574,430 Less: promotional allowances.......................... (12,102 ) (30,267) (42,369 ) ------- ---------- ----------- Net revenues........................................ 240,116 291,945 532,061 Costs and Expenses: Gaming................................................ 41,430 134,974 176,404 Rooms................................................. 12,047 8,782 20,829 Food and beverage..................................... 41,069 32,020 73,089 Other operating expenses.............................. 37,505 40,222 77,727 Selling, general and administrative................... 36,208 37,658 $ (2,200 (a) 71,666 Tour operations....................................... 15,262 15,262 Corporate expenses.................................... 10,895 10,895 Depreciation and amortization......................... 11,442 12,386 (2,242 (b) 21,586 ------- ---------- ------------ ----------- Total operating expenses............................ 205,858 266,042 (4,442 ) 464,840 ------- ---------- ------------ ----------- Income from Operations.................................. 34,258 25,903 4,442 64,603 Other Income (Expense): Interest income....................................... 12,499 3,233 15,732 Interest expense...................................... (3,133 ) (28,873 (1) 2,008 (c) (29,998 ) Other, net............................................ 144 144 ------- ---------- ------------ ----------- Total other income (expense)........................ 9,510 (25,640) 2,008 (14,122 ) Equity in Earnings of Associated Companies.............. 2,530 2,530 Provision for Income Taxes.............................. (576 ) (1,935 (d) (2,511 ) ------- ---------- ------------ ----------- Net Income............................................ $ 45,722 $263 $4,515 $50,500 (2) ------- ---------- ------------ ----------- ------- ---------- ------------ -----------
The accompanying notes are an integral part of these pro forma consolidated statements of operations. 32 SUN INTERNATIONAL HOTELS LIMITED NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) (1) Other revenues for SINA includes $8,744 related to payments under the Showboat Lease and interest expense for SINA includes $8,804 related to the Showboat Notes. (2) Pro forma net income does not include an after-tax loss of $2,948 on the extinguishment of debt resulting from the Tender Offer. (3) Pro Forma Adjustments: The Pro Forma Consolidated Statements of Operations have been prepared to give effect to the Merger in a business combination to be accounted for as a purchase for accounting purposes. Based upon the respective per share values of Ordinary Shares and common stock of SINA as of August 16, 1996, the last full trading day prior to the announcement of the Merger, each share outstanding of common stock of SINA has been or will be exchanged for 0.4324 Ordinary Shares and each share of Class B stock of SINA outstanding has been or will be converted into 0.1928 Ordinary Shares. In addition, the Pro Forma Consolidated Statements of Operations give effect to the issuance of the Outstanding Notes and the use of proceeds to retire the Mortgage Notes. A description of the pro forma adjustments is as follows: (a) To exclude approximately $2,200 in fees related to a license agreement with the Griffin Group, Inc., which was terminated as a result of the Merger. (b) To adjust the amortization and depreciation expense resulting from the allocation of the purchase price to goodwill and hotels and other buildings. Sun International amortizes goodwill and depreciates hotels and other buildings over a period of 40 years and furniture and equipment over 3 to 7 years. (c) To adjust the interest expense, including the accretion of the debt discount on the Mortgage Notes and Showboat Notes, for the year as a result of the issuance of the Outstanding Notes and the consummation of the Tender Offer assuming an interest rate of 9% on the Outstanding Notes. (d) To record a provision for income taxes based upon the pro forma income before income taxes. 33 SELECTED FINANCIAL AND OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA) The following table summarizes selected consolidated financial and operating data of the Company for the years ended December 31, 1995 and 1996 and certain balance sheet data as of December 31, 1996. The data is presented on an actual basis for the years ended December 31, 1995 and 1996 and as of December 31, 1996 and on a pro forma basis for the year ended and as of December 31, 1996 to give effect to the Merger, as adjusted to give effect to the issuance of the Outstanding Notes, and the consummation of the Tender Offer. The summary information provided on an actual basis is derived from the Consolidated Financial Statements that have been audited by Arthur Andersen LLP, independent public accountants, and are included elsewhere in this Prospectus. The pro forma financial data, as adjusted for the issuance of the Outstanding Notes, is provided for informational purposes only, is unaudited and is not necessarily indicative of future results or what the operating results would have been had the transactions actually been consummated as of the beginning of the periods indicated. The following Selected Financial and Operating Data should be read in conjunction with the Consolidated Financial Statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus.
YEAR ENDED DECEMBER YEAR ENDED 31, DECEMBER 31, 1996 ---------------------- PRO FORMA, 1995 1996 AS ADJUSTED ---------- ---------- ----------------- STATEMENT OF OPERATIONS DATA: Revenues: Room revenues......................................... $50,412 $67,243 $83,253 Food and beverage revenues............................ 50,806 60,372 88,239 Gaming revenues....................................... 79,605 77,342 336,014 Tour operation revenues............................... 16,338 15,048 15,048 Management fee revenues............................... 4,858 8,896 8,896 Other revenues........................................ 21,195 23,317 42,980 Promotional allowances................................ (9,274) (12,102) (42,369) ---------- ---------- -------- Total net revenues.................................. 213,940 240,116 532,061 Operating income........................................ 22,990 34,258 64,603 Equity earnings from affiliates......................... 2,313 2,530 2,530 Net income(1)........................................... 18,359 45,722 50,500 Net income per Ordinary Share before accretion(1)(9).... $0.87 $1.58 $1.54 Weighted average number of Ordinary Shares.............. 21,194 28,915 32,805 Ratio of earnings to fixed charges(2)................... 2.9x 13.5x 2.6x OTHER FINANCIAL DATA: EBITDA(3)............................................... 33,226 45,700 77,445 (4) Depreciation and amortization........................... 10,236 11,442 21,586 Capital expenditures: Maintenance........................................... 6,061 11,353 19,502 Expansion............................................. 40,739 68,123 79,649 ---------- ---------- -------- Total............................................... 46,800 79,476 99,151 Ratio of EBITDA to interest expense(3)(5)............... -- -- 3.7x Ratio of long-term debt to EBITDA(3)(6)................. -- -- 2.6x ATLANTIS OPERATING DATA: Average number of rooms................................. 1,147 1,147 Average occupancy....................................... 85% 87% Average daily room rate................................. $122 $158 Average number of slot machines......................... 811 813 Win per slot machine per day............................ $115 $117 Average number of table games........................... 68 64 Win per table game per day.............................. $1,851 $1,826 ATLANTIC CITY OPERATING DATA:(7) Average number of slot machines......................... 2,218 2,350 Win per slot machine per day............................ $236 $214 Average number of table games........................... 81 81 Win per table game per day.............................. $2,495 $2,413 CONNECTICUT OPERATING DATA:(8) Average number of slot machines......................... -- 2,575 Win per slot machine per day............................ -- $317 Average number of table games........................... -- 180 Win per table game per day.............................. -- $2,251
34
AS OF DECEMBER 31, 1996 ------------------------ ACTUAL AS ADJUSTED ----------- ----------- BALANCE SHEET DATA: Cash and cash equivalents, including restricted cash.................................. $122,864 $156,029 Total assets.......................................................................... 1,122,619 1,160,863 Total debt(10)........................................................................ 263,365 306,522 Shareholders' equity.................................................................. 702,989 700,041
- ------------- (1) Pro forma net income and pro forma net income per share do not reflect an after-tax loss of $2,948 and $0.09 per share, respectively, on the extinguishment of debt resulting from the Tender Offer. (2) For the purposes of computing the ratio of earnings to fixed charges, (i) earnings represent income (loss) from continuing operations before income taxes plus fixed charges exclusive of capitalized interest, and (ii) fixed charges consists of interest, whether expensed or capitalized, and amortization of deferred financing fees. There were no preference shares outstanding for any period. Accordingly, the ratio of earnings to combined fixed charges and preferred stock dividends is identical to the ratio of earnings to fixed charges. In addition, in the 1996 pro forma calculation of the ratio of earnings to fixed charges, earnings include $8,744 related to payments under the Showboat Lease and interest expense includes $8,804 related to the Showboat Notes. See footnote 4. Had this ratio been calculated excluding these amounts, this ratio would have been 2.9x. (3) EBITDA represents income from operations before interest, taxes, depreciation and amortization. EBITDA should not be construed as an alternative to operating income or any other measure of performance determined in accordance with U.S. GAAP or as an indicator of the Company's operating performance, liquidity or cash flows generated by operating, investing and financing activities. The Company has included the information concerning EBITDA as management understands it is used by certain investors as one measure of cash flow. This line item enables comparison of the Company's performance with the performance of other companies that report EBITDA. (4) SINA owns land upon which the Showboat Casino Hotel in Atlantic City is situated. This land is leased to ACS pursuant to the Showboat Lease. The lease payment was $8,744 for 1996. SINA has outstanding $105,333 of the Showboat Notes, which are non-recourse and secured by a mortage and collateral assignment of the Showboat Lease. Interest on the non-recourse Showboat Notes consists of a pass-through of the lease payments under the Showboat Lease. EBITDA on a pro-forma basis for the year ended December 31, 1996 excludes $8,744 in other revenues related to payments under the Showboat Lease. (5) In calculating this ratio $8,744 in other revenues related to payments under the Showboat Lease is excluded from EBITDA and $8,804 of interest related to the Showboat Notes is excluded from interest expense. (6) In calculating this ratio $105,333 of long-term debt related to the Showboat Notes is excluded, and $8,744 in other revenues related to payments under the Showboat Lease is excluded from EBITDA. (7) The Company did not own or operate the Atlantic City properties until December 1996. (8) The Mohegan Sun Casino commenced operations in October 1996. (9) Prior to the Equity Offering, the holders of the Company's Series A Ordinary Shares had a put right requiring the Company to purchase any such shares tendered at a price of $17.50 per share (subject to certain adjustments). Prior to the termination of such put right concurrently with the consummation of the Equity Offering, the Company accreted the difference between the original issue price and the put right price by charging amounts to equity based on the effective interest method. (10) Total debt includes $105,333 representing the non-recourse Showboat Notes. 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE INFORMATION CONTAINED IN THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, AND THE OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING DISCUSSION INCLUDES FORWARD LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND UNCERTAINTIES. SEE "RISK FACTORS". RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 The Company recorded net income of $45.7 million in 1996 compared to $18.4 million in 1995. Earnings per share increased to $1.58 in 1996 as compared to $0.87 for 1995, an increase of 82%. Net revenues of $240.1 million in 1996 were 12% above the $213.9 million of net revenues recorded in 1995. Operating income increased to $34.3 million in 1996 from $23.0 million in 1995, an increase of 49%. The primary contributor to this growth was strong results at the Company's Paradise Island operations. The Company's Paradise Island operations continued to perform very well, generating operating income of $32.7 million in 1996, a 38% increase over 1995. The Company's Atlantis property achieved an average occupancy of 87% for the year, compared to 85% in 1995, and the average daily room rate grew by 29% to $158. While the room and food and beverage operations achieved solid growth, gaming revenues declined by a modest 3% for the year to $77.5 million, mainly as a result of a lower table hold of 13.6% for the year compared to 15.7% in 1995. Table hold during the first quarter of 1996 was unusually low. In September 1996, the Company acquired the 562-room Pirate's Cove Hotel, which operated at approximately break-even for the period following its acquisition. The Company intends to implement the approximately $20 million Pirate's Cove Renovation, which is expected to be completed during the first half of 1999, to position this property as Atlantis' moderately priced unit. In addition, the Company intends to use a portion of this property to house many of the construction staff during the Paradise Island Expansion. The Mohegan Sun Casino in Montville, Connecticut, which was developed for the Mohegan Tribe by TCA, a partnership in which Sun International owns a 50% interest, opened in October 1996. From its opening through December 31, 1996, the casino generated net revenues of $97.0 million, including $90.9 million of gaming revenues. The average daily win per slot for the period was $317, which resulted in total slot revenues of $64.7 million for the period. Table revenues were $26.2 million, although the hold percentage of 14.5% was low given the slower rate of play due to the initial level of inexperience among dealers. The casino steadily improved its hold percentages and is now achieving a more normalized hold percentage. From its opening on October 12, 1996, through December 31, 1996, the operation generated earnings before bingo operations (which are not managed by TCA) and interest, taxes, depreciation and amortization of $22.8 million. TCA earns management fees based on 30% to 40% of the Mohegan Sun Casino's earnings after depreciation and interest. The percentage of profits distributed to the partnership starts at 40% and declines to 30% based on predetermined profitability thresholds. Prior to distributing its profits equally to its partners, TCA contributes $1.2 million per annum to the casino's capital reserve account, funds its own operating costs and then makes certain priority payments to its partners. From the Mohegan Sun Casino's opening through December 31, 1996, the Company earned fees of $3.4 million. The Company has a 22.8% interest in Sun Indian Ocean, a Mauritius company which owns five beach resort hotels in Mauritius and one in the Comoros. The Company also has long-term management contracts with these properties which expire in 2003. In 1996, the Company earned management fees of $4.5 million, as compared to $4.0 million in 1995. Equity earnings for both years were $1.5 million. In 1996, the Indian Ocean resorts generated revenues of $74.9 million as compared to $63.8 million in 1995, and had net income in 1996 of $6.4 million as compared to $6.7 million in 1995. The reduction in 1996's net income compared to that of 1995 included the effects of an approximately 11% reduction in the dollar value of the Mauritian currency. Two new resorts were opened in 1996 on the island of Mauritius, the 333-room Le Coco Beach and the 238-room Sugar Beach, bringing the total rooms owned by Sun Indian Ocean to 1,381. These two new properties, which were developed by the Company and are targeted at the 36 moderate priced segments of the market, provide a more complete product offering in the Indian Ocean. On a comparable basis, the four established properties achieved an average occupancy of 74% in 1996, as compared to 72% in 1995, and average room rates in 1996 declined to $153 from $170 during 1995, primarily due to the decrease in the dollar value of the Mauritian currency. Including the effect of opening the two new properties, one of which opened in March and the other in October, the properties achieved an average occupancy of 74% and average room rate of $132. The Company has an effective 25% interest in Sun France which owns four casinos in France. The Company provides various services to these casinos under a technical services agreement, which expires in October 1997. In 1996, the French casinos generated total revenues of $107.7 million, as compared to $103.2 million in 1995, and net income of $4.3 million as compared to $3.0 million in 1995. In 1996, the Company earned technical assistance fees of $0.8 million, as compared to $0.9 million in 1995 and equity earnings of $1.1 million for 1996, as compared to $0.8 million for 1995. OTHER FACTORS AFFECTING EARNINGS Corporate expenses were $10.9 million for 1996, or 4.5% of revenues, compared to $9.5 million in the prior year, or 4.4% of revenues. The Company received $2.6 million of income, which is a fixed contribution towards its corporate expenses payable pursuant to an agreement with one of its shareholders, as compared to $2.4 million in 1995. This fixed contribution increases annually at 3%. During 1996, the Company earned project development fees of $226,000, as compared to $1.1 million in 1995, for services rendered in connection with the construction of Le Coco Beach and Sugar Beach. The Company received approximately $744,000 in 1996 as compared to $186,000 in 1995, in relation to the sale of its interest in a Greek consortium which had bid on a casino license in Athens, Greece. The Company has now received payment in full for its interest. The Company recorded interest income of $6.2 million in 1996 as compared to $1.5 million in 1995 on subordinated notes that it purchased from the Mohegan Gaming Authority. The subordinated notes currently pay interest through the issue of additional notes. As of December 31, 1996, the Company owns a total of $66.0 million of these notes of which $23.6 million bear interest at 15% and the balance bear interest at prime plus 1%. The Company had total interest income of $12.5 million in 1996 as compared to $2.4 million in 1995. Interest expense decreased to $3.1 million in 1996 from $9.7 million in 1995. The reduction in interest expense and the increase in interest income resulted from repayment of all outstanding bank debt and the amount due to affiliates in March 1996 with the proceeds from a public offering of Ordinary Shares and the investment of the balance of these proceeds. The Company completed the acquisition of SINA on December 16, 1996. The results of operations excludes the operations of SINA for the period following the acquisition as such results were not material to the Company's operations. YEAR ENDED DECEMBER 31, 1994 The year ended December 31, 1994 is not comparable to 1995 because the Company acquired the Paradise Island operations effective May 3, 1994 and prior to such time the Company's only operations included its interest in Sun Indian Ocean and in the Sun France casinos. The Company recorded a net loss of $16.5 million in 1994 on net revenues of $76.7 million. The Paradise Island operations generated net revenues of $69.7 million and operating losses of $21.4 million for the eight month period ending December 31, 1994, which excludes the traditionally strong winter period from New Year's to Easter. Following the acquisition of the Paradise Island operations the Company commenced an approximately $140 million redevelopment program and consequently, the property's available room inventory was substantially reduced until the completion of the construction in late December. Room rates were heavily discounted during this period, and public areas and restaurants were closed periodically. As a result, the redevelopment program had a significant negative impact on the operating results of the Paradise Island operations. 37 For the twelve months ended December 31, 1994, the Indian Ocean properties recorded revenues of $50.0 million and net income of $6.2 million. The resorts achieved an average occupancy and room rate of 73% and $173 on an average available room base of 625 rooms. The Company earned management fees of $3.4 million and equity earnings of $950,000 from its Indian Ocean operations. In 1994, the French casinos generated total revenues and net income of $76.4 million and $1.9 million, respectively. The Company earned technical assistance fees and equity earnings of $0.8 million and $0.5 million, from its French operations. Corporate expenses were $5.1 million in 1994. In 1994, the Company received a $2.4 million contribution toward such costs pursuant to an agreement with one of its shareholders. The Company also received project fees of $216,000 for services rendered in connection with the renovation of certain of its Indian Ocean properties. In 1994, the Company realized a gain of $1.9 million on the sale of 16.7% of its interest in Sun France which reduced its effective holding in such company to 25%. LIQUIDITY, CAPITAL RESOURCES AND CAPITAL SPENDING At December 31, 1996, the Company had unrestricted cash and cash equivalents of $97.2 million, including $29.3 million at SINA. During the year, the Company generated $39.1 million in operating cash flow, excluding the SINA operations. In anticipation of the Paradise Island Expansion, the Company consummated a public offering of a total of 8,049,737 of its Ordinary Shares at a price of $35 per share on March 1, 1996. Of the approximately $265 million of net proceeds to the Company from the offering, approximately $120 million were used to repay all outstanding bank debt and $8.5 million were used to repay amounts owed to Sun International Investments Limited, the Company's 49% shareholder. Capital expenditures totaled $79.5 million in 1996, including approximately $38 million for the purchase of the Pirate's Cove Hotel on Paradise Island, $18.2 million for the Paradise Island Expansion and $10.3 million for a corporate aircraft. In comparison, capital expenditures in 1995 of $46.8 million include approximately $40.7 million carried over from the initial $140 million redevelopment program at Paradise Island, which was substantially completed by December 1994. Management expects future capital expenditures to increase significantly with the Paradise Island Expansion, including the development of a new deluxe 1,200 room hotel, casino, and marine attractions, which will expand the ocean-themed environment of Atlantis. This development is anticipated to cost approximately $450 million and should be completed by late 1998. The Company expects to enhance the Resorts Casino Hotel by way of the Atlantic City Renovation, which will include the construction of additional parking and a renovation of approximately 500 hotel rooms and various improvements to the public areas. Since November 1996, the Company has acquired property in Atlantic City at a cost of $12 million (including $7.3 million expended in January 1997). The Company intends to continue to acquire land in Atlantic City for use in connection with the Atlantic City Expansion. The Company acquired $42.0 million of subordinated Secured Completion Guarantee Notes (as defined herein) from the Mohegan Gaming Authority during 1996 pursuant to its obligations under a $50 million completion guarantee, which bear interest at prime plus one percent. As part of the initial funding of the Mohegan Gaming Authority and concurrent with the offering of $175 million of Mohegan Senior Notes by the Mohegan Gaming Authority in September 1995, the Company acquired $38.3 million of Mohegan Subordinated Notes (as defined herein) from the Mohegan Gaming Authority, which bear interest at 15%. Payment in cash of interest on the Mohegan Subordinated Notes is deferred until $87.5 million in principal of the Mohegan Senior Notes have been tendered for and the Mohegan Gaming Authority achieves a fixed charge coverage ratio of 2.5x over the previous four fiscal quarters. On November 8, 1996, the Company sold 50% of its Mohegan Subordinated Notes to Waterford Gaming, its 50% partner in TCA, for $22.5 million. As of December 31, 1996, the Company held $23.6 million of Mohegan Subordinated Notes and $42.4 million of Secured Completion Guarantee Notes. In January 1997 the Company funded the balance of $8.0 million under its completion guarantee obligations. 38 Pursuant to the Existing Revolving Credit Facility, certain banks led by The Bank of Nova Scotia and The Royal Bank of Scotland have committed to provide revolving loans of up to $250 million, which are intended to be used primarily to fund the Paradise Island Expansion. The Company is currently engaged in discussions with The Bank of Nova Scotia and Societe Generale USA to increase the size of the Existing Revolving Credit Facility to $375 million and make additional amendments thereto. These amendments are expected to include lower interest rates and provide the Company with more flexibility than the Existing Revolving Credit Facility. Management believes that available cash on hand of approximately $97 million at December 31, 1996 combined with funds generated from operations and funds available under the Existing Revolving Credit Facility and expected to be available under the Existing Revolving Credit Facility, as amended, will be sufficient to finance its planned operating and investing activities. 39 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER Promptly after the Registration Statement of which this Prospectus constitutes a part has been declared effective, the Issuers will offer the Exchange Notes in exchange for surrender of the Outstanding Notes. The Issuers will keep the Exchange Offer open for not less than 20 business days (or longer if required by applicable law) after the date on which notice of the Exchange Offer is mailed to the holders of the Outstanding Notes. For each Outstanding Note validly tendered to the Issuers pursuant to the Exchange Offer and not withdrawn by the holder thereof, the holder of such Outstanding Note will receive an Exchange Note having a principal amount equal to the principal amount of such surrendered Outstanding Note. Interest on each Exchange Note will accrue from the last interest payment date on which interest was paid on the Outstanding Note surrendered in exchange therefor or, if no interest has been paid on such Outstanding Note, from the date of the original issue of the Outstanding Notes. The Exchange Notes evidence the same debt as the Outstanding Notes and are issued under and are entitled to the same benefits under the Indenture as the Outstanding Notes. In addition, the Exchange Notes and the Outstanding Notes are treated as one series of securities under the Indenture. In the event that (a) neither the Registration Statement of which this Prospectus is a part nor a Shelf Registration (as defined in the Registration Rights Agreement) with respect to the Outstanding Notes is filed on or prior to the 45th day after the date of original issue of the Outstanding Notes, (b) neither of such registration statements is declared effective by the Commission on or prior to the 165th day after the Closing Date (the "Effectiveness Target Date"), (c) the Registration Statement becomes effective, and the Issuers fail to consummate the Exchange Offer within 45 days of the earlier of the effectiveness of the Registration Statement or the Effectiveness Target Date, or (d) the Shelf Registration with respect to the Outstanding Notes is declared effective but thereafter ceases to be effective or usable in connection with resales of Outstanding Notes during the period specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Issuers will pay to each Holder of the Outstanding Notes, accruing from the date of the first such Registration Default (or if such Registration Default has been cured, from the date of the next Registration Default), liquidated damages ("Liquidated Damages") in an amount equal to one-half of one percent (0.5%) per annum of the principal amount of the Outstanding Notes held by such Holder during the first 90-day period immediately following the occurrence of such Registration Default, increasing by an additional one-half of one percent (0.5%) per annum of the principal amount of such Notes during each subsequent 90-day period, up to a maximum amount of Liquidated Damages equal to two percent (2.0%) per annum of the principal amount of such Outstanding Notes, which provision for Liquidated Damages will continue until such Registration Default has been cured. Liquidated Damages accrued as of any interest payment date will be payable on such date. PERIOD FOR TENDERING OUTSTANDING NOTES Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), the Issuers will accept for exchange Outstanding Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time, on , , 1997; PROVIDED, HOWEVER, that if the Issuers, in their sole discretion, have extended the period of time for which the Exchange Offer is open, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $200,000,000 aggregate principal amount of Outstanding Notes is outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1997, to all Holders of Outstanding Notes known to the Issuers. The Issuers' obligation to accept Outstanding Notes for exchange pursuant to the Exchange Offer is subject to certain conditions set forth under "--Certain Conditions to the Exchange Offer" below. The Issuers expressly reserve the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any Outstanding Notes, by giving oral or written notice of such extension to the Holders thereof as described below. During any such extension, all Outstanding Notes previously tendered will remain subject to the Exchange Offer and 40 may be accepted for exchange by the Issuers. Any Outstanding Notes not accepted for exchange for any reason will be returned without expense to the tendering Holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Outstanding Notes tendered in the Exchange Offer must be in denominations of principal amount of $1,000 or any integral multiple thereof. The Issuers expressly reserve the right to amend or terminate the Exchange Offer, and not to accept for exchange any Outstanding Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified below under "--Certain Conditions to the Exchange Offer". The Issuers will give oral or written notice of any extension, amendment, non-acceptance or termination to the Holders of the Outstanding Notes as promptly as practicable, such notice in the case of any extension to be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. PROCEDURES FOR TENDERING OUTSTANDING NOTES The tender to the Issuers of Outstanding Notes by a Holder thereof as set forth below and the acceptance thereof by the Issuers will constitute a binding agreement between the tendering Holder and the Issuers upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a Holder who wishes to tender Outstanding Notes for exchange pursuant to the Exchange Offer must transmit a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to The Bank of New York (the Exchange Agent) at one of the addressees set forth below under "--Exchange Agent" on or prior to the Expiration Date. In addition, either (i) certificates for such Outstanding Notes must be received by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Outstanding Notes into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the Holder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OUTSTANDING NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE ISSUERS. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Outstanding Notes surrendered for exchange pursuant thereto are tendered (i) by a registered Holder of the Outstanding Notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution (as defined below). In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be made by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (collectively, "Eligible Institutions"). If Outstanding Notes are registered in the name of a person other than a signer of the Letter of Transmittal, the Outstanding Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Issuers in their sole discretion, duly executed by the registered Holder with the signature thereon guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Outstanding Notes tendered for exchange will be determined by the Issuers in their sole discretion, which determination shall be final and binding. The Issuers reserve the absolute right to reject any and all tenders of any particular Outstanding Notes not properly tendered or to not accept any particular Outstanding Notes which acceptance might, in the judgment of the Issuers or their counsel, be unlawful. The Issuers also reserve the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular 41 Outstanding Notes either before or after the Expiration Date. The interpretation of the terms and conditions of the Exchange Offer as to any particular Outstanding Notes either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) by the Issuers shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes for exchange must be cured within such reasonable period of time as the Issuers shall determine. Neither the Issuers, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Outstanding Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered Holder or Holders of Outstanding Notes, such Outstanding Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered Holder or Holders that appear on the Outstanding Notes. If the Letter of Transmittal or any Outstanding Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuers, proper evidence satisfactory to the Issuers of their authority to so act must be submitted. In all cases, issuance of Exchange Notes for Outstanding Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Outstanding Notes or a timely Book-Entry Confirmation of such Outstanding Notes in the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Outstanding Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Outstanding Notes are submitted for a greater principal amount than the Holder desires to exchange, such unaccepted or non-exchanged Outstanding Notes will be returned without expense to the tendering Holder thereof (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry procedures described below, such non-exchanged Outstanding Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Outstanding Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Outstanding Notes by causing the Book-Entry Transfer Facility to transfer such Outstanding Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Outstanding Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal (or a copy thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at one of the addressees set forth below under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. GUARANTEED DELIVERY PROCEDURES If a registered Holder of the Outstanding Notes desires to tender such Outstanding Notes and the Outstanding Notes are not immediately available, or time will not permit such Holder's Outstanding Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a a copy thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Issuers (by telegram, telex, fax transmission, or mail or hand delivery), setting forth the name and address of the Holder of Outstanding Notes and the amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Outstanding Notes, in proper form for transfer, or a 42 Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Outstanding Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addressees set forth below under "--Exchange Agent". Any such notice of withdrawal must specify the name of the person having tendered the Outstanding Notes to be withdrawn, identify the Outstanding Notes to be withdrawn (including the principal amount of such Outstanding Notes) and (where certificates for Outstanding Notes have been transmitted) specify the name in which such Outstanding Notes are registered, if different from that of the withdrawing Holder. If certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing Holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such Holder is an Eligible Institution. If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Issuers, whose determination shall be final and binding on all parties. Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described above, such Outstanding Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Outstanding Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Outstanding Notes" above at any time on or prior to the Expiration Date. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, the Issuers shall not be required to accept for exchange, or to issue Exchange Notes in exchange for, any Outstanding Notes and may terminate or amend the Exchange Offer, if at any time before the acceptance of such Outstanding Notes for exchange or the exchange of the Exchange Notes for such Outstanding Notes, any of the following events shall occur: (a) such acceptance or issuance would violate applicable law or any applicable interpretation of the staff of the Commission; (b) there shall be threatened, instituted or pending any action or proceeding by or before any governmental agency with respect to the Exchange Offer which, in the Issuers' judgment, would reasonably be expected to impair the ability of the Issuers to proceed with the Exchange Offer; (c) there shall have been adopted or enacted any statute, law, rule or regulation which, in the Issuers' judgment, would reasonably be expected to impair the ability of the Issuers to proceed with the Exchange Offer; (d) there shall have been declared by U.S. federal, New York State or Bahamian authorities a banking moratorium which, in the Issuers' judgment, would reasonably be expected to impair the ability of the Issuers to proceed with the Exchange Offer; or 43 (e) there shall have been declared a suspension by order of the Commission or any other governmental authority of trading generally on the NYSE, the AMEX or in the NASDAQ National Market which, in the Issuers' judgment, would reasonably be expected to impair the ability of the Issuers to proceed with the Exchange Offer. The foregoing conditions are for the sole benefit of the Issuers and may be asserted by the Issuers regardless of the circumstances giving rise to any such condition or may be waived by the Issuers in whole or in part at any time and from time to time in their sole discretion. The failure by the Issuers at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Issuers will not accept for exchange any Outstanding Notes tendered, and no Exchange Notes will be issued in exchange for any such Outstanding Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939. EXCHANGE AGENT The Bank of New York has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addressees set forth below. Questions and requests for assistance, requests for additional copies of the Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent, addressed as follows: BY MAIL: BY HAND OR OVERNIGHT COURIER: The Bank of New York The Bank of New York 101 Barclay Street, 7E 101 Barclay Street New York, NY 10286 Corporate Trust Services Window Attention: Reorganization Section, Ground Level Arwen Gibbons New York, NY 10286 Attention: Reorganization Section, Arwen Gibbons Telephone: (212) 815-6333 Fax for Eligible Institutions: (212) 571-3080
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FAX TRANSMISSION OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. FEES AND EXPENSES The Issuers will not make any payment to brokers, dealers, or others soliciting acceptances of the Exchange Offer. The Issuers will pay certain other expenses to be incurred in connection with the Exchange Offer, including the fees and expenses of the Exchange Agent, accounting and certain legal fees. TRANSFER TAXES Holders who tender their Outstanding Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that Holders who instruct the Issuers to register Exchange Notes in the name of, or request that Outstanding Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering Holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Outstanding Notes who do not exchange their Outstanding Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Outstanding Notes as set forth in the legend thereon as a consequence of the issuance of the Outstanding Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and 44 applicable state securities laws. In general, the Outstanding Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Issuers do not currently anticipate that they will register Outstanding Notes under the Securities Act. To the extent that Outstanding Notes are tendered and accepted in connection with the Exchange Offer, any trading market for Outstanding Notes not tendered in connection with the Exchange Offer could be adversely affected. The tender of Outstanding Notes pursuant to the Exchange Offer may have an adverse effect upon, and increase the volatility of, the market price of the Outstanding Notes due to a reduction in liquidity. Issuance of the Exchange Notes in exchange for the Outstanding Notes pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of such Outstanding Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, Holders of the Outstanding Notes desiring to tender such Outstanding Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. The Issuers are under no duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes for exchange. Outstanding Notes that are not tendered or that are tendered but not accepted by the Issuers for exchange, will, following consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof under the Securities Act and, upon consummation of the Exchange Offer, certain registration rights under the Registration Rights Agreement will terminate. 45 BUSINESS GENERAL The Company is an international resort and gaming company incorporated in The Bahamas which develops and manages premier resort and casino properties. The Company, through its subsidiaries, currently operates resort hotels and casinos in The Bahamas, Atlantic City, Connecticut, the Indian Ocean and France. The Company's largest property is Atlantis, a 1,147-room resort and casino located on Paradise Island, The Bahamas. Following its acquisition by the Company, Atlantis was redeveloped into an ocean-themed destination resort through the $140 million Initial Development Program. Seeking to capitalize on the success of Atlantis, Sun International recently commenced construction of the approximately $450 million Paradise Island Expansion. The Paradise Island Expansion will substantially increase the Company's room base on Paradise Island with the construction of a new 1,200-room deluxe hotel and casino and the expansion of Atlantis' ocean-themed adventure environment. As part of its continued development of Paradise Island, in September 1996 the Company acquired the 562-room Pirate's Cove Hotel adjacent to Atlantis for approximately $12 million in cash plus the assumption of approximately $22.6 million of indebtedness. In connection with the Paradise Island Expansion, the Company is planning the Pirate's Cove Renovation to create a moderately-priced hotel within the Atlantis complex. The Company expects to complete the Paradise Island Expansion by late 1998 and the Pirate's Cove Renovation by the first half of 1999, thus creating a 3,000-room resort complex appealing to all market segments which will include approximately 1,200 deluxe rooms, 1,100 mid-market rooms and 700 moderately-priced rooms. In December 1996, the Company acquired GGE, the predecessor to SINA. SINA is a holding company which, through RIH, its indirect wholly owned subsidiary, is principally engaged in the ownership and operation of the Resorts Casino Hotel in Atlantic City, which has approximately 660 guest rooms, a 70,000 square foot casino, an 8,000 square foot simulcast parimutuel betting and poker area and related facilities, located on the Boardwalk. SINA also owns approximately 7.7 acres in the South Inlet area and other real estate in the Atlantic City area, most of which is vacant land. During 1997, the Company expects to begin enhancing the existing Resorts Casino Hotel by way of the Atlantic City Renovation, which will include the construction of additional parking, the renovation of approximately 500 of the hotel rooms and various improvements to the public areas. Thereafter, the Company intends to commence construction of the Atlantic City Expansion, a significant addition to the existing property, which will transform the SINA properties into a highly themed resort with significantly increased room base and casino capacity. During 1996, the Mohegan Sun Casino was developed for the Mohegan Tribe by TCA, a partnership in which the Company, through its wholly owned subsidiary, Sun Cove, owns a 50% interest. The Mohegan Sun Casino has a unique Native American Theme and consists of approximately 150,000 square feet of gaming space and features approximately 2,670 slot machines, 180 table games and parking for 7,200 cars. In total, the Company currently operates 11 hotels containing approximately 3,900 rooms and seven casinos with an aggregate of over 270,000 square feet of gaming space containing more than 6,300 slot machines and 380 table games. Upon completion of the Paradise Island Expansion, the Company will operate 12 hotels containing approximately 5,100 rooms with approximately 300,000 square feet of gaming space. THE PROPERTIES AND CURRENT EXPANSION PROJECTS THE BAHAMAS Sun International, through its wholly owned Bahamian subsidiary, Sun Bahamas, owns approximately 570 acres or almost 70% of Paradise Island. Approximately 220 acres are available for future development of which 30 acres will be used for the Paradise Island Expansion. Sun International also owns 561 acres of undeveloped land on Andros Island. Paradise Island has extensive existing infrastructure and is easily accessible from the densely populated eastern United States. There are regularly scheduled airline flights from south Florida and New York City to either Paradise Island or neighboring Nassau, having flight times of approximately 50 minutes and two and one-half hours, respectively. Following the acquisition of its Paradise Island operations in May 1994, the Company embarked upon the Initial Development Program, pursuant to which the Company reconstructed and refurbished its existing Paradise Island facilities and created the ocean-themed environment of "Atlantis". Included in the Initial 46 Development Program was the refurbishment of all 1,147 guest rooms, the construction of new specialty food and beverage facilities, an upgrading of the 30,000-square foot Atlantis Casino and the creation of a 14-acre saltwater marine life habitat. The marine life habitat features the world's largest open air aquarium, showcasing over 100 species of marine life, waterfalls, lagoons, adventure walks and a clear tunnel submerged in a predator lagoon through which visitors can walk and be surrounded by sharks, sea turtles, stingrays and other marine life. The Initial Development Program was substantially completed by December 1994, after only seven months of construction during which the casino and substantial portions of the hotel remained open. In addition, a portion of the Initial Development Program expanded and improved the infrastructure on Paradise Island. Results of Atlantis since completion of the Initial Development Program have exceeded management's expectations. For the year ended December 31, 1995, Atlantis achieved average occupancy and average daily room rates of 85% and $122, respectively. The Company improved upon these results in 1996 by realizing an average occupancy of 87% and an average daily room rate of $158. The Company believes that these results are the highest the property has achieved during the last ten years. In addition to Atlantis, the Company's Paradise Island operations include the Ocean Club, a luxury resort hotel with 59 guest rooms, which was renovated as part of the Initial Development Program, Paradise Paradise, a 100-room beachfront resort hotel catering to value-conscious tourists and the Pirate's Cove Hotel, a 562-room hotel. In addition, Sun Bahamas owns and operates convention facilities, shops, restaurants, bars and lounges, tennis courts, the Paradise Island Golf Course and other resort facilities on Paradise Island. For the year ended December 31, 1996, the Ocean Club achieved average occupancy and average daily room rates of 79% and $356, respectively, Paradise Paradise achieved average occupancy and average daily room rates of 70% and $76, respectively, and the Pirate's Cove Hotel achieved average occupancy and average daily room rates of 49% and $68, respectively. Sun Bahamas also owns roads and other land improvements on Paradise Island, the Paradise Island Airport and a water and sewage system which serves, at stated charges, substantially all facilities on Paradise Island, including non-affiliated customers. The water and sewage systems, which are operated with the approval of the Bahamian Government, will require some expansion in conjunction with the Paradise Island Expansion. The Atlantis Casino is at the center of the Atlantis complex. The casino building, situated between two hotel towers, contains nearly 165,000 square feet of public space, including the 30,000-square foot gaming area. It also houses seven restaurants and bars, retail space and Le Cabaret Theater. The Atlantis Casino contains approximately 830 slot machines and 70 table games. The further development of Paradise Island is the cornerstone of the Company's expansion plans, and its approximately 220 acres of undeveloped property provide the Company with an opportunity to expand Paradise Island into a master planned and highly themed destination resort centered around spectacular Bahamian beaches and the wonders of the ocean. The Company recently commenced construction of the Paradise Island Expansion and expects to complete the construction by late 1998 at a cost of approximately $450 million. The Company does not expect the construction of the Paradise Island Expansion to interfere materially with its operations at Atlantis. The Paradise Island Expansion will include the construction of a 1,200-room deluxe hotel and new casino. It is also intended to increase convention and meeting facilities and to expand the ocean-themed environment of Atlantis with the addition of numerous marine attractions. Upon completion of the Paradise Island Expansion, guests will be able to explore an elaborate ocean-themed environment containing lagoons, waterfalls, adventure rides and exotic marine life exhibits. Consistent with the Company's strategy of offering accommodations that appeal to broad market segments within a single master-planned destination resort, the Company acquired the 562-room Pirate's Cove Hotel on Paradise Island, located adjacent to Atlantis for approximately $12 million in cash plus the assumption of approximately $22.6 million of indebtedness. The Company intends to implement the Pirate's Cove Renovation, which is expected to be completed during the first half of 1999, in order to position this property as Atlantis' moderately priced unit. During construction of the Paradise Island Expansion, the Company intends to use a portion of this property to house many of the construction staff. Upon successful completion of the Paradise Island Expansion and the Pirate's Cove Renovation, the Company will operate an integrated 3,000-room resort complex appealing to all market segments which will include approximately 1,200 deluxe rooms, 1,100 mid-market rooms and 700 moderately priced rooms. After the completion of the 47 Paradise Island Expansion and the Pirate's Cove Renovation, Sun Bahamas will continue to own approximately 190 acres of undeveloped land on Paradise Island with extensive beach and golf course frontage. See "Risk Factors -- Risks Associated with New Projects and Expansion". In addition to its available cash on hand and cash flow from operations, the Company intends to use borrowings under the Existing Revolving Credit Facility to finance the Paradise Island Expansion and the Pirate's Cove Renovation. The Existing Revolving Credit Facility contains a number of conditions precedent to funding. See "-- Existing Revolving Credit Facility". The Company continues to explore additional development opportunities on Paradise Island. Following the completion of the Paradise Island Expansion and the Pirate's Cove Renovation, management's growth plan includes the potential development of additional resort properties on Paradise Island, each appealing to a distinct target market. For example, management anticipates that additional expansion opportunities will exist to develop room capacity that caters to budget-oriented customers at lower price points than those currently offered at Atlantis. In addition, management believes that similar expansion opportunities exist in the luxury end of the market with a further build-out of the Ocean Club. Other potential development projects may include residential villas, timeshare developments, marinas and golf course communities. Any further development projects on Paradise Island are expected to be constructed on the approximately 190 acres of undeveloped land remaining after the Paradise Island Expansion, which includes extensive beach and golf course frontage, or on additional tracts of land that may be acquired from time to time. Sun International Resorts, Inc., a Florida corporation and subsidiary of the Company, together with its subsidiaries based in Florida, provides general and administrative support services, marketing services, travel reservations and wholesale tour services for the Company's Paradise Island operations. ATLANTIC CITY The Resorts Casino Hotel in Atlantic City, New Jersey commenced operations in May 1978 and was the first casino/hotel opened in Atlantic City. This was accomplished by the conversion of the former Haddon Hall Hotel, a classic hotel structure originally built in the early 1900's, into a casino/hotel. It is situated on approximately seven acres of land with approximately 310 feet of Boardwalk frontage overlooking the Atlantic Ocean. The Resorts Casino Hotel consists of two hotel towers, the 15-story East Tower and the nine story North Tower. In addition to the casino facilities described below, the casino/hotel complex includes approximately 660 guest rooms, the 1,400-seat Superstar Theater, seven restaurants, one cocktail lounge, a VIP slot and table player lounge, an indoor swimming pool and health club, and retail stores. The complex also has approximately 50,000 square feet of convention facilities, including eight large meeting rooms and a 16,000 square foot ballroom. The Resorts Casino Hotel has a 70,000 square foot casino and a simulcast parimutuel betting and poker area of approximately 8,000 square feet. In December 1996, these gaming areas contained 41 blackjack tables, 18 poker tables, 11 roulette tables, 10 dice tables, 6 Caribbean stud poker tables, 4 baccarat tables, 2 let it ride poker tables, 2 three card poker tables, 2 pai gow poker tables, 2 big six wheels, 1 sic bo table, 2,350 slot machines, 5 betting windows and 4 customer-operated terminals for simulcast parimutuel betting. Also included in the simulcast area is a keno lounge. In 1995 SINA purchased the Chalfonte Site, a 4.4 acre tract on the Boardwalk adjacent to the Resorts Casino Hotel. SINA also recently entered into a five year lease with an option to purchase approximately 3 acres to the north of the Resorts Casino Hotel, purchased an adjacent parcel and was successful in vacating the portion of North Carolina Avenue that lies between the Chalfonte Site and the Resorts Casino Hotel. These parcels, together with the Chalfonte Site, total more than 9 acres. During 1997, the Company expects to begin enhancing the existing Resorts Casino Hotel by way of the Atlantic City Renovation, which will include the construction of additional parking, the renovation of approximately 500 of the hotel rooms and various improvements to the public areas. The planning for the Atlantic City Renovation has just recently begun, and the costs and schedule therefor have not yet been determined. 48 In 1998, the Company expects to begin planning of the Atlantic City Expansion. The Atlantic City Expansion is expected to consist of a new development on land adjacent to the existing Resorts Casino Hotel, including additional hotel rooms and development of a highly themed casino and entertainment complex. The new development would be integrated with the existing Resorts Casino Hotel, and when completed during 2000, management believes that it should be one of the first Las Vegas style gaming entertainment complexes in Atlantic City. The size and scope of the Atlantic City Expansion depends, in part, upon the amount of additional land the Company is able to acquire. In addition, the Company's ability to carry out the Atlantic City Expansion depends on a number of other factors, including completion of necessary planning, receipt of adequate financing and certain state and local approvals. In addition to the approximately 9 acres of land encompassing the Resorts Casino Hotel and the Chalfonte Site, SINA owns approximately 10 acres of land upon which the Showboat Casino Hotel (the "Showboat"), which is operated by ACS, is situated. This land is leased to ACS pursuant to the Showboat Lease. The Showboat Lease provides for an initial annual rental, which commenced in March 1987, of $6,340,000, subject to annual adjustment based upon changes in the consumer price index. The annual rental is $8,744,000 for 1996. All lease payments due under the Showboat Lease directly service SINA's obligations under SINA's $105,333,000 aggregate principal amount of non-recourse Showboat Notes. SINA also owns various non-operating sites, approximating 29 acres, and has a lease with an option to purchase approximately 3 acres in Atlantic City that could be developed. Included in these parcels is the 2 acre Steeplechase Pier site. SINA also owns in fee an approximately 552 acre parcel located in Atlantic City on Blackhorse Pike, of which approximately 545 acres are considered to be woodlands and wetlands, which may not be developed. SINA owns in fee various individual parcels of property located in the area of Atlantic City known as the South Inlet which in the aggregate constitute 7.7 acres and a parcel of land in Atlantic City consisting of approximately six acres and a warehouse thereon. SINA is the owner of various additional properties at scattered sites in Atlantic City. Principal among these is the so-called "Trans Expo" site, a 2.3 acre parcel located near the site of the new convention center. CONNECTICUT Sun International, through its wholly owned subsidiary, Sun Cove, has a 50% interest in, and is a managing partner of, TCA, a Connecticut general partnership, which developed and manages the Mohegan Sun Casino, a casino and entertainment complex for the Mohegan Tribe in Montville, Connecticut. Construction of the Mohegan Sun Casino began in early October 1995, and the facility commenced operations in October 1996. The Mohegan Sun Casino has a Native American theme which is conveyed through architectural features and the use of natural design elements such as timber, stone and water. Guests enter the Mohegan Sun Casino through one of four major entrances, each of which is distinguished by a separate seasonal theme - winter, spring, summer and fall - emphasizing the importance of the seasonal changes to tribal life. The Mohegan Sun Casino consists of approximately 150,000 square feet of gaming space and features approximately 2,670 slot machines, 180 table games and parking for 7,200 cars. The site for the Mohegan Sun Casino is located approximately one mile from the interchange of Interstate 395 and Connecticut Route 2A (which has been widened to a four-lane expressway). As part of its integrated development plan, the Mohegan Gaming Authority constructed a four-lane access road (with its own exit) from Route 2A, which gives patrons of the Mohegan Sun Casino direct access to Interstate 395, which, in turn, gives direct access to Interstate 95, the main highway connecting Boston, Providence and New York. This road system allows customers to drive directly into the property from the interstate highway system without encountering a traffic light. The Company believes that the demographics of the area surrounding the Mohegan Sun Casino are extremely favorable, with 2.4 million adults residing within 50 miles, 10.2 million adults residing within 100 miles and 21.8 million adults residing within 150 miles of the Mohegan Sun Casino in 1995, according to market research reports. The Mohegan Sun Casino is located approximately 10 miles west of Foxwoods, which the Company believes to be one of the most profitable casinos in the world. Foxwoods, which is operated by the Pequot Tribe, reported approximately $595 million of revenues from slot machines for the 12 months ended June 30, 1996, an average of approximately $405 per slot machine per day. The Company 49 believes that the location, ease of access and distinctive northeastern Indian theme of the Mohegan Sun Casino should enable it to capture a significant share of the gaming market in the northeastern United States. See "Risk Factors -- Competition -- Connecticut". While the Mohegan Sun Casino opened during the slow season, since its opening through December 31, 1996, the property achieved an average daily win per slot machine of $317 and recorded net revenues of $97 million and earnings before bingo operations (which are not managed by TCA) and interest, taxes, depreciation and amortization of $22.8 million. To fund construction and development of the Mohegan Sun Casino, the Mohegan Gaming Authority completed a private placement of $175 million of the Mohegan Senior Notes to institutional investors in September 1995 (the "Mohegan Offering"). The Mohegan Offering, structured with the assistance of the Company, was the first offering in which a Native American Indian tribe was able to utilize the services of internationally recognized investment banks to finance a significant casino project. In connection with funding construction and development of the Mohegan Sun Casino, in September 1995 the Company acquired approximately $40 million of Subordinated Notes due 2003 (the "Mohegan Subordinated Notes") of the Mohegan Gaming Authority. As a result of a recent sale of some of the Mohegan Subordinated Notes to one of the partners of TCA, the Company currently holds $23.6 million of Mohegan Subordinated Notes. In addition, subject to certain qualifications and limitations, the Company guaranteed the payment of all project costs owing prior to such completion up to a maximum aggregate amount of $50 million (the "Secured Completion Guarantee"). As of January 31, 1997, the Company has provided $50 million to the Mohegan Gaming Authority under the Secured Completion Guarantee, for which it has received certain subordinated indebtedness of the Mohegan Gaming Authority (the "Secured Completion Guarantee Notes"). Fixed interest is payable on the Mohegan Senior Notes at the rate of 13.5% per annum. In addition, certain cash flow participation interest is payable on the Mohegan Senior Notes on each interest payment date in an amount equal to 5% of the Mohegan Gaming Authority's cash flow. The Mohegan Subordinated Notes bear interest at 15% per annum. However, payment in cash of such interest is deferred until $87.5 million in principal amount of the Mohegan Senior Notes have been retired and the Mohegan Gaming Authority achieves a fixed charge coverage ratio of 2.5 to 1.0 over the previous four fiscal quarters. The Mohegan Subordinated Notes are subordinated in right to required payments on the Mohegan Senior Notes, as are payments to TCA of management fees under the TCA Management Agreement. In connection with its supply of certain operational and financial support to TCA, the Company will receive certain priority payments from TCA's management fees. Specifically, the Company will receive priority payments from TCA of approximately $12 million for development and construction services. In addition, the Company will receive priority payments from TCA in respect of its performance under the Secured Completion Guarantee. Each of these priority payments will be paid from TCA's management fees prior to the pro rata distribution to TCA's partners (including the Company) of TCA's profits. The Secured Completion Guarantee Notes bear interest at the prime rate as announced by Chase Manhattan Bank plus 1% per annum. In addition, for certain financial advisory and other services provided to TCA the Company will receive a priority payment from TCA equal to the difference between such rate and 26.5% per annum on its investment in the Secured Completion Guarantee Notes issued as part of the Secured Completion Guarantee. The Company's partner in TCA is required to purchase $7.5 million of Secured Completion Guarantee Notes over a three-year period. The final calculations of the cost of developing, constructing, equipping and opening the Mohegan Sun Casino have not been finalized but are expected to total approximately $318 million, which consists of $305 million of project development costs and $13 million of initial working capital. The sources of funds for the project costs are (i) $175 million from the sale of the Mohegan Senior Notes, (ii) $40 million from the sale of the Mohegan Subordinated Notes, (iii) $50 million committed by the Company pursuant to the Secured Completion Guarantee and (iv) $40 million of equipment financing. In addition, $13 million of initial working capital has been provided by a bank working capital facility. Sun Cove, a wholly owned subsidiary of the Company, is one of two managing partners of TCA. All decisions of the managing partners require the concurrence of Sun Cove and the other managing partner, Waterford Gaming, L.L.C. In the event of deadlock there are mutual buy-out provisions. 50 INDIAN OCEAN Sun International owns a 22.8% interest in Sun Indian Ocean, a Mauritian company which is publicly traded on the Mauritius Stock Exchange. Sun Indian Ocean is regarded as one of the premier resort operators in the Indian Ocean and owns five beach resort hotels in Mauritius: the 175-room Le Saint Geran Hotel, Golf Club & Casino ("Le Saint Geran"), the 200-room Le Touessrok Hotel & Ile Aux Cerfs ("Le Touessrok"), the 240-room La Pirogue Hotel & Casino ("La Pirogue"), the 333-room Le Coco Beach ("Le Coco Beach") and the 238-room Sugar Beach Resort Hotel ("Sugar Beach"). Sun Indian Ocean also owns the 187-room Le Galawa Beach Resort ("Le Galawa") in the Comoros. Mauritius and the Comoros are tropical islands located in the Indian Ocean approximately 1,200 miles and 200 miles, respectively, from the east coast of mainland Africa. The resorts in Mauritius and the Comoros are marketed primarily to luxury and mid-market tourists from Europe and southern Africa. Le Saint Geran and Le Touessrok offer deluxe accommodations and are acknowledged by the European travel trade to be among the finest beach resorts in the world. La Pirogue, Le Coco Beach, Sugar Beach and Le Galawa cater to mid-market and budget travellers. Sun Indian Ocean owns five of the 16 major hotels in Mauritius representing approximately 36% of the room inventory among properties with more than 80 rooms. Mauritius' tourist industry mainly comprises visitors from England, Germany, France, Italy and South Africa. Scheduled air service to and from Mauritius is provided through scheduled flights on numerous airlines including Air France, British Airways, Cathay Pacific, Singapore Airlines, Air India, Air Mauritius, Lufthansa and South African Airlines. Sun Indian Ocean is a leading resort operator at the upper end of the market, as there is only one other five-star property on Mauritius. The Company believes that the recent openings of Le Coco Beach and Sugar Beach have increased its market share on Mauritius, further enhanced its presence in the mid-market and provided certain economies of scale. Pursuant to the management agreements with Sun Indian Ocean, the Company provides comprehensive management services under individual management agreements with each of Le Saint Geran, Le Touessrok, La Pirogue, Sugar Beach and Le Coco Beach. The term of each of these management agreements (the "Sun Indian Ocean Management Agreements") continues through December 2003. The Company has the right to extend each Sun Indian Ocean Management Agreement for a five-year period by notice in writing delivered to Sun Indian Ocean by December 2001. Under each of the Sun Indian Ocean Management Agreements, the Company receives a management fee calculated as a percentage of revenues (2%) and adjusted EBITDA (15%). In addition, under each of the Sun Indian Ocean Management Agreements other than the management agreement for Le Saint Geran, the Company receives project consulting fees charged at 2.5% of the total project costs for construction and refurbishment. The Company also has a management agreement to provide services to Le Galawa in the Comoros. The terms of this agreement are identical to the terms of the Sun Indian Ocean Management Agreements except that the Company is entitled to receive a basic fee of 3.5% of revenues rather than 2%. FRANCE Sun International owns an effective 25% interest in Sun France, a private company founded in 1990, which owns four locals-oriented casinos in France, located in Nice and Chamonix and in the Marseilles districts of Cassis and Carry-le-Rouet. Sun International's principal partners in Sun France are Chargeurs, Accor and the Barriere family, the latter two of which have broad experience in the French domestic gaming and international lodging industries. Accor, a publicly traded company, is one of the largest hotel operators in the world, operating under the trade names "Sofitel", "Novotel", "Mercure" and others. The Barriere family is one of the largest French casino operators, operating 10 casinos. The Chargeurs organization is a publicly traded industrial company in France. In 1990, Sun France acquired the Casino Ruhl in Nice and subsequently acquired the three additional casinos in 1992. The Casino Ruhl, the only casino in Nice, operates 300 slot machines and 28 table games. The Cassis casino operates 100 slot machines and 17 table games, the Carry-le-Rouet casino operates 80 slot 51 machines and one table game and the Chamonix casino operates 49 slot machines and 13 table games. Sun France operates in excess of 20,000 square feet of gaming space, which contains approximately 530 slot machines and 60 table games. In France customers are required to pay an entry fee payable to the government and provide details of identity in order to gain access to table games. Further information is required from patrons wishing to obtain credit through credit cards. These requirements tend to limit the number of customers. In addition, French casinos have traditionally been heavily regulated and taxed with approximately a 60% levy on table games. The effective tax on slots is lower, beginning at 40% and gradually increasing to 60%, with the result that the profitability of Sun France will be largely determined by the number of slot machines installed. The Company provides various services to Sun France's four casinos under a technical assistance agreement, which expires in October 1997, pursuant to which the Company receives a fixed fee equivalent to approximately $800,000 per year (at current exchange rates). COMPETITION GENERAL The resort and casino industries are characterized by a high degree of competition among a large number of participants and are largely dependent on tourism. The Company competes with resorts both with and without gaming and with gaming facilities generally, including land-based casinos, riverboat, dockside and cruise ship on-board casinos and other forms of gaming, as well as other forms of entertainment. A number of the Company's competitors are larger and have greater financial and other resources than the Company. In addition, a number of jurisdictions have recently legalized gaming and other jurisdictions are considering the legalization of gaming. The Company cannot predict what effect a continued proliferation of gaming and the resulting increase in competition could have on the Company's ability to compete effectively in the future. The Company believes that the ability to compete effectively in the resort and gaming industries, particularly the destination resort and gaming industries, is based on several factors, including the scope, quality, location and accessibility of resort and gaming facilities and amenities, the effectiveness of marketing efforts, customer service, the relative convenience of available transportation, service and the quality and price of rooms, food and beverages, convention facilities and entertainment. THE BAHAMAS The Company's Paradise Island operations compete with cruise ships and other hotels and resorts, particularly those on Paradise Island and New Providence Island in The Bahamas as well as those on Grand Bahama Island and the Caribbean islands. There are approximately 7,600 rooms for overnight guests on Paradise Island and New Providence Island combined, of which approximately 3,100 are located on Paradise Island, including 1,880 in hotels owned and operated by the Company. The Marriott Crystal Palace, a resort and casino with a theater and other amenities located on New Providence Island, across Nassau harbor from Paradise Island, is Atlantis' primary competitor on Paradise Island and New Providence Island. The Atlantis Casino also competes with the Princess Casino and, to a lesser extent, the Lucayan Beach Resort and Casino, each of which offers hotel accommodations, restaurants, gaming and other leisure facilities on Grand Bahamas Island, approximately 40 minutes by air from Paradise Island. The Atlantis Casino also competes with the El San Juan located in Puerto Rico and, to a lesser extent, with gaming casino facilities located in several other hotels and resorts in Puerto Rico, with cruise ships which effectively provide additional rooms and with resorts and casinos located on other Caribbean islands, in Atlantic City, in Las Vegas and elsewhere in the United States. See "Risk Factors -- Competition -- The Bahamas". ATLANTIC CITY Competition in the Atlantic City casino/hotel market is very strong. Casino/hotels compete on a number of different bases, including promotional allowances given to customers, entertainment, advertising, services provided to patrons, caliber of personnel, attractiveness of the hotel and casino areas and related amenities, and parking facilities. The Resorts Casino Hotel competes directly with 11 casino/hotels in Atlantic City which, in the aggregate, contain almost 1,000,000 square feet of gaming area, including simulcast betting and 52 poker rooms, and almost 10,000 hotel rooms. In addition, gaming companies have announced plans to enter the Atlantic City market. See "--Certain Matters Affecting the Company's Atlantic City Operations--New Convention Center and Casino/Hotel Expansion". The Resorts Casino Hotel is located at the eastern end of the Boardwalk adjacent to the Trump Taj Mahal Casino Resort (the "Taj Mahal"), which is next to the Showboat. These three properties have a total of approximately 2,700 hotel rooms and approximately 314,000 square feet of gaming space in close proximity to each other. A 28-foot wide enclosed pedestrian bridge between the Resorts Casino Hotel and the Taj Mahal allows patrons of both hotels and guests for events being held at the Resorts Casino Hotel and the Taj Mahal to move between the facilities without exposure to the weather. A similar enclosed pedestrian bridge connects the Showboat to the Taj Mahal, allowing patrons to walk under cover among all three casino/ hotels. The remaining nine Atlantic City casino/hotels are located approximately one-half mile to one and one-half miles to the west on the Boardwalk or in the Marina area of Atlantic City. In recent years, competition for the gaming patron outside of Atlantic City has become extremely intense. For instance, gaming operations run by federally recognized Indian tribes throughout New York and New England, including the Mohegan Sun Casino and Foxwoods, and other gaming operations that federally recognized Indian tribes are currently seeking or plan to seek authorization for, directly compete with Atlantic City for the day-trip patron. Other Indian tribes in the northeastern United States are seeking federal recognition in order to establish gaming operations which would further increase the competition for day-trip patrons. See "Risk Factors -- Competition -- Atlantic City". CONNECTICUT Because the Mohegan Sun Casino is marketed primarily to day-trip customers, it competes primarily with Foxwoods and, to a lesser extent, with casinos in Atlantic City, New Jersey, certain of which have greater resources and name recognition than the Company or the Mohegan Sun Casino. Currently, Foxwoods is the only casino in operation within 150 miles of the Mohegan Sun Casino site. Foxwoods is located approximately 10 miles from the Mohegan Sun Casino site and is currently the largest gaming facility in the United States in terms of the number of slot machines, with more than 4,500 slot machines currently in operation. In addition, Foxwoods offers a number of amenities that the Mohegan Sun Casino does not currently offer, including hotels and extensive non-gaming entertainment facilities. Foxwoods has been in operation for more than four years, and the Company believes that Foxwoods' successful operation has enabled it to build financial resources that are currently substantially greater than those of the Mohegan Gaming Authority or the Mohegan Tribe. Currently, outside Atlantic City, casino gaming in the northeastern United States may be conducted only by federally recognized Indian tribes operating under IGRA. In addition to the Pequot Tribe, which operates Foxwoods, a federally recognized tribe in Rhode Island and a federally recognized tribe in Massachusetts are each seeking to establish gaming operations in their respective states. The Oneida Tribe, which operates a gaming facility in upstate New York, is seeking to expand its operations. In addition, a number of Indian tribes in the northeastern United States are seeking federal recognition in order to establish gaming operations. The Company cannot predict whether any of these tribes will be successful in establishing gaming operations and, if established, whether such gaming operations will have a material adverse effect on the operations of the Mohegan Sun Casino. In addition, a number of states, including Connecticut, have explored legalizing casino gaming by non-Indians in one or more locations. In November 1995, the Connecticut state legislature rejected a proposal submitted by the Pequot Tribe to develop a casino in Bridgeport, Connecticut. The Pequot proposal had been submitted in response to a request for proposals made by the State of Connecticut. Under the tribal-state compact between the Mohegan Tribe and the State of Connecticut, if Connecticut were to legalize any gaming operations other than pursuant to IGRA (I.E., by an Indian tribe on Indian land) with slot machines or other commercial casino games, the Mohegan Tribe would no longer be required to make payments to the State of Connecticut related to slot machine revenues. The Company is unable to predict whether the Connecticut state legislature will accept any other casino proposal and, if such proposal results in a casino being constructed and opened, whether such casino will have a material adverse effect on the Mohegan Sun Casino. See "Risk Factors -- Competition -- Connecticut". 53 OTHER EXISTING OPERATIONS Sun Indian Ocean's resorts on Mauritius and the Comoros, as vacation destinations, are in competition with other locations offering vacations to tourists from Europe, southern Africa and parts of Asia. In Mauritius, there is also competition from other resorts on the island. In the Comoros, however, there are no competitive resorts at the current time. Sun Indian Ocean has a leading position in the luxury end of the Mauritian hotel market where it owns two of the three luxury hotels offering a total of 375 rooms, while the competing hotel offers only 84 rooms. It faces more competition for the mid-market La Pirogue and Sugar Beach and for the budget Le Coco Beach. In total, there are approximately 4,000 hotel rooms of international quality available in Mauritius, of which 1,500 are marketed in approximately the same price bracket as La Pirogue, Le Coco Beach and Sugar Beach. There is currently one competing hotel with 141 rooms that is situated on the same beach as La Pirogue. In France, casino licenses may be issued only in resort towns or locations with natural spa facilities. If additional casino licenses were granted in the resort locations in which Sun France operates and such casinos were built, Sun France's casinos would face direct competition from those casinos. There are currently no other casino facilities in the towns where Sun France operates; however, there are approximately eight casinos in Cannes, Monte Carlo and other towns along the Cote d'Azur which the Company considers to be in direct competition with the Sun France casinos. See "Risk Factors -- Competition -- Other Existing Operations". CERTAIN MATTERS AFFECTING THE COMPANY'S BAHAMAS OPERATIONS AIRLINE ARRANGEMENTS The majority of patrons at the Company's resorts on Paradise Island arrive through the recently expanded Nassau International Airport located on New Providence Island. This large, modern facility is served by several carriers offering frequently scheduled jet service from New York, Atlanta, Toronto, Miami and other cities. Ground transportation is facilitated by a bridge linking Paradise Island and New Providence Island. Additionally, Sun Bahamas, through a subsidiary, owns and operates the Paradise Island Airport, a short takeoff and landing facility, including a 3,000-foot runway, airport terminal and customs building, situated on 63 acres of land located at the southeast corner of Paradise Island. Paradise Island Airlines provides regularly scheduled air service from southern Florida to Paradise Island pursuant to a Services Agreement with the Company. This agreement will expire in mid-1998 and will be automatically renewed for one-year terms unless notice of non-renewal is given at least six months prior to expiration. The Company believes, however, that fewer than 20% of its patrons arrive via the Paradise Island Airport. UNION CONTRACT ARRANGEMENTS In The Bahamas, approximately 1,900 of Sun Bahamas employees are represented by The Bahamas Catering and Allied Workers Union (the "Union"). Sun Bahamas participates in The Bahamas Hotel Employers Association (the "Association"), which represents resort operators in the Paradise Island-New Providence Island area. The Association's existing contract with the Union expires in 1998. The Company believes that Sun Bahamas' and the Association's relations with the Union are good. CASINO LICENSE Paradise Enterprises Limited, a subsidiary of the Company ("PEL"), is currently licensed to operate the Atlantis Casino under the Bahamian Gaming Act. In accordance with Bahamian casino licensing requirements, PEL is obligated to have its casino license renewed annually by the Gaming Board. In addition, other than an existing obligation to grant two casino licenses, the Bahamian Government has agreed that it will grant no new casino licenses with respect to gaming operations on Paradise Island or New Providence Island until 2013, provided that Sun Bahamas achieves 75% of its projected minimum employment growth of 2,000 full-time jobs in connection with its expansion and development plans by year ten of the renewal period. The moratorium on granting new casino licenses will remain in place, however, in the event such growth is not achieved because of overall poor market conditions rather than inadequate management by Sun International. 54 GAMING TAXES AND FEES Currently, the Gaming Act provides for taxes on casino revenues consisting of an annual basic license fee of $200,000 plus a tax of 25% on all gaming win up to $10 million, 20% on the next $6 million of win, 10% on the next $4 million of win and 5% on all win over $20 million. ATLANTIS CASINO LEASE A subsidiary of the Company entered into various agreements effective in 1978, pursuant to which the Atlantis Casino is leased to the Hotel Corporation of The Bahamas ("HCB"), a government-owned entity, at an annual rental of $500,000. PEL has an exclusive right to manage and operate the Atlantis Casino, for which it currently pays HCB an annual operating fee of $3 million and 5% of the gaming win above $20 million. Prior to the acquisition of the Company's Paradise Island operations, PEL paid HCB an annual operating fee of $5 million and 15% of gaming win above $25 million. MANAGEMENT AGREEMENT The Bahamian Government has extended the existing management agreement between HCB and PEL through May 2014. The amended annual payment terms beginning in May 1994 are as follows: (i) for years one through five, a $3 million base fee plus 5% of gaming win over $20 million, (ii) for years six through ten, a $3 million base fee plus 7.5% of gaming win over $20 million, (iii) for years eleven through fifteen, a $4 million base fee plus 10% of gaming win over $20 million and (iv) thereafter upon such terms as the relevant parties shall agree, provided that the fee shall not exceed a base fee of $5 million plus 15% of gaming win above a threshold of $25 million. Upon expiration, the management agreement will continue in effect with such changes as the parties may agree but in any event on terms no less favorable than those agreed upon with other casino managers on Paradise Island and New Providence Island. The Bahamian Government has agreed to consider steps eventually to eliminate the role of HCB and allow for direct licensing of casinos. The following table summarizes, for the periods shown, the taxes and fees paid or accrued by Sun Bahamas under the Gaming Act and certain agreements with the Bahamian Government:
FOR THE YEAR ---------------------------- 1995 1996 ------------- ------------- Gaming tax..................................................... $ 7,100,000 $ 7,000,000 Basic license and operating fees............................... 6,200,000 6,000,000 ------------- ------------- Total........................................................ $ 13,300,000 $ 13,000,000 ------------- ------------- ------------- -------------
HEADS OF AGREEMENT In connection with the Paradise Island Expansion, on December 13, 1995 the Company and the Bahamian Government amended the Heads of Agreement to provide the Company with certain tax relief, incentives and other benefits described below. These benefits have been granted in exchange for the Company agreeing to, among other things, spend a minimum of $250 million on the Paradise Island Expansion, build a minimum of 1,000 additional guest rooms and employ and keep employed between 2,000 and 2,500 additional Bahamian workers after completion of the Paradise Island Expansion. CONTROL OF SUN INTERNATIONAL. SIIL has agreed with the Bahamian Government not to reduce its equity interest in Sun International below 45% until six months after completion of the Paradise Island Expansion and thereafter to control a majority of the Board of Directors of Sun International for a period of five additional years. CASINO LICENSE FEES AND WIN TAXES. In replacement of the gaming taxes and the fees payable to the HCB, the Bahamian Government has agreed, for a period of 20 years following completion of the Paradise Island Expansion, to set annual casino license fees at $100,000 per thousand square feet of casino space, plus a minimum annual casino win tax of $4.3 million on all gaming win up to $20 million, 12.5% on all gaming win between $20 million and $120 million and 10% on all gaming win in excess of $120 million. Additionally, during the first 11 years following completion of the Paradise Island Expansion, the Bahamian Government will reduce the annual casino license fees by $5 million and reduce by 45% the win tax to be paid on gaming win between $20 million and $120 million. 55 STAMP TAX AND IMPORT DUTY. The Heads of Agreement provides for an exemption of the Company from stamp tax and import duty on much of the material and equipment which will be required for the Paradise Island Expansion. JOINT MARKETING ARRANGEMENTS. The Bahamian Government will extend, until the year 2003, certain joint marketing arrangements with the Company pursuant to which, among other things, the Company is eligible to receive matching funds of up to $4 million annually from the Bahamian Government for marketing and promotional activities, subject to an eight-year total of $20 million. INFRASTRUCTURE. The Heads of Agreement includes several important government commitments to improve the infrastructure of Paradise Island and New Providence Island. These commitments include improving road access and other transportation facilities used by visitors to Paradise Island and New Providence Island as well as installation of a telecommunications cable from Florida to The Bahamas through a joint venture with AT&T Corp. CERTAIN MATTERS AFFECTING THE COMPANY'S ATLANTIC CITY OPERATIONS NEW CONVENTION CENTER AND CASINO/HOTEL EXPANSION In January 1992, the State of New Jersey enacted legislation that authorized a financing plan for the construction of a new convention center to be located on a 30-acre site next to the Atlantic City train station at the base of the Atlantic City Expressway. The Company understands that the new convention center will have 500,000 square feet of exhibit space and an additional 109,000 square feet of meeting rooms. Construction of the new convention center began in early 1993 and it is scheduled to be completed in the spring of 1997. The convention center is part of a broader plan that includes an additional expansion of the Atlantic City International Airport, the transformation of the main entryway into Atlantic City into a new corridor, and the construction of a new 500 room convention hotel. Officials have commented upon the need for improved commercial air service into Atlantic City as a factor in the success of the proposed convention center. The corridor will link the new convention center and hotel with the Boardwalk. In all, six blocks are to be transformed into an expansive park with extensive landscaping, night-time lighting, a large fountain and pool with an 86-foot lighthouse. It is believed that additional hotel rooms are necessary to support the convention center as well as to allow Atlantic City to become a competitive destination resort. Thus, in addition to the 500 room convention hotel, to further spur construction of new hotel rooms and renovation of substandard hotel rooms into deluxe accommodations, up to a total of $175 million has been set aside by the Casino Reinvestment Development Authority (the "CRDA"), a public authority created under the NJCCA, to aid in financing such projects. To date, the CRDA has approved the expansion projects submitted by eight casino/hotels which are to receive CRDA financing totaling approximately $140 million, and could result in the construction of approximately 3,500 hotel rooms. Also, Mirage Resorts, Inc., a Las Vegas, Nevada casino/hotel company, has been selected to be the developer of an approximately 180 acre tract in the Marina area of Atlantic City. Mirage Resorts, Inc. proposes to build a $750 million, 2,000 room casino/hotel, Boyd Gaming Corp. proposes to build a $500 million, 1,000 room casino/hotel and Circus Circus Enterprises, Inc. proposes to build a $600 million, 2,000 room casino/hotel on that tract. The Company understands that the state of New Jersey and Mirage Resorts, Inc. have reached an agreement as to financing the costs of certain infrastructure improvements needed to develop that tract. MGM Grand, Inc. has also announced plans for the construction of a new casino/hotel in Atlantic City. Although these developments are viewed as positive and favorable to the future prospects of the Atlantic City gaming industry, the Company, at this point, can make no representations as to whether, or to what extent, its results may be affected by the completion of the new convention center, the airport expansion projects and the proposed increase in number of hotel rooms in the area. 56 SEASONAL FACTORS Inclement weather can adversely affect the operations of the Company's Atlantic City properties as the principal means of transportation to Atlantic City is by automobile or bus. Higher revenues and earnings are typically realized from the Atlantic City operations during the middle third of the year. See "Risk Factors-- Recent Operating Results of SINA". REGULATION, GAMING TAXES AND FEES GENERAL. The Company's operations in Atlantic City are subject to regulation under the NJCCA, which authorizes the establishment of casinos in Atlantic City, provides for licensing, regulation and taxation of casinos and related persons and entities and created the NJCCC and the Division of Gaming Enforcement to administer the NJCCA. In general, the provisions of the NJCCA concern: (i) the ability, reputation, character, financial stability and integrity of casino operators, their officers, directors and employees and others financially interested in or in control of a casino; (ii) the nature and suitability of hotel and casino facilities, operating methods and conditions; and (iii) financial and accounting practices. Gaming operations are subject to a number of restrictions relating to the rules of games, types of games permitted, credit play, size of hotel and casino operations, hours of operation, persons who may be employed and licensure of such persons, persons or entities that may do business with casinos, the maintenance of accounting and cash control procedures, security and other aspects of the business. CASINO LICENSE. A casino license is initially issued for a term of one year and must be renewed annually by action of the NJCCC for the first two renewal periods succeeding the initial issuance of a casino license. Thereafter the NJCCC may renew a casino license for a period of four years, although the NJCCC may reopen licensing hearings at any time. A license is not transferable and may be conditioned, revoked or suspended at any time upon proper action by the NJCCC. The NJCCA also requires an operations certificate which, in effect, has a term coextensive with that of a casino license. On February 26, 1979, the NJCCC granted a casino license to RIH for the operation of the Resorts Hotel Casino. In January 1996, RIH's license was renewed until January 31, 2000. RIH's renewed license is subject to a financial stability review midway through the license period. In order for a casino license to be renewed, the licensee must show by clear and convincing evidence that it meets all of the criteria set out in the NJCCA, including the qualification of holding, intermediary and subsidiary companies of a casino licensee and of the directors, officers and certain employees of such companies. RESTRICTIONS ON OWNERSHIP OF SECURITIES. The NJCCA imposes certain restrictions upon the ownership of securities issued by a corporation which holds a casino license or is a holding, intermediary or subsidiary company of a corporate licensee (collectively, "holding company"). Among other restrictions, the sale, assignment, transfer, pledge or other disposition of any security issued by a corporation which holds a casino license is conditional and shall be ineffective if disapproved by the NJCCC. If the NJCCC finds that an individual owner or holder of any securities of a corporate licensee or its holding company must be qualified and is not qualified under the NJCCA, the NJCCC has the right to propose any necessary remedial action. In the case of corporate holding companies and affiliates whose securities are publicly traded, the NJCCC may require divestiture of the security held by any disqualified holder who is required to be qualified under the NJCCA. In the event that entities or persons required to be qualified refuse or fail to qualify and fail to divest themselves of such security interest, the NJCCC has the right to take any necessary action, including the revocation or suspension of the casino license. If any security holder of the licensee or its holding company or affiliate who is required to be qualified is found disqualified, it will be unlawful for the security holder to (i) receive any dividends or interest upon any such securities, (ii) exercise, directly or through any trustee or nominee, any right conferred by such securities or (iii) receive any remuneration in any form from the corporate licensee for services rendered or otherwise. The Company's Articles of Association, as amended, provide that all securities of the Company are held subject to the condition that if the holder thereof is found to be disqualified by the NJCCC pursuant to provisions of the NJCCA, then that holder must dispose of his or her interest in the securities. 57 REMEDIES UNDER THE NJCCA. In the event that it is determined that a licensee has violated, or fails to affirmatively prove that it meets all of the criteria of, the NJCCA, or if a security holder of the licensee required to be qualified is found disqualified but does not dispose of his securities in the licensee or holding company, under certain circumstances the licensee could be subject to fines or have its license suspended, conditioned or revoked. The NJCCA provides for the mandatory appointment of a conservator to operate the casino and hotel facility if a license is revoked or not renewed and permits the appointment of a conservator if a license is suspended for a period in excess of 120 days. If a conservator is appointed, the suspended or former licensee is entitled to a "fair rate of return out of net earnings, if any, during the period of the conservatorship, taking into consideration that which amounts to a fair rate of return in the casino or hotel industry." Under certain circumstances, upon the revocation of a license or failure to renew, the conservator, after approval by the NJCCC and consultation with the former licensee, may sell, assign, convey or otherwise dispose of all of the property of the casino/hotel. In such cases, the former licensee is entitled to a summary review of such proposed sale by the NJCCC and creditors of the former licensee and other parties in interest are entitled to prior written notice of sale. LICENSE FEES, TAXES AND INVESTMENT OBLIGATIONS. The NJCCA provides for casino license renewal fees and other fees based upon the cost of maintaining control and regulatory activities and various license fees for the various classes of employees. In addition, a casino licensee is subject annually to a tax of 8% of "gross revenue" (defined under the NJCCA as casino win, less provision for uncollectible accounts up to 4% of casino win) and license fees of $500 on each slot machine. Also, the NJCCA has been amended to create a new Atlantic City fund (the "AC Fund") for economic development projects other than the construction and renovation of casino/hotels. Beginning in fiscal year 1995/1996 and for the following three fiscal years, if the amount of money expended by the NJCCC and the Division of Gaming Enforcement is less than $57,300,000, the prior year's budget for these agencies, the amount of the difference is to be contributed to the AC Fund. Thereafter, beginning with fiscal year 1999/2000 and for the following three fiscal years, an amount equal to the average paid into the AC Fund for the previous four fiscal years shall be contributed to the AC Fund. Each licensee's share of the amount to be contributed to the AC Fund is based upon its percentage of the total industry gross revenue for the relevant fiscal year. After eight years, the casino licensee's requirement to contribute to this fund ceases. The following table summarizes, for the periods shown, the fees, taxes and contributions assessed upon SINA by the NJCCC.
FOR THE YEAR ------------------------------------------- 1994 1995 1996 ------------- ------------- ------------- Gaming tax.......................................................... $ 19,996,000 $ 21,402,000 $ 20,661,000 License, investigation, inspection and other fees................... 4,218,000 3,917,000 3,672,000 Contribution to AC Fund............................................. 224,000 570,000 ------------- ------------- ------------- $ 24,214,000 $ 25,543,000 $ 24,903,000 ------------- ------------- ------------- ------------- ------------- -------------
The NJCCA, as originally adopted, required a licensee to make investments equal to 2% of the licensee's gross revenue (the "investment obligation") for each calendar year, commencing in 1979, in which such gross revenue exceeded its "cumulative investments" (as defined in the NJCCA). A licensee had five years from the end of each calendar year to satisfy this investment obligation or become liable for an "alternative tax" in the same amount. In 1984 the New Jersey legislature amended the NJCCA so that these provisions now apply only to investment obligations for the years 1979 through 1983. Certain issues have been raised by the CRDA and the State of New Jersey Department of the Treasury (the "Treasury") concerning the satisfaction of investment obligations for the years 1979 through 1983 by SINA. These matters were dormant for an extensive period of time until late 1995 when SINA was contacted by the CRDA. CRDA legal representatives have recently indicated that Treasury may take a position that SINA owes additional investment alternative taxes including interest and possibly penalties. If these issues are determined adversely, SINA could be required to pay the relevant amount in cash. Management of the Company intends to contest these issues and believes a negotiated settlement with an insignificant monetary cost is possible. 58 Effective for 1984 and subsequent years, the amended NJCCA requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the CRDA or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's gross revenue. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of gross revenue. Licensees are required to make quarterly deposits with the CRDA against their current year investment obligations. SINA's investment obligations for the years 1996, 1995, 1994 and 1993 amounted to $3,229,000, $3,348,000, $3,124,000, and $3,054,000, respectively, and, with the exception of a $127,000 credit received in 1995 for making a donation, have been satisfied by deposits made with the CRDA. At December 31, 1996, SINA held $6,859,000 face amount of bonds issued by the CRDA and had $19,701,000 on deposit with the CRDA. The CRDA bonds issued through 1995 have interest rates ranging from 3.9% to 7% and have repayment terms of between 20 and 50 years. CERTAIN MATTERS AFFECTING THE COMPANY'S CONNECTICUT OPERATIONS REGULATION The Mohegan Tribe is a federally recognized Native American Indian tribe with approximately 1,100 members, whose federal recognition became effective May 15, 1994. In May 1994, the Mohegan Tribe and the State of Connecticut entered into a gaming compact to authorize and regulate Class III gaming operations (slot machines and table games). TCA managed the development and construction and manages the operation and marketing of the Mohegan Sun Casino. Each of the partners of TCA and certain employees of the Mohegan Sun Casino must be licensed by relevant tribal and state authorities. Each of the partners of TCA has received a gaming license from the Commissioner of Revenue Services of the State of Connecticut. No assurances can be given, however, that any new or permanent licenses, permits or approvals that may be required by the Company, its key employees and its partners, if applicable, in the future will be granted or that its existing licenses, permits and approvals will be renewed or will not be suspended or revoked in the future. In addition, gaming licenses or management agreements held or subsequently acquired by the Company or its subsidiaries pursuant to applicable law and regulations, including the IGRA and NIGC regulations, may require review, approval or licensing of any person or entity directly, or indirectly possessing or acquiring 10% or more of the Company's equity securities (a "Substantial Interest"). The NIGC is required to review, and approve any such person or entity and make a finding of suitability pursuant to the IGRA and NIGC regulations. If the NIGC were to determine that a person or entity holding a Substantial Interest in a gaming management agreement was unsuitable, prior approval of the management agreement could be revoked, subsequent approvals or renewals could be blocked and certain required gaming licenses could be suspended, rescinded or denied. See "--TCA Management Agreement". TCA MANAGEMENT AGREEMENT The Mohegan Tribe and TCA have entered into the TCA Management Agreement pursuant to which the Mohegan Tribe has engaged TCA to develop, operate, manage and maintain the Mohegan Sun Casino in exchange for an annual fee which is calculated in three tiers based upon net revenues (as defined) as set forth below (in thousands):
III ------------ II ANNUAL FEE I ------------------- FROM ------------ ANNUAL FEE FROM TIERS I & II 40% OF TIER I PLUS 30% OF NET REVENUES PLUS 35% OF NET NET REVENUES UP TO REVENUES BETWEEN ABOVE ------------ ------------------- ------------ Year 1................................................ $ 50,546 $ 50,547-63,183 $ 63,183 Year 2................................................ 73,115 73,116-91,394 91,394 Year 3................................................ 91,798 91,799-114,747 114,747 Year 4................................................ 95,693 95,694-119,616 119,616 Year 5................................................ 104,107 104,108-130,134 130,134 Year 6 (subject to Buyout Option)..................... 114,335 114,336-142,919 142,919 Year 7 (subject to Buyout Option)..................... 130,944 130,945-163,680 163,680
59 MANAGEMENT FEES. The monthly management fee payments to TCA are calculated against 1/12th of targeted annual net revenue amounts set forth in the TCA Management Agreement and then adjusted to actual net revenue amounts realized annually within 60 days of the close of each fiscal year. The annual adjustment may or may not have a material effect on cash flow. As defined in the TCA Management Agreement, "Net Revenues" of the Mohegan Sun Casino means the amount of gross revenues of the facility, less operating expenses and certain specified categories of revenue, such as income from any financing or refinancing, taxes or charges received from patrons on behalf of and remitted to a governmental entity, proceeds from the sale of capital assets, insurance proceeds and interest on the reserve fund. Net revenues include "Net Gaming Revenues", which are equal to the amount of "net win" (the difference between gaming wins and losses) less all gaming related operational expenses. In addition, TCA will be required to establish, and, together with the Mohegan Tribe, make monthly contributions to, a replacement reserve fund (the "Reserve Fund"), which may be used to pay any approved budgeted capital expenditures for the Mohegan Sun Casino. The annual TCA contribution to such fund will total $1.2 million. TERM. The term of the TCA Management Agreement is seven years from the date of the opening of the Mohegan Sun Casino, subject to a one-time option for a buy-out by the Mohegan Tribe on the last day of the 60th month following the first full month of operations (the "Buyout Option"). In order to exercise the Buyout Option, the Mohegan Tribe must fulfill certain obligations, including: (i) fully paying and satisfying certain outstanding indebtedness, including all indebtedness under the Mohegan Senior Notes, the Secured Completion Guarantee Notes and the Mohegan Subordinated Notes and (ii) entering into discussion with TCA to determine the exercise price of the Buyout Option on commercially reasonable terms. PRIORITY PAYMENTS. In connection with its supply of certain operational and financial support to TCA, the Company will receive priority payments of approximately $12 million from TCA. In addition, for certain financial advisory and other services provided to TCA the Company will receive a priority payment from TCA on its investments in the Secured Completion Guarantee Notes equal to the difference between the prime rate as announced by Chase Manhattan Bank plus 1% per annum and 26.5% per annum. Each of these priority payments will be paid from TCA's management fees prior to the pro rata distribution to TCA's partners of TCA's profits. BUSINESS BOARD. Pursuant to the TCA Management Agreement, certain decision-making authority and oversight duties are delegated to a committee comprised of an equal number of representatives of the Mohegan Tribe and of TCA (the "Business Board"). Actions by the Business Board require the unanimous approval of its members or their respective designees. The Mohegan Tribe and TCA have agreed that, in the event that the Business Board is unable to reach a mutual decision or compromise, any disputes will be submitted to summary arbitration before a single arbitrator, who will render a decision within 48 hours of submission of the dispute. WAIVER OF SOVEREIGN IMMUNITY. Pursuant to the TCA Management Agreement, the Mohegan Tribe has waived sovereign immunity for the purpose of permitting, compelling or enforcing arbitration and has agreed to be sued by TCA in any court of competent jurisdiction for the purpose of compelling arbitration or enforcing any arbitration or judicial award arising out of the TCA Management Agreement, the Secured Completion Guarantee, the Secured Completion Guarantee Notes and the Mohegan Subordinated Notes. The parties have agreed that all disputes and claims arising out of the TCA Management Agreement or the Mohegan Tribe's gaming ordinance will be submitted to binding arbitration, which shall be the sole remedy of the parties, and that punitive damages may not be awarded to either party by any arbitrator. The Mohegan Tribe's waiver of sovereign immunity is limited to enforcement of money damages from undistributed or future net revenues of the Mohegan Sun Casino (or, under certain conditions, net revenues of other gaming operations of the Mohegan Tribe). Funds earned and paid to the Mohegan Tribe as the Mohegan Tribe's share of net revenues prior to any judgment or award are not subject to the waiver and would not be available for levy pursuant to any judgment or award. GAMING DISPUTES COURT. The Mohegan Tribe's Constitution (the "Mohegan Constitution") provides for the governance of the Mohegan Tribe by a tribal council, in which the legislative and executive powers of the Mohegan Tribe are vested, and a constitutional review board. On July 20, 1995, the tribal council enacted 60 a tribal ordinance creating the Gaming Disputes Court (the "Court"), which is composed of a trial and an appellate branch. The Mohegan Constitution and the tribal ordinance establishing the Court give the Court exclusive jurisdiction for the Mohegan Tribe over all disputes and controversies related to gaming between any person or entity and the Mohegan Gaming Authority, the Mohegan Tribe or TCA. The Court has been authorized by the Mohegan Constitution to consist of at least four judges, none of whom may be members of the Mohegan Tribe and each of whom must be either a retired federal judge or Connecticut Attorney Trial Referee (who is an attorney appointed by the Connecticut Supreme Court). ENVIRONMENTAL MATTERS The Company is subject to federal, state and local laws and regulations that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water as well as handling and disposal practices for solid and hazardous wastes, and (ii) impose liability for the costs of cleaning up, and certain damages resulting from, past spills, disposals or other releases of hazardous substances (together, "Environmental Laws"). From time to time, the Company's operations have resulted or may result in certain noncompliance with applicable Environmental Laws. However, the Company believes that any such noncompliance would not have a material adverse effect on the Company's results of operations. The Mohegan Sun Casino site was formerly occupied by UNC, a naval products manufacturer of, among other things, nuclear reactor fuel components. UNC's facility was officially decommissioned on June 8, 1994, when the NRC confirmed that all licensable quantities of SNM had been removed from the Mohegan Sun Casino site and that any residual SNM contamination was remediated in accordance with the NRC-approved decommissioning plan. From 1991 through 1993, UNC commissioned an environmental consultant to perform a series of environmental assessments on the Mohegan Sun Casino site, including extensive soil investigations and groundwater monitoring. The environmental assessments detected among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. Extensive remediation of contaminated soils and additional investigations were then completed. Although the Mohegan Sun Casino site currently meets applicable remediation requirements, no assurance can be given that the various environmental assessments with respect to the Mohegan Sun Casino site revealed all existing environmental conditions, that any prior owners or tenants of the Mohegan Sun Casino site did not create any material environmental condition not known to the Mohegan Gaming Authority, that future laws, ordinances or regulations will not impose any material environmental liability or that a material environmental condition does not otherwise exist on the Mohegan Sun Casino site. Future remediation may be necessary if excavation and construction exposes contaminated soil which has otherwise been deemed isolated and not subject to cleanup requirements. Such remediation could adversely impact the results of operations of the Mohegan Sun Casino and therefore the results of operations and financial conditions of the Company. In addition, the EPA has named a predecessor to SINA as a potentially responsible party ("PRP") under CERCLA for the cleanup of contamination resulting from past disposals of hazardous waste at the Bay Drum site in Florida, to which the predecessor, among others, sent waste in the past. CERCLA requires PRPs to pay for cleanup of sites at which there has been a release or threatened release of hazardous substances. Courts have interpreted CERCLA to impose strict, joint and several liability upon all persons liable for cleanup costs. As a practical matter, however, at sites where there are multiple PRPs, the costs of cleanup typically are allocated among the parties according to a volumetric or other standard. Because the Company has only limited information at this time regarding this site and the wastes sent to it by the predecessor, the Company is unable to determine the extent of its potential liability, if any, at this site. EXISTING REVOLVING CREDIT FACILITY Under the Existing Revolving Credit Facility among Sun Bahamas (as borrower), Sun International and certain subsidiaries of Sun Bahamas (as guarantors), Standard Bank London, Limited, Absa Bank Limited, Nedcor Bank Limited and Henry Ansbacher & Co. Limited (as lenders) and The Bank of Nova Scotia and The Royal Bank of Scotland plc (as managing agents and lenders), the lenders have committed to provide revolving loans of up to $250 million, PROVIDED that various borrowing conditions and covenant restrictions in 61 the Existing Revolving Credit Facility may limit Sun Bahamas' ability to borrow under the Existing Revolving Credit Facility. The proceeds of loans made under the Existing Revolving Credit Facility may be used by Sun Bahamas, Sun International and the Restricted Subsidiaries (as defined below) (i) for the Paradise Island Expansion, (ii) for general corporate purposes and (iii) to make certain investments. The Restricted Subsidiaries include the existing direct and indirect subsidiaries of Sun International, other than (i) Sun Bahamas and (ii) the subsidiary which holds the Pirate's Cove Hotel. The subsidiaries which hold the Atlantic City assets of SINA are not Restricted Subsidiaries. Future subsidiaries may be Restricted Subsidiaries or unrestricted subsidiaries, at Sun International's election. The Existing Revolving Credit Facility is guaranteed by the Company and each of the Restricted Subsidiaries, and is secured by substantially all the assets of Sun Bahamas and each of the guarantors. The Existing Revolving Credit Facility also contains limitations on the ability of the Company, Sun Bahamas and the Restricted Subsidiaries to, among other things, (i) incur or guarantee indebtedness, (ii) make investments in any third parties or unrestricted subsidiaries of the Company or (iii) acquire any additional real property or improvements, other than "Permitted Investments" that consist of the foregoing (but limited to advances and investments in entities engaged in the hotel, resort or gaming industries) in an amount which prior to the completion of the Paradise Island Expansion shall not exceed the "Permitted Investment Amount". The Permitted Investment Amount is initially $125 million, subject to adjustment. The Company is currently engaged in discussions with The Bank of Nova Scotia and Societe Generale USA to increase the size of the Existing Revolving Credit Facility to $375 million and make additional amendments thereto. These amendments are expected to include lower interest rates and provide the Company with more flexibility than the Existing Revolving Credit Facility. 62 MANAGEMENT DIRECTORS AND OFFICERS The current directors of the Company are:
COUNTRY OF NAME CITIZENSHIP DIRECTOR SINCE - ---------------------------------------------------------------------------- --------------------- --------------- Derek Hawton................................................................ South Africa 1993 Solomon Kerzner............................................................. South Africa 1993 Peter Buckley............................................................... United Kingdom 1994 Howard Marks................................................................ United States 1994 Eric Siegel................................................................. United States 1994
Pursuant to the Company's Articles of Association, as amended, the maximum number of directors of the Company is fixed at five. The current directors of the Company will hold office until the date of the annual general meeting to be held in 1997. At the annual general meeting to be held in 1997, and at each subsequent annual general meeting, directors will be appointed by resolution of the holders of Ordinary Shares to hold office until the date of the next annual general meeting. The current executive officers of the Company are:
NAME AGE EXECUTIVE OFFICER SINCE - ------------------------------------------------------------------------------------- --- ----------------------- Solomon Kerzner Chairman and Chief Executive Officer................................................ 61 1993 Howard B. Kerzner President........................................................................... 33 1995 Charles D. Adamo Executive Vice President--Corporate Development & General Counsel................... 36 1995 John R. Allison Executive Vice President--Chief Financial Officer................................... 50 1994 James Boocher Executive Vice President--Project Development....................................... 41 1996 Kevin DeSanctis Chief Operating Officer--North America & Caribbean.................................. 44 1995 Peter J. Venison Chief Operating Officer--Europe & Indian Ocean...................................... 54 1995
The backgrounds of each of the directors and the executive officers of the Company are described below: Solomon Kerzner, 61--Chairman and Chief Executive Officer. Mr. Kerzner has been the Chairman and Chief Executive Officer of Sun International since October 1993 and from October 1993 to June 1996 was President. Mr. Kerzner is the Chairman of SIIL, the Company's controlling shareholder, and of WLG, which owns an indirect interest in SIIL. Mr. Kerzner is one of the visionary leaders of the resort and gaming industries. Prior to founding Sun International, Mr. Kerzner pioneered the concept of an entertainment and gaming destination resort designed and managed to appeal to multiple market segments by developing Sun City. Located approximately 100 miles northwest of Johannesburg, South Africa, Sun City has been expanded in phases since its opening in 1979. The resort has been designed to cater to a broad public market by combining gaming with a wide variety of nongaming entertainment experiences. Today, Sun City covers approximately 620 acres and attracts over two million visitors annually. The facilities at Sun City include four hotels with approximately 1,300 rooms, an entertainment center that includes a 6,000-seat indoor superbowl, a 46-acre man-made lake for watersports and approximately 55,000 square feet of gaming space. In 1992, Sun City was expanded to include The Lost City, a $275 million themed resort which recreates a forgotten African civilization that has been rediscovered. The Lost City covers approximately 60 acres and its center includes The Palace, a 350-room luxury hotel. The resort also includes a man-made jungle in which over one million trees were transplanted and the Valley of the Waves, which includes a wave pool, adventure rides and 63 sand beaches. During Mr. Kerzner's 30-year career he has been responsible for the development of 21 hotels with over 5,500 rooms, and was the founder of the largest hotel chain in southern Africa. The Company does not have any interest in any of the southern African properties developed by Mr. Kerzner. Howard B. Kerzner, 33--President. Mr. Kerzner joined Sun International in May 1995 as Executive Vice President--Corporate Development and has been President of the Company since June 1996. Prior to that time, he was Director--Corporate Development of SIIL from September 1992. Previously Mr. Kerzner was an Associate of Lazard Freres & Co. LLC from September 1991. Prior to that Mr. Kerzner worked for the First Boston Corporation. Mr. Kerzner is the son of Mr. Solomon Kerzner. Charles D. Adamo, 36--Executive Vice President--Corporate Development & General Counsel. Mr. Adamo joined Sun International in May 1995 as General Counsel and has been responsible for corporate development since January 1997. Prior to that time, he was Group Legal Advisor of SIIL from September 1994. Previously, Mr. Adamo was engaged in the practice of law at the firm of Cravath, Swaine & Moore in New York from 1986. Mr. Adamo is admitted to the bar in the State of New York. John R. Allison, 50--Executive Vice President--Chief Financial Officer. Mr. Allison joined Sun International in May 1995 as Chief Financial Officer. Mr. Allison joined SIIL in March 1994 as Group Financial Director. From December 1987 until February 1994, Mr. Allison was Chief Financial Officer-- South African Operations of Sun International Inc. ("SII"), a resort and management holding company with interests in approximately 27 hotels in southern Africa. Prior to that time, he was the Group Financial Director of Kimberly-Clark (South Africa) Limited for four years. He is a fellow of the Institute of Chartered Accountants in England and Wales and a member of the South African Institute of Chartered Accountants. James Boocher, 41--Executive Vice President--Project Development. Mr. Boocher joined Sun International in November of 1996. He is the executive in charge of Sun International's expansion on Paradise Island. Before joining Sun International, Mr. Boocher was President of Ellis-Don Construction Ltd., Canada's second largest construction company. Prior to joining Ellis-Don, Mr. Boocher was a construction Director for Olympia and York Development. He was involved in projects in the World Financial Center, New York, Canary Wharf, London, England and two office buildings in Dallas, Texas. Mr. Boocher attended Ball State University. Peter Buckley, 54--Director. Mr. Buckley has been a Director of Sun International since April 1994. Mr. Buckley is Chairman and Chief Executive Officer of Caledonia. In 1994 he was appointed Chairman of Caledonia having been Deputy Chairman and Chief Executive since 1987. He is also Chairman of Amber Holdings plc and Sterling Industries plc--both listed companies associated with Caledonia--as well as being Chairman of British Air Transport (Holdings) Ltd., English & Scottish Investors plc and Bristow Helicopter Group Limited. He is a Non-executive Director of Close Brothers Group plc, Exco plc, RHS Enterprises Ltd., Societe Generale de Surveillance Holding S.A.--Geneva, SIIL and The Telegraph plc. Kevin DeSanctis, 44--Chief Operating Officer--North America & Caribbean. Mr. DeSanctis joined Sun International in July 1995 as President, Gaming. Prior to joining Sun International, Mr. DeSanctis served as Executive Vice President and Chief Operating Officer of Hemmeter Enterprises since April 1994. From 1991 to 1994, Mr. DeSanctis served as President and Chief Operating Officer of the Trump Plaza Hotel and Casino. From August 1989 to February 1991, Mr. DeSanctis served as Vice President of Casino Operations of The Mirage Hotel and Casino in Las Vegas, Nevada. Prior to August 1989, Mr. DeSanctis served in various positions in the casino industry. D.A. Hawton, 59--Director. Mr. Hawton has been a Director of Sun International since December 1993. Mr. Hawton is Executive Chairman of Safren (among South Africa's 25 largest industrial groups employing 30,000 people). He is also a Director of South African Mutual Life Assurance (South Africa's largest insurance company with assets in excess of $40 billion) and a Director of Standard Bank Investment Corporation (South Africa's largest banking group). Mr. Hawton is a fellow of South Africa's chartered Institute of Secretaries. Howard Marks, 50--Director. Mr. Marks has been a Director of Sun International since April 1994. Mr. Marks is Chairman of Oaktree Capital Management, LLC ("Oaktree Capital"). Oaktree Capital 64 manages funds in excess of $5 billion for institutional investors. Previously Mr. Marks was employed by The TCW Group, Inc. where he became Chief Investment Officer for Domestic Fixed Income and President of its largest affiliate, TCW Asset Management Company. Eric Siegel, 39--Director. Mr. Siegel has been a Director of Sun International since April 1994. Mr. Siegel is a Principal of Pegasus Insurance Partners and a Limited Partner of Apollo Advisors, L.P. ("Apollo")/Lion Advisors, L.P. Apollo invests in debt and equity securities and other instruments of public and private companies. Mr. Siegel is also a Director and member of the executive committee of El Paso Electric Company, a publicly traded utility company. Peter J. Venison, 54--Chief Operating Officer--Europe & Indian Ocean. Mr. Venison joined Sun International in May 1995 as Executive Vice President and President, Europe & Indian Ocean. Prior to that time, he was a Managing Director of SII from May 1990. Before joining SII, Mr. Venison was President of Treadev Limited, a resort development company. STOCK OPTION PLANS The Company has adopted the Company Stock Option Plan (the "Plan") which was approved by the shareholders at the annual general meeting held in 1995. The Plan provides for options to be granted to purchase up to 2,000,000 Ordinary Shares, of which options to acquire 1,745,511 Ordinary Shares at exercise prices ranging from $11.6875 to $50.00 have been granted as of December 31, 1996. The Plan provides for the options to become exercisable, unless otherwise specified by the Board of Directors of the Company and subject to certain acceleration and termination provisions, after two years from the date of grant in respect of 20% of such options and thereafter in installments of 20% per year over a four-year period. The options have a term of 10 years from the date of grant. Employees, officers and directors of the Company and subsidiaries of the Company may be granted options under the Plan. Such options may be transferred to trusts with respect to which any such participants are beneficiaries and corporations or other entities controlled by such participants. PRINCIPAL SHAREHOLDER SIIL, through its ownership of approximately 49% of the outstanding Ordinary Shares, is the principal shareholder of the Company. WLG, a company controlled by a trust for the benefit of the family of Mr. Solomon Kerzner, Chairman of the Board of Directors and Chief Executive Officer of the Company, indirectly controls through intermediate entities approximately one-third of the outstanding ordinary shares of SIIL. Peter Buckley, a director of the Company and SIIL, is also chairman and chief executive officer of Caledonia, an English corporation, which indirectly owns through intermediate entities approximately one-third of the outstanding ordinary shares of SIIL. Derek Hawton, a director of the Company and SIIL, is also chairman and chief executive officer of Safren, a South African corporation, which indirectly controls through intermediate entities approximately one-third of the outstanding ordinary shares of SIIL. SIIL has agreed with the Bahamian Government, among other things, to maintain voting power in the Company of not less than 45% until six months after the completion of the Paradise Island Expansion and thereafter to control a majority of the Board of Directors of the Company for an additional five years. Ownership participation in SIIL is governed by a Subscription and Shareholders' Agreement. Rosegrove Limited ("Rosegrove") owns approximately two-thirds of the outstanding equity of SIIL and World Leisure Investments Limited, a Bermuda corporation ("WLI"), owns the remaining shares. WLI is owned by WLG, which is owned by a trust for the benefit of the Kerzner family. Rosegrove is owned indirectly and equally by Safren and Caledonia. Caledonia is a diversified trading and investment company listed on the London Stock Exchange. Safren is an industrial conglomerate whose interests span shipping, warehousing, travel services, casino resorts and retailing. Safren is listed on the Johannesburg Stock Exchange. Currently, the officers and directors of the Company, as a group, hold options granted pursuant to the Plan to acquire 1,019,755 Ordinary Shares, less than 4% of which were exercisable as of the date of this Prospectus.
PERCENT OF CLASS OF SHARES OWNER AMOUNT OWNED CLASS - ----------------------------------------- ------------------------------------- -------------- --------------- Ordinary Shares.......................... SIIL 16,112,380 49% Ordinary Shares.......................... Directors and Officers as a group -- less than 1%
65 THE COMMONWEALTH OF THE BAHAMAS The Commonwealth of The Bahamas had a population of approximately 250,000 in 1994. The Bahamas includes approximately 700 islands, 29 of which are inhabited, and extends from east of the Florida coast to just north of Cuba and Haiti. Over 60% of the population lives on New Providence Island, where Nassau, the capital of The Bahamas, is located. The Bahamas first obtained internal self-government in 1964 and became an independent nation within the British Commonwealth in 1973. The first elections under universal adult suffrage were held in November 1962. The present government was elected in 1992 and succeeded a government that was in power for over 20 years. The next election is scheduled to be held in August 1997. The official language is English. The currency of The Bahamas has been tied to the U.S. dollar since 1970 with an official exchange rate of U.S. $1.00 = 1.00 Bahamian dollar. While The Bahamas continues to be the principal tourist destination in the Caribbean, its tourism industry has been affected by increased competition and the world recession of the early 1990s. In 1994, tourist arrivals were approximately 3.4 million, including 1.8 million cruise ship passengers. The Ministry of Tourism spends over $35 million annually to promote The Bahamas and in recent years the government has made large investments in the expansion of both Nassau Harbor and Nassau International Airport. REPUBLIC OF MAURITIUS The Republic of Mauritius is a small, multi-ethnic, independent country consisting of several islands with a land area of about 720 square miles. The Republic of Mauritius is located in the Indian Ocean and has a population of approximately 1,100,000. The main island, Mauritius, lies approximately 1,200 miles off the east coast of mainland Africa. The other islands are Rodrigues Island, the Agalega Islands and the Cargados Carajos Shoals. The climate is subtropical and generally humid. In 1994, tourist arrivals were approximately 420,000, as compared to approximately 300,000 in 1993. Most residents are bilingual, speaking English and French. Mauritius has been independent since 1968 and a republic since 1991. Presidential elections are held every five years and the next election will be held in 1997. 66 DESCRIPTION OF NOTES GENERAL The Outstanding Notes were issued and the Exchange Notes are issuable under an indenture dated as of March 10, 1997 (the "Indenture"), between the Issuers, the Guarantors, and The Bank of New York, as trustee (the "Trustee"), a copy of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Upon the effectiveness of the Registration Statement of which this Prospectus is a part, the Indenture will be subject to and governed by the Trust Indenture Act of 1939, as amended. The terms of the Exchange Notes are identical in all material respects to the terms of the Outstanding Notes except that the Exchange Notes have been registered under the Securities Act and are issued free from any covenant regarding registration and except that, if the Exchange Offer is not consummated by , 1997, the interest rate borne by the Outstanding Notes will increase 0.5% per annum every 90 days until the Exchange Offer is consummated (up to a maximum amount of 2.0% per annum). The Exchange Notes and the Outstanding Notes are treated as one series of Notes under the Indenture and holders thereof are entitled to the benefit of the Indenture. Accordingly, unless specifically stated to the contrary, the following description applies equally to all Notes. The following summaries of certain material provisions of the Indenture do not purport to be complete, and where reference is made to particular provisions of the Indenture, such provisions, including the definitions of certain terms, are incorporated by reference as a part of such summaries or terms, which are qualified in their entirety by such reference. The definitions of certain capitalized terms used in the following summary are set forth below under "--Certain Definitions". Section references herein are to sections of the Indenture. The Notes will be senior subordinated, unsecured, general obligations of the Issuers, limited in aggregate principal amount to $200 million. The Notes will be subordinate in right of payment to certain other debt obligations of the Issuers. The Notes will be jointly and severally irrevocably and unconditionally guaranteed on a senior subordinated basis by each of the Issuers' respective present and future Subsidiaries (the Guarantors). The obligations of each Guarantor under its guarantee, however, will be limited in a manner intended to avoid it being deemed a fraudulent conveyance under applicable law. See "--Certain Bankruptcy Limitations" below. The term "Subsidiaries" as used herein, however, does not include Unrestricted Subsidiaries. The Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and integral multiples thereof. PRINCIPAL, MATURITY AND INTEREST The Notes will mature on March 15, 2007. The Notes will bear interest at the rate per annum stated on the cover page hereof from the date of issuance or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually in arrears on March 15 and September 15 of each year, commencing , to the persons in whose names such Notes are registered at the close of business on the March 1 or September 1 immediately preceding such Interest Payment Date. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes will be payable, and the Notes may be presented for registration of transfer or exchange, at the office or agency of the Issuers maintained for such purpose, which office or agency shall be maintained in the Borough of Manhattan, The City of New York. At the option of the Issuers, payment of interest may be made by check mailed to the Holders of the Notes at the addresses set forth upon the registry books of the Issuers; PROVIDED, that all payments with respect to Global Notes, and Certificated Securities the holders of which have given wire transfer instructions to the Issuers and the paying agent, will be required to be made by wire transfer of immediately available funds to the accounts specified by the holders thereof. No service charge will be made for any registration of transfer or exchange of Notes, but the Issuers may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Until otherwise designated by the Issuers, the Issuers' office or agency will be the corporate trust office of the Issuers presently located at the office of the Trustee in the Borough of Manhattan, The City of New York. SUBORDINATION The Notes and the Guarantees will be general, unsecured obligations of the Issuers and the Guarantors, respectively, subordinated in right of payment to all Senior Debt of the Issuers and the Guarantors, 67 respectively. On a pro forma basis, as of the date of this Prospectus, after giving effect to the Tender Offer, the issuance of the Outstanding Notes and the application of the proceeds therefrom, Sun International on a consolidated basis has no Senior Debt outstanding. The Indenture provides that no payment of any kind or character from any source may be made by or on behalf of the Issuers or a Guarantor, as applicable, on account of the principal of, premium, if any, or interest or Liquidated Damages or Additional Amounts on the Notes (including any repurchases of Notes and rescission payments), or on account of the redemption provisions of the Notes, for cash or property (other than from the trust described under "--Legal Defeasance and Covenant Defeasance"), (i) upon the maturity of any Senior Debt of the Issuers or such Guarantor by lapse of time, acceleration (unless waived) or otherwise, unless and until all principal of, premium, if any, the interest on and any fee or other amount due in respect of such Senior Debt are first paid in full in cash or Cash Equivalents or otherwise to the extent holders accept satisfaction of amounts due by settlement in other than cash or Cash Equivalents, or (ii) in the event of default in the payment of any principal of, premium, if any, or interest on or any fee or other amount due in respect of Senior Debt of the Issuers or such Guarantor when it becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise (a "Payment Default"), unless and until such Payment Default has been cured or waived or otherwise has ceased to exist. Upon (i) the happening of an event of default (other than a Payment Default) that permits the holders of Senior Debt to declare such Senior Debt to be due and payable and (ii) written notice of such event of default given to the Trustee by the Representative under the Credit Agreement or the holders of an aggregate of at least $25 million principal amount outstanding of any other Senior Debt or their representative (a "Payment Blockage Notice"), then, unless and until such event of default has been cured or waived or otherwise has ceased to exist, no payment (by set-off or otherwise) may be made by or on behalf of the Issuers or any Guarantor which is an obligor under such Senior Debt on account of the principal of, premium, if any, or interest or Liquidated Damages or Additional Amounts on the Notes, including any repurchases of Notes and rescission payments, other than payments made from the trust described under "--Legal Defeasance and Covenant Defeasance"; PROVIDED, HOWEVER, that so long as the Credit Agreement is in effect, a Payment Blockage Notice may only be given by the Representative under the Credit Agreement unless otherwise agreed in writing by the requisite lenders under the Credit Agreement. Notwithstanding the foregoing, unless the Senior Debt in respect of which such event of default exists has been declared due and payable in its entirety within 179 days after the Payment Blockage Notice is delivered as set forth above (the "Payment Blockage Period") (and such declaration has not been rescinded or waived), at the end of the Payment Blockage Period, the Issuers and the Guarantors shall be required to pay all sums not paid to the Holders of the Notes during the Payment Blockage Period due to the foregoing prohibitions and to resume all other payments as and when due on the Notes. Any number of Payment Blockage Notices may be given; PROVIDED, HOWEVER, that (i) not more than one Payment Blockage Notice shall be given within a period of any 360 consecutive days, and (ii) no default that existed upon the date of such Payment Blockage Notice or the commencement of such Payment Blockage Period (whether or not such event of default is on the same issue of Senior Debt) shall be made the basis for the commencement of any other Payment Blockage Period, unless such event of default shall have been cured or waived for a period of not less than 90 days. Upon any distribution of assets of either Issuer or any Guarantor upon any dissolution, winding up, total or partial liquidation or reorganization of either Issuer or a Guarantor, whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar proceeding or upon assignment for the benefit of creditors or any marshalling of assets or liabilities, (i) the holders of all Senior Debt of such Issuer or such Guarantor, as applicable, will first be entitled to receive payment in full in cash or Cash Equivalents or otherwise to the extent holders accept satisfaction of amounts due by settlement in other than cash or Cash Equivalents before the Holders are entitled to receive any payment on account of principal of, premium, if any, and interest and Liquidated Damages or Additional Amounts on the Notes, including any repurchases of Notes and rescission payments, other than Junior Securities or from the trust described under "--Legal Defeasance and Covenant Defeasance", and (ii) any payment or distribution of assets of such Issuer or such Guarantor of any kind or character from any source, whether in cash, property or securities, other than Junior Securities or from the trust described under "--Legal Defeasance and Covenant Defeasance", to which the Holders or the Trustee on behalf of the Holders would be entitled (by set-off or otherwise), except 68 for the subordination provisions contained in the Indenture, will be paid by the liquidating trustee or agent or other person making such a payment or distribution directly to the holders of such Senior Debt or their representative to the extent necessary to make payment in full in cash or Cash Equivalents on all such Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. In the event that, notwithstanding the foregoing, any payment or distribution of assets (other than, where applicable, Junior Securities or from the trust described under "--Legal Defeasance and Covenant Defeasance") shall be received by the Trustee or the Holders at a time when such payment or distribution is prohibited by the foregoing provisions, such payment or distribution shall be held in trust for the benefit of the holders of such Senior Debt, and shall be paid or delivered by the Trustee or such Holders, as the case may be, to the holders of such Senior Debt remaining unpaid or unprovided for or to their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Debt may have been issued, ratably according to the aggregate principal amounts remaining unpaid on account of such Senior Debt held or represented by each, for application to the payment of all such Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt in full in cash or Cash Equivalents or otherwise to the extent holders accept satisfaction of amounts due by settlement in other than cash or Cash Equivalents after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. No provision contained in the Indenture or the Notes will affect the obligation of the Issuers and the Guarantors, which is absolute and unconditional, to pay, when due, principal of, premium, if any, and interest and Liquidated Damages on the Notes. The subordination provisions of the Indenture and the Notes will not prevent the occurrence of any Default or Event of Default under the Indenture or limit the rights of the Trustee or any Holder to pursue any other rights or remedies with respect to the Notes. As a result of these subordination provisions, in the event of the liquidation, bankruptcy, reorganization, insolvency, receivership or similar proceeding or an assignment for the benefit of the creditors of the Issuers or a marshalling of assets or liabilities of the Issuers, Holders of the Notes may receive ratably less than other creditors. The Indenture will limit, subject to certain financial tests, the amount of additional Indebtedness, including Senior Debt, that the Issuers and their Subsidiaries can incur. See "Certain Covenants--Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock". CERTAIN BANKRUPTCY LIMITATIONS Each Issuer is a holding company, conducting all its business through Subsidiaries, which have guaranteed or will guarantee the Issuers' obligations with respect to the Notes, and Unrestricted Subsidiaries. Holders of the Notes will be direct creditors of each Guarantor by virtue of its guarantee. Nonetheless, in the event of the bankruptcy or financial difficulty of a Guarantor, such Guarantor's obligations under its guarantee may be subject to review and avoidance under state, federal and foreign fraudulent transfer laws. Among other things, such obligations may be avoided if a court concludes that such obligations were incurred for less than reasonably equivalent value or fair consideration at a time when the Guarantor was insolvent, was rendered insolvent, or was left with inadequate capital to conduct its business. A court would likely conclude that a Guarantor did not receive reasonably equivalent value or fair consideration to the extent that the aggregate amount of its liability on its guarantee exceeds the economic benefits it received in the issuance of Outstanding Notes and the Exchange Offer. The obligations of each Guarantor under its guarantee will be limited in a manner intended to cause it not to be a fraudulent conveyance under applicable law, although no assurance can be given that a court would give the Holder the benefit of such provision. See "Risk Factors--Fraudulent Transfer Considerations." If the obligations of a Guarantor under its guarantee were avoided, Holders of Notes would have to look to the assets of any remaining Guarantors for payment. There can be no assurance in that event that such assets would suffice to pay the outstanding principal and interest on the Notes. OPTIONAL REDEMPTION The Issuers will not have the right to redeem any Notes prior to March 15, 2002 (other than out of the Net Cash Proceeds of a Public Equity Offering, as described in the next following paragraph, or pursuant to a Required Regulatory Redemption or an Optional Tax Redemption). The Notes will be redeemable for cash 69 at the option of the Issuers, in whole or in part, at any time on or after March 15, 2002, upon not less than 30 days' nor more than 60 days' notice to each Holder of Notes, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the 12-month period commencing March 15 of the years indicated below, in each case (subject to the right of Holders of record on a Record Date to receive interest due on an Interest Payment Date that is on or prior to such Redemption Date) together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the Redemption Date:
YEAR PERCENTAGE - ---------------------- ----------- 2002.................. 104.500% 2003.................. 103.000% 2004.................. 101.500% 2005 and thereafter... 100.000%
On or prior to March 15, 2000, upon a Public Equity Offering of Ordinary Shares for cash of Sun International, up to $70 million aggregate principal amount of the Notes may be redeemed at the option of the Issuers within 120 days of such Public Equity Offering, on not less than 30 days, but not more than 60 days, notice to each Holder of the Notes to be redeemed, with cash from the Net Cash Proceeds of such Public Equity Offering, at 109% of the principal amount thereof (subject to the right of Holders of record on a Record Date to receive interest due on an Interest Payment Date that is on or prior to such Redemption Date), together with accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption; PROVIDED, HOWEVER, that immediately following each such redemption not less than $130 million aggregate principal amount of the Notes are outstanding. REQUIRED REGULATORY REDEMPTION If a Holder or a beneficial owner of a Note is required by any regulatory body responsible for a gaming license held by Sun International or a Subsidiary of Sun International (a "Gaming Authority") to be found suitable to hold the Notes, the Holder shall apply for a finding of suitability within 30 days after a Gaming Authority requests or sooner if so required by such Gaming Authority. The applicant for a finding of suitability must pay all costs of the investigation for such finding of suitability. If a Holder or beneficial owner is required to be found suitable to hold the Notes and is not found suitable by a Gaming Authority, the Holder shall, to the extent required by applicable law, dispose of his Notes within 30 days or within that time prescribed by a Gaming Authority, whichever is earlier. If the Holder fails to dispose of its Notes within such time period, the Issuers may, at their option, redeem the Holder's Notes (a "Required Regulatory Redemption") at, depending on applicable law, (i) the principal amount thereof, together with accrued and unpaid interest and Liquidated Damages, if any, to the date of the finding of unsuitability by a Gaming Authority, (ii) the amount that such Holder paid for the Notes, (iii) the fair market value of the Notes, (iv) the lowest of clauses (i), (ii) and (iii), or (v) such other amount as may be determined by the appropriate Gaming Authority. PAYMENT OF ADDITIONAL AMOUNTS The Issuers will, subject to certain limitations and exceptions (as set forth below), pay to each Holder such amounts (the "Additional Amounts") as may be necessary in order that every net payment or deemed payment of (i) principal, premium, Liquidated Damages and interest, if any, with respect to a Note, or (ii) net proceeds on the sale or exchange of a Note, each after deduction or withholding for or on account of any taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the government of The Bahamas or any authority thereof or therein having power to tax, will result in the receipt by the Holders of the amounts that would have been received by them had no such deduction or withholding been required; PROVIDED, HOWEVER, that no such Additional Amounts shall be payable in respect of any Note for: (1) any tax, duty, assessment, or other governmental charge which would not have been imposed but for the fact that such Holder: 70 (a) is a resident, domiciliary or national of, or engaged in business or maintains a permanent establishment or was physically present in, The Bahamas or any political subdivision thereof or therein or otherwise has some connection with The Bahamas other than the mere ownership of, or receipt of payment under, such Note; (b) presented such Note for payment in The Bahamas or any political subdivision thereof or therein, unless such Note could not have been presented for payment elsewhere; or (c) presented such Note for payment more than 30 days after the date on which the payment in respect of such Note became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Note for payment on any day within such period of 30 days; (2) any estate, inheritance, gift, sales, transfer, or similar tax, assessment or other governmental charge or any taxes, duties, assessments or other governmental charges that are payable otherwise than by deduction or withholding from payments on the Notes; (3) any tax, duty, assessment, or other governmental charge imposed on a Holder that is not the beneficial owner of a Note to the extent that the beneficial owner would not have been entitled to the payment of Additional Amounts had the beneficial owner directly held the Note; or (4) any combination of items (1), (2) and (3). Whenever there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Note or the net proceeds received on the sale or exchange of any Note, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the Indenture. Without limiting a Holder's right to receive payment of Additional Amounts, in the event that Additional Amounts actually paid with respect to the Notes are based on rates of deduction or withholding of Bahamian taxes in excess of the appropriate rate applicable to the Holder of such Notes and, as a result thereof, such Holder of Notes is entitled to make a claim for a refund or credit of such excess, then such Holder of Notes shall, by accepting the Notes and receiving a payment of Additional Amounts, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to the Issuers. By making such assignment, the Holder of Notes makes no representation or warranty that the Issuers will be entitled to receive such claim for a refund or credit and incurs no other obligation with respect thereto. OPTIONAL TAX REDEMPTION The Notes may be redeemed at the option of the Issuers, in whole but not in part, upon not less than 30 nor more than 60 days' notice given as provided in the Indenture, at any time at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated Damages, if any, to the date fixed for redemption if, as a result of any change in or amendment to the laws, treaties, rulings or regulations of The Bahamas, or of any political subdivision or taxing authority thereof or therein, or any change in the official position of the applicable taxing authority regarding the application or interpretation of such laws, treaties, rulings or regulations (including a holding judgment or order of a court of competent jurisdiction) or any execution thereof or amendment thereto, which is enacted into law or otherwise becomes effective after the date of this Prospectus, either Issuer is or would be required on the next succeeding interest payment date to pay Additional Amounts on the Notes as a result of the imposition of a Bahamian withholding tax and the payment of such Additional Amounts cannot be avoided by the use of any reasonable measures available to the Issuers which do not cause the Issuers to incur any material costs. The Issuers shall also pay to holders on the redemption date any Additional Amounts then due and which will become due as a result of the redemption or would otherwise be payable. Prior to the publication of any notice of redemption in accordance with the foregoing, the Issuers shall deliver to the Trustee an officer's certificate stating that (i) the payment of Additional Amounts cannot be avoided by the use of any reasonable measures available to the Issuers which do not cause the Issuers to 71 incur any material costs and (ii) the Issuers are entitled to effect such redemption based on the written, substantially unqualified opinion of counsel, which counsel shall be reasonably acceptable to the Trustee, that the Issuers have or will become obligated to pay Additional Amounts as a result of such change or amendment. The notice, once delivered by the Issuers to the Trustee, will be irrevocable. SELECTION AND NOTICE In the case of a partial redemption (other than a Required Regulatory Redemption), the Trustee shall select the Notes or portions thereof for redemption on a PRO RATA basis, by lot or in such other manner it deems appropriate and fair. The Notes may be redeemed in part in multiples of $1,000 only. The Notes will not have the benefit of any sinking fund. Except as required by a Gaming Authority with respect to a Required Regulatory Redemption, notice of any redemption will be sent, by first class mail, at least 30 days and not more than 60 days prior to the date fixed for redemption to the Holder of each Note to be redeemed to such Holder's last address as then shown upon the registry books of the Registrar. Any notice which relates to a Note to be redeemed in part only must state the portion of the principal amount equal to the unredeemed portion thereof and must state that on and after the date of redemption, upon surrender of such Note, a new Note or Notes in a principal amount equal to the unredeemed portion thereof will be issued. On and after the date of redemption, interest will cease to accrue on the Notes or portions thereof called for redemption, unless the Issuers default in the payment thereof. CERTAIN COVENANTS Set forth below are certain covenants contained in the Indenture. During any period of time that (i) the Notes have Investment Grade Status and (ii) no Default or Event of Default has occurred and is continuing under the Indenture with respect to the Notes, the Issuers and their Subsidiaries will not be subject to the provisions of the Indenture with respect to the Notes described below under "--Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock", "--Limitation on Restricted Payments" and "-- Limitation on Sale of Assets and Subsidiary Stock" (collectively, the "Suspended Covenants"). In the event that the Issuers and their Subsidiaires are not subject to the Suspended Covenants with respect to the Notes for any period of time as a result of the preceding sentence and, subsequently, either of the Rating Agencies withdraws its rating or assigns the Notes a rating below the required Investment Grade Ratings, then the Issuers and their Subsidiaries will thereafter again be subject to the Suspended Covenants for the benefit of the Notes and compliance with the Suspended Covenant with respect to Restricted Payments made after the time of such withdrawal or assignment will be calculated in accordance with the terms of the covenant described below under "--Limitation on Restricted Payments" as if such covenant had been in effect during the entire period of time from the Issue Date with respect to the Notes. REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL The Indenture provides that in the event that a Change of Control Triggering Event has occurred, each Holder of Notes will have the right, at such Holder's option, pursuant to an irrevocable and unconditional offer by the Issuers (the "Change of Control Offer"), to require the Issuers to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date (the "Change of Control Purchase Date") that is no later than 45 Business Days after the occurrence of such Change of Control Triggering Event, at a cash price equal to 101% of the principal amount thereof (the "Change of Control Purchase Price"), together with accrued and unpaid interest and Liquidated Damages, if any, to the Change of Control Purchase Date. The Change of Control Offer shall be made within 20 Business Days following a Change of Control Triggering Event and shall remain open for at least 20 Business Days following its commencement (the "Change of Control Offer Period"). Upon expiration of the Change of Control Offer Period, the Issuers promptly shall purchase all Notes properly tendered in response to the Change of Control Offer. As used herein, a "Change of Control Triggering Event" shall be deemed to occur if either of the Rating Agencies shall downgrade or withdraw their rating of the Notes as a result of or, in any case, within 90 days of, a Change of Control. A "Change of Control" means (i) Sun International ceases to be the "beneficial owner," directly or indirectly, of 100% of the Equity Interests of SINA; (ii) any sale, transfer or other 72 conveyance, whether direct or indirect, of all or substantially all of the assets, on a consolidated basis, of Sun International or SINA, in one transaction or a series of related transactions (in each case other than to a person that is a Permitted Holder); (iii) any merger or consolidation of Sun International with or into any person if, immediately after giving effect to such transaction, any "person" or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other than a Permitted Holder) is or becomes the "beneficial owner", directly or indirectly, of more than 50% of the total voting power in the aggregate normally entitled to vote in the election of directors, managers, or trustees, as applicable, of the surviving entity or entities; (iv) any "person" or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other than a Permitted Holder) is or becomes the "beneficial owner", directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of Capital Stock of Sun International then outstanding normally entitled to vote in elections of directors; (v) during any period of 12 consecutive months after the Issue Date, individuals who at the beginning of any such 12-month period constituted the Board of Directors of Sun International or SINA (together with any new directors whose election by such Board or whose nomination for election by the shareholders of Sun International or SINA, as applicable, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Sun International or SINA then in office; or (vi) the adoption of a plan relating to the liquidation or dissolution of either of the Issuers. On or before the Change of Control Purchase Date, the Issuers will (i) accept for payment Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to pay the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any) of all Notes so tendered and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate listing the Notes or portions thereof being purchased by the Issuers. The Paying Agent promptly will pay the Holders of Notes so accepted an amount equal to the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any), and the Trustee promptly will authenticate and deliver to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be delivered promptly by the Issuers to the Holder thereof. The Issuers publicly will announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. The phrase "all or substantially all" of the assets of Sun International or SINA will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of "all or substantially all" of the assets of Sun International or SINA has occurred. The Issuers' ability to pay such purchase price is, and may in the future be, limited by the terms of the Existing Revolving Credit Facility, as the same may be amended, or other agreements relating to indebtedness that constitute Senior Debt. The occurrence of certain of the events that would constitute a Change of Control may constitute a default under the Existing Revolving Credit Facility, as the same may be amended. Future indebtedness of the Issuers may contain prohibitions of certain events which would constitute a Change of Control or require the Issuers to offer to redeem such indebtedness upon a Change of Control. Moreover, the exercise by the Holders of Notes of their right to require the Issuers to purchase the Notes could cause a default under such future indebtedness, even if the Change of Control itself does not, due to the financial effect of such purchase on the Issuers. Finally, the Issuers' ability to pay cash to Holders of Notes upon a purchase may be limited by the Issuers' then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. Any Change of Control Offer will be made in compliance with any and all applicable laws, rules and regulations, including, if applicable, Regulation 14E under the Exchange Act and the rules thereunder and any and all other applicable Federal and state securities laws. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL STOCK The Indenture provides that, except as set forth below in this covenant, the Issuers and the Guarantors will not, and will not permit any of their Subsidiaries to, individually or collectively, directly or indirectly, 73 issue, assume, guaranty, incur, become directly or indirectly liable with respect to (including as a result of an Acquisition), or otherwise become responsible for, contingently or otherwise (individually and collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital Stock (including Acquired Indebtedness), except Permitted Indebtedness. Notwithstanding the foregoing, if (i) no Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect on a pro forma basis to, such incurrence of Indebtedness or Disqualified Capital Stock and (ii) on the date of such incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of Sun International for the Reference Period immediately preceding the Incurrence Date, after giving effect on a pro forma basis to such incurrence of such Indebtedness or Disqualified Capital Stock and, to the extent set forth in the definition of Consolidated Coverage Ratio, the use of proceeds thereof, would be at least 2.0 to l (the "Debt Incurrence Ratio"), then the Issuers and the Guarantors may incur such Indebtedness or Disqualified Capital Stock. Acquired Indebtedness shall be deemed to have been incurred at the time the person who incurred such Indebtedness becomes a Subsidiary of either of the Issuers (including upon designation of any Unrestricted Subsidiary or other person as a Subsidiary) or is merged with or into or consolidated with either of the Issuers or a Subsidiary of either of the Issuers, as applicable. LIMITATION ON RESTRICTED PAYMENTS The Indenture provides that the Issuers and the Guarantors will not, and will not permit any of their Subsidiaries to, individually or collectively, directly or indirectly, make any Restricted Payment if, after giving effect to such Restricted Payment on a pro forma basis, (i) a Default or an Event of Default shall have occurred and be continuing, (ii) Sun International is not permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio in the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock," or (iii) the aggregate amount of all Restricted Payments made by Sun International and its Subsidiaries, including after giving effect to such proposed Restricted Payment, from and after the Issue Date, would exceed the sum of (a) 50% of the aggregate Consolidated Net Income of Sun International for the period (taken as one accounting period), commencing January 1, 1996 to and including the last day of the fiscal quarter ended immediately prior to the date of each such calculation (or, in the event Consolidated Net Income for such period is a deficit, then minus 100% of such deficit) (not giving any pro forma effect to the Merger for periods prior to its consummation), plus (b) the aggregate Net Cash Proceeds received by Sun International from the sale of its Qualified Capital Stock (other than (i) to a Subsidiary of Sun International and (ii) to the extent applied in connection with a Qualified Exchange) after the Issue Date, plus (c) $50 million. The immediately preceding paragraph, however, will not prohibit (x) a Qualified Exchange, (y) the payment of any dividend on Capital Stock within 60 days after the date of its declaration if such dividend could have been made on the date of such declaration in compliance with the foregoing provisions and (z) the redemption or repurchase of any Capital Stock or Indebtedness of the Issuers or their Subsidiaries (other Capital Stock or Indebtedness held by SIIL, its shareholders or Permitted Holders), if the holder or beneficial owner of such Capital Stock or Indebtedness is required to be found suitable by any Gaming Authority to own or vote any such security and is found unsuitable by any such Gaming Authority to so own or vote such security. The full amount of any Restricted Payment made pursuant to the foregoing clauses (y) and (z) (but not pursuant to clause (x)) of the immediately preceding sentence, however, will be deducted in the calculation of the aggregate amount of Restricted Payments available to be made referred to in clause (iii) of the immediately preceding paragraph. 74 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Indenture provides that the Issuers and Guarantors will not, and will not permit any of their Subsidiaries to, individually or collectively, directly or indirectly, create, assume or suffer to exist any consensual restriction on the ability of any Subsidiary of Sun International, SINA or such Guarantors to pay dividends or make other distributions to or on behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer assets or property to or on behalf of, or make or pay loans or advances to or on behalf of, Sun International, SINA, the Guarantors or any Subsidiary of any of them, or to guaranty the Notes, except (a) restrictions imposed by the Notes or the Indenture, (b) restrictions imposed by applicable law, (c) existing restrictions under specified Indebtedness outstanding on the Issue Date, (d) restrictions under any Acquired Indebtedness not incurred in violation of the Indenture or any agreement relating to any property, asset, or business acquired by Sun International or any of its Subsidiaries, which restrictions in each case existed at the time of acquisition, were not put in place in connection with or in anticipation of such acquisition and are not applicable to any person, other than the person acquired, or to any property, asset or business, other than the property, assets and business so acquired, (e) any such restriction or requirement imposed by Indebtedness incurred under paragraph (a) of the definition of "Permitted Indebtedness", provided such restriction or requirement is no more restrictive than that imposed by the Credit Agreement as of the Issue Date, (f) restrictions with respect solely to a Subsidiary of Sun International imposed pursuant to a binding agreement that has been entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Subsidiary, provided such restrictions apply solely to the Equity Interests or assets of such Subsidiary that are being sold, (g) restrictions on transfer contained in FF&E Indebtedness incurred pursuant to paragraph (c) of the definition of "Permitted Indebtedness", provided such restrictions relate only to the transfer of the property acquired with the proceeds of such FF&E Indebtedness, and (h) in connection with and pursuant to Permitted Refinancings, replacements of restrictions imposed pursuant to clauses (a), (c) or (d) of this paragraph that are not more restrictive than those being replaced and do not apply to any other person or assets than those that would have been covered by the restrictions in the Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary provisions restricting subletting or assignment of any lease, license or contract entered into in the ordinary course of business, consistent with industry practice, nor (b) Liens permitted under the terms of the Indenture shall in and of themselves be considered a restriction on the ability of the applicable Subsidiary to transfer such agreement or assets, as the case may be. LIMITATION ON LAYERING INDEBTEDNESS The Indenture provides that the Issuers and the Guarantors will not, individually or collectively, directly or indirectly, incur, or suffer to exist any Indebtedness that is subordinate in right of payment to any other Indebtedness of either Issuer or any Guarantor unless, by its terms, such Indebtedness is subordinate in right of payment to, or ranks PARI PASSU with, the Notes or the Guarantee, as applicable. LIMITATION ON LIENS SECURING INDEBTEDNESS The Indenture provides that the Issuers and the Guarantors will not, and will not permit any of their Subsidiaries to, individually or collectively, create, incur, assume or suffer to exist any Lien of any kind, other than Permitted Liens, upon any of their respective assets now owned or acquired on or after the date of the Indenture or upon any income or profits therefrom securing any Indebtedness of the Issuers, the Guarantors or any of their Subsidiaries other than Senior Debt, unless the Issuers and Guarantors each provide, and cause their Subsidiaries to provide, concurrently therewith, that the Notes are equally and ratably so secured, provided that, if such Indebtedness is Subordinated Indebtedness, the Lien securing such Subordinated Indebtedness shall be subordinate and junior to the Lien securing the Notes with the same relative priority as such Subordinated Indebtedness shall have with respect to the Notes. LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK The Indenture provides that the Issuers and the Guarantors will not, and will not permit any of their Subsidiaries to, individually or collectively, in one or a series of related transactions, convey, sell, transfer, assign or otherwise dispose of, directly or indirectly, any of its property, business or assets, including by merger or consolidation (in the case of a Guarantor or a Subsidiary of Sun International or SINA), and including any sale or other transfer or issuance of any Equity Interests of any Subsidiary of Sun International or SINA, whether by Sun International, SINA or a Subsidiary of either or through the issuance, sale or transfer of Equity Interests by a Subsidiary of Sun International or SINA, and including any sale and 75 leaseback transaction (an "Asset Sale"), unless (i)(a) within 360 days after the date of such Asset Sale, the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption of the Notes in accordance with the terms of the Indenture or to the repurchase of the Notes pursuant to an irrevocable, unconditional cash offer (the "Asset Sale Offer") to repurchase Notes at a purchase price of 100% of principal amount (the "Asset Sale Offer Price") together with accrued and unpaid interest and Liquidated Damages, if any, to the date of payment, made within 330 days of such Asset Sale or (b) within 330 days following such Asset Sale, the Asset Sale Offer Amount is (1) invested in assets and property (other than notes, bonds, obligation and securities) which in the good faith judgment of the Board will immediately constitute or be a part of a Related Business of Sun International, SINA or such Subsidiary (if it continues to be a Subsidiary) immediately following such investment or (2) used to permanently reduce Senior Debt (provided that in the case of a revolver or similar arrangement that makes credit available, such commitment is so permanently reduced by such amount), (ii) no more than the greater of (A) $20 million or (B) 15% of the total consideration for such Asset Sale or series of related Asset Sales consists of consideration other than cash or Cash Equivalents; PROVIDED HOWEVER, that more than 15% of the total consideration may consist of consideration other than cash or Cash Equivalents if (A) the portion of such consideration that does not consist of cash or Cash Equivalents consists of assets of a type ordinarily used in the operation of a Related Business (including Capital Stock of a person that becomes a wholly owned Subsidiary and that holds such assets) to be used by the Issuers or a Subsidiary in the conduct of a Related Business, (B) the terms of such Asset Sale have been approved by a majority of the members of the Board of Directors of Sun International having no personal stake in such transaction, and (C) if the value of the assets being disposed of by the Issuers or such Subsidiary in such transaction (as determined in good faith by such members of the Board of Directors) is at least $10 million, the Board of Directors of Sun International has received a written opinion of a nationally recognized investment banking firm to the effect that such Asset Sale is fair, from a financial point of view, to Sun International and Sun International has delivered a copy of such opinion to the Trustee, (iii) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect, on a pro forma basis, to, such Asset Sale, and (iv) if the value of the assets disposed of is at least $5 million, the Board of Directors of Sun International determines in good faith that Sun International or such Subsidiary, as applicable, receives fair market value for such Asset Sale (as evidenced by a resolution of the Board of Directors). The Indenture provides that an acquisition of Notes pursuant to an Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set forth in (i) above (the "Excess Proceeds") exceeds $20 million and that each Asset Sale Offer shall remain open for 20 Business Days following its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset Sale Offer Period, the Issuers shall apply the Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and Liquidated Damages, if any, to the purchase of all Notes properly tendered (on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to purchase all Notes so tendered) at the Asset Sale Offer Price (together with accrued and unpaid interest and Liquidated Damages, if any). To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount, the Issuers may use any remaining Net Cash Proceeds for general corporate purposes as otherwise permitted by the Indenture and following the consummation each Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For purposes of (ii) above, total consideration received means the total consideration received for such Asset Sales minus the amount of (a) Senior Debt assumed by a transferee which assumption permanently reduces the amount of Indebtedness outstanding on the Issue Date or permitted pursuant to clause (a) or (c) of the definition of Permitted Indebtedness (including that in the case of a revolver or similar arrangement that makes credit available, such commitment is so reduced by such amount), (b) FF&E Indebtedness secured solely by the assets sold and assumed by a transferee and (c) property that within 30 days of such Asset Sale is converted into Cash or Cash Equivalents. Notwithstanding the foregoing provisions of the prior paragraph: (i) Sun International and its Subsidiaries may, in the ordinary course of business, convey, sell, transfer, assign or otherwise dispose of inventory acquired and held for resale in the ordinary course of business; 76 (ii) Sun International and its Subsidiaries may convey, sell, transfer, assign or otherwise dispose of assets pursuant to and in accordance with the provisions of the covenant "Limitation on Merger, Sale or Consolidation"; (iii) Sun International and its Subsidiaries may sell or dispose of damaged, worn out or other obsolete property in the ordinary course of business so long as such property is no longer necessary for the proper conduct of the business of Sun International or such Subsidiary, as applicable; (iv) the Issuers and the Subsidiaries may convey, sell, transfer, assign or otherwise dispose of assets to any Issuer or any of their wholly owned Guarantors; and (v) the Issuers may sell their Equity Interests in Sun France and certain non-strategic real estate on Paradise Island and in Atlantic City. All Net Cash Proceeds from an Event of Loss shall be invested, used for prepayment of Senior Debt, or used to repurchase Notes, all within the period and as otherwise provided above in clauses (i)(a) or (i)(b) of the first paragraph of this covenant. In addition to the foregoing, Sun International will not, and will not permit any Subsidiary to, directly or indirectly make any Asset Sale of any of the Equity Interests of any Subsidiary except (i) pursuant to an Asset Sale of all the Equity Interests of such Subsidiary or (ii) pursuant to an Asset Sale of common stock with no preferences or special rights or privileges and with no redemption or prepayment provisions, PROVIDED that after such sale the Issuers or their Subsidiaries own at least 50.1% of the voting and economic interests of the Capital Stock of such Subsidiary. Any Asset Sale Offer shall be made in compliance with all applicable laws, rules, and regulations, including, if applicable, Regulation 14E of the Exchange Act and the rules and regulations thereunder and all other applicable Federal and state securities laws. LIMITATION ON TRANSACTIONS WITH AFFILIATES The Indenture provides that none of the Issuers or any of their Subsidiaries will be permitted on or after the Issue Date to enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (an "Affiliate Transaction"), or any series of related Affiliate Transactions (other than Exempted Affiliate Transactions) (i) unless it is determined that the terms of such Affiliate Transaction are fair and reasonable to Sun International or such Subsidiary, as applicable, and no less favorable to Sun International or such Subsidiary, as applicable, than could have been obtained in an arm's length transaction with a non-Affiliate and (ii) if involving consideration to either party in excess of $2 million, unless such Affiliate Transaction(s) has been approved by a majority of the members of the Board of Directors that are disinterested in such transaction and (iii) if involving consideration to either party in excess of $15 million, unless in addition to the foregoing Sun International, prior to the consummation thereof, obtains a written favorable opinion as to the fairness of such transaction to Sun International from a financial point of view from an independent investment banking firm of national reputation. LIMITATION ON PAYMENTS FOR CONSENT The Indenture provides that none of the Issuers or any of their Subsidiaries or Unrestricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all Holders of the Notes which so consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement, which solicitation documents must be mailed to all Holders of the Notes prior to the expiration of the solicitation. LIMITATION ON MERGER, SALE OR CONSOLIDATION The Indenture provides that neither of the Issuers will, directly or indirectly, consolidate with or merge with or into another person or sell, lease, convey or transfer all or substantially all of its assets (computed as to each Issuer on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person or group of affiliated Persons or adopt a Plan of Liquidation, unless (i) either (a) Sun International or SINA, as applicable, is the resulting surviving or transferee entity (the "Successor Company") or (b) the Successor Company or, in the case of a Plan of Liquidation, the entity which receives the 77 greatest value from such Plan of Liquidation is a corporation organized under the laws of the Commonwealth of the Bahamas (in the case of Sun International only) or the United States, any state thereof or the District of Columbia and expressly assumes by supplemental indenture all of the obligations of Sun International or SINA, as applicable, in connection with the Notes and the Indenture; (ii) no Default or Event of Default shall exist or shall occur immediately after giving effect on a pro forma basis to such transaction; (iii) immediately after giving effect to such transaction on a pro forma basis, the Consolidated Net Worth of the Successor Company or, in the case of a Plan of Liquidation, the entity which receives the greatest value from such Plan of Liquidation is at least equal to the Consolidated Net Worth of Sun International or SINA, as applicable, immediately prior to such transaction; and (iv) immediately after giving effect to such transaction on a pro forma basis, the Successor Company or, in the case of a Plan of Liquidation, the entity which receives the greatest value from such Plan of Liquidation would immediately thereafter be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock". Upon any consolidation or merger or any transfer of all or substantially all of the assets of Sun International or SINA, as applicable, or consummation of a Plan of Liquidation in accordance with the foregoing, the successor corporation formed by such consolidation or into which Sun International or SINA is merged or to which such transfer is made or, in the case of a Plan of Liquidation, the entity which receives the greatest value from such Plan of Liquidation shall succeed to, and be substituted for, and may exercise every right and power of, Sun International or SINA, as applicable, under the Indenture with the same effect as if such successor corporation had been named therein as Sun International or SINA, as applicable, and Sun International or SINA, as applicable, shall be released from the obligations under the Notes and the Indenture except with respect to any obligations that arise from, or are related to, such transaction. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of all or substantially all of the properties and assets of one or more Subsidiaries, the interest of Sun International or SINA, as applicable, in which constitutes all or substantially all of the properties and assets of Sun International or SINA, as applicable, shall be deemed to be the transfer of all or substantially all of the properties and assets of Sun International, or SINA, as applicable. LIMITATION ON LINES OF BUSINESS The Indenture provides that none of the Issuers or any of their Subsidiaries shall directly or indirectly engage to any substantial extent in any line or lines of business activity other than that which, in the good faith judgment of the Board of Directors of Sun International, is a Related Business. FUTURE SUBSIDIARY GUARANTORS The Indenture provides that all present and future Subsidiaries of either Issuer (including any Unrestricted Subsidiary upon being designated a Subsidiary) will jointly and severally guaranty irrevocably and unconditionally all principal, premium, if any, and interest on the Notes on a senior subordinated basis. RELEASE OF GUARANTORS The Indenture provides that no Guarantor shall consolidate or merge with or into (whether or not such Guarantor is the surviving person) another person unless (i) subject to the provisions of the following paragraph, the person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee, pursuant to which such person shall unconditionally guarantee, on a senior subordinated basis, all of such Guarantor's obligations under such Guarantor's guarantee and the Indenture on the terms set forth in the Indenture; and (ii) immediately before and immediately after giving effect to such transaction on a pro forma basis, no Default or Event of Default shall have occurred or be continuing. Notwithstanding the foregoing, upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Guarantor of all or substantially all of its assets to an entity which is not a Subsidiary or the designation of a Subsidiary as an Unrestricted Subsidiary, which transaction is otherwise in compliance with the Indenture (including, without limitation, the provisions of the covenant "Limitations on Sale of Assets and Subsidiary Stock"), such Guarantor will be deemed released from its obligations under its Guarantee of the Notes; PROVIDED, HOWEVER, that any such termination shall occur only to the extent that all 78 obligations of such Guarantor under all of its guarantees of, and under all of its pledges of assets or other security interests which secure, any Indebtedness of either Issuer or any of their Subsidiaries shall also terminate upon such release, sale or transfer. LIMITATION ON STATUS AS INVESTMENT COMPANY The Indenture prohibits Sun International and its Subsidiaries from being required to register as an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or from otherwise becoming subject to regulation under the Investment Company Act. REPORTS The Indenture provides that whether or not Sun International or SINA is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, each of Sun International and SINA shall deliver to the Trustee and to each Holder within 15 days after it is or would have been (if it were subject to such reporting obligations) required to furnish such with the Commission, annual and quarterly financial statements substantially equivalent to financial statements that would have been included in reports filed with the Commission, if such entity were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the Issuers' certified independent public accountants as such would be required in such reports to the Commission, and, in each case, together with a management's discussion and analysis of financial condition and results of operations which would be so required and, to the extent permitted by the Exchange Act or the Commission, file with the Commission the annual, quarterly and other reports which it is or would have (if it were subject to such reporting obligations) been required to file with the Commission. EVENTS OF DEFAULT AND REMEDIES The Indenture defines an Event of Default as (i) the failure by the Issuers to pay any installment of interest or Liquidated Damages, if any, on the Notes as and when the same becomes due and payable and the continuance of any such failure for 30 days, (ii) the failure by the Issuers to pay all or any part of the principal, or premium, if any, on the Notes when and as the same becomes due and payable at maturity, redemption, by acceleration or otherwise, whether or not prohibited by the subordination provisions of the Indenture, including, without limitation, payment of the Change of Control Purchase Price or the Asset Sale Offer Price, or otherwise, (iii) the failure by either of the Issuers or any of their Subsidiaries otherwise to comply with the covenants described under "Certain Covenants--Repurchase of Notes at the Option of the Holder Upon a Change of Control", "--Limitation on Sale of Assets and Subsidiary Stock" and "-- Limitation on Merger, Sale or Consolidation", (iv) (A) failure by either of the Issuers or any of their Subsidiaries to observe or perform any other covenant or agreement described under "Certain Covenants" (except as provided in clauses (i), (ii) and (iii) above) and the continuance of such failure for a period of 30 days after written notice is given to the Issuers by the Trustee or to the Issuers and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes outstanding, or (B) failure by either of the Issuers or any of their Subsidiaries to observe or perform any other covenant or agreement contained in the Notes or the Indenture (except as provided for in clauses (i), (ii), (iii) and (iv)(A) above) and the continuance of such failure for 60 days after written notice is given to the Issuers by the Trustee or the Issuers and the Trustee by the Holders of at least 25% in aggregate principal amount of Notes outstanding, (v) certain events of bankruptcy, insolvency or reorganization in respect of either of the Issuers or any of their Significant Subsidiaries, (vi) a default in Indebtedness of either of the Issuers or any of their Subsidiaries with an aggregate principal amount in excess of $10 million (a) resulting from the failure to pay any principal at final stated maturity or (b) as a result of which the maturity of such Indebtedness has been accelerated prior to its stated maturity, and (vii) final unsatisfied judgments not covered by insurance aggregating in excess of $10 million, at any one time rendered against either of the Issuers or any of their Subsidiaries and either (a) the commencement by any creditor of any enforcement proceeding upon any such judgment that is not promptly stayed or (b) such judgment is not stayed, bonded or discharged within 60 days. The Indenture provides that if a Default occurs and is continuing, the Trustee must, within 90 days after the occurrence of such default, give to the Holders notice of such default. If an Event of Default occurs and is continuing (other than an Event of Default specified in clause (v), above, relating to either of the Issuers or any of their Significant Subsidiaries,) then in every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders 79 of 25% in aggregate principal amount of the Notes then outstanding, by notice in writing to the Issuers (and to the Trustee if given by Holders) (an "Acceleration Notice"), may declare all principal and premium, if any, determined as set forth below, and accrued and unpaid interest and Liquidated Damages, if any, thereon to be due and payable immediately; PROVIDED, HOWEVER, that if any Senior Debt is outstanding pursuant to the Credit Agreement, such acceleration shall not be effective until the earlier of (x) the fifth Business Day after the giving to Sun International and the Representative of such written notice, unless such Event of Default is cured or waived prior to such date and (y) the date of acceleration of any Senior Debt under the Credit Agreement. If an Event of Default specified in clause (v) above relating to either of the Issuers or any of their Significant Subsidiaries occurs, all principal and accrued interest thereon will be immediately due and payable on all outstanding Notes without any declaration or other act on the part of Trustee or the Holders. The Holders of a majority in aggregate principal amount of Notes generally are authorized to rescind such acceleration if all existing Events of Default, other than the non-payment of the principal of, premium, if any, and interest and Liquidated Damages on the Notes which have become due solely by such acceleration, have been cured or waived. Prior to the declaration of acceleration of the maturity of the Notes, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may waive on behalf of all the Holders any default, except a default in the payment of principal of or interest on any Note not yet cured or a default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable security or indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Indenture provides that the Issuers may, at their option and at any time, elect to have their obligations and the obligations of the Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Issuers shall be deemed to have paid and discharged the entire indebtedness represented, and the Indenture shall cease to be of further effect as to all outstanding Notes and Guarantees, except as to (i) rights of Holders to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due from the trust funds; (ii) Issuers' obligations with respect to such Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or agency for payment and money for security payments held in trust; (iii) the rights, powers, trust, duties, and immunities of the Trustee, and the Issuers' obligations in connection therewith; and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Issuers may, at their option and at any time, elect to have the obligations of the Issuers and the Guarantors released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, non-payment of guarantees, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. The Issuers may exercise their Legal Defeasance option regardless of whether it previously exercised Covenant Defeasance. 80 In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on such Notes on the stated date for payment thereof or on the redemption date of such principal or installment of principal of, premium, if any, or interest on such Notes, and the Holders of Notes must have a valid, perfected, exclusive security interest in such trust; (ii) in the case of the Legal Defeasance, the Issuers shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to Trustee confirming that (A) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of such Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to such Trustee confirming that the Holders of such Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture or any other material agreement or instrument to which either of the Issuers or any of their Subsidiaries is a party or by which either of the Issuers or any of their Subsidiaries is bound; (vi) the Issuers shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders of such Notes over any other creditors of the Issuers or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuers or others; and (vii) the Issuers shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that the conditions precedent provided for in, in the case of the officers' certificate, (i) through (vi) and, in the case of the opinion of counsel, clauses (i) (with respect to the validity and perfection of the security interest), (ii), (iii) and (v) of this paragraph have been complied with. If the funds deposited with the Trustee to effect Legal Defeasance or Covenant Defeasance are insufficient to pay the principal of, premium, if any, and interest on the Notes when due, then the obligations of the Issuers under the Indenture will be revived and no such defeasance will be deemed to have occurred. AMENDMENTS AND SUPPLEMENTS The Indenture contains provisions permitting the Issuers, the Guarantors and the Trustee to enter into a supplemental indenture for certain limited purposes without the consent of the Holders. With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, the Issuers, the Guarantors and the Trustee are permitted to amend or supplement the Indenture or any supplemental indenture or modify the rights of the Holders; PROVIDED, that no such modification may, without the consent of each Holder affected thereby: (i) change the Stated Maturity on any Note, or reduce the principal amount thereof or the rate (or extend the time for payment) of interest thereon or any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Note or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or reduce the Change of Control Purchase Price or the Asset Sale Offer Price or alter the provisions (including the defined terms used therein) regarding the right of the Issuers to redeem the Notes in a manner adverse to the Holders, or (ii) reduce the percentage in principal amount of the outstanding Notes, the consent of whose Holders is required for any such amendment, 81 supplemental indenture or waiver provided for in the Indenture, or (iii) modify any of the waiver provisions, except to increase any required percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected thereby. NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS The Indenture will provide that no direct or indirect stockholder, employee, officer or director, as such, past, present or future of the Issuers, the Guarantors or any successor entity shall have any personal liability in respect of the obligations of the Issuers or the Guarantors under the Indenture or the Notes by reason of his or its status as such stockholder, employee, officer or director, except to the extent such person is an Issuer or Guarantor. ADDITIONAL INFORMATION Anyone who receives this Prospectus may obtain a copy of the Indenture and the Registration Rights Agreement without charge by writing to Sun International Hotels Limited, Coral Towers, Paradise Island, Bahamas (attention: General Counsel). CERTAIN DEFINITIONS "Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of any person existing at the time such person becomes a Subsidiary of either of the Issuers or is merged or consolidated into or with either of the Issuers or any of their Subsidiaries. "Acquisition" means the purchase or other acquisition of any person or all or substantially all the assets of any person by any other person, or the acquisition of assets that constitute all or substantially all of an operating unit of business, whether by purchase, merger, consolidation, or other transfer, and whether or not for consideration. "Affiliate" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with Sun International. For purposes of this definition, the term "control" means the power to direct the management and policies of a person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise, PROVIDED, that, with respect to ownership interest in Sun International and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to constitute control. "Average Life" means, as of the date of determination, with respect to any security or instrument, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from the date of determination to the date or dates of each successive scheduled principal (or redemption) payment of such security or instrument and (b) the amount of each such respective principal (or redemption) payment by (ii) the sum of all such principal (or redemption) payments. "Beneficial Owner" or "beneficial owner" has the meaning attributed to it in Rules l3d-3 and l3d-5 under the Exchange Act (as in effect on the Issue Date), whether or not applicable, except that a "person" shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York or the New York Stock Exchange are authorized or obligated by law or executive order to close. "Capitalized Lease Obligation" means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such person. "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness that is not otherwise itself capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. 82 "Cash Equivalent" means (a) (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), (ii) time deposits and certificates of deposit of any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million or (iii) commercial paper issued by others rated at least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc., and in the case of each of (i), (ii) and (iii) above maturing within one year after the date of acquisition or (b) shares of money market mutual funds or similar funds having assets in excess of $500 million. "Consolidated Coverage Ratio" of any person on any date of determination (a "Transaction Date") means the ratio, on a pro forma basis, of (a) the aggregate amount of Consolidated EBITDA of such person attributable to continuing operations and businesses (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of) for the Reference Period to (b) the aggregate Consolidated Fixed Charges of such person (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of, but only to the extent that the obligations giving rise to such Consolidated Fixed Charges would no longer be obligations contributing to such person's Consolidated Fixed Charges subsequent to the Transaction Date) during the Reference Period; PROVIDED, that for purposes of such calculation, (i) Acquisitions which occurred during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date shall be assumed to have occurred on the first day of the Reference Period, (ii) transactions giving rise to the need to calculate the Consolidated Coverage Ratio shall be assumed to have occurred on the first day of the Reference Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified Capital Stock during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date (and the application of the proceeds therefrom to the extent used to refinance or retire other Indebtedness) shall be assumed to have occurred on the first day of such Reference Period, and (iv) the Consolidated Fixed Charges of such person attributable to interest on any Indebtedness or dividends on any Disqualified Capital Stock bearing a floating interest (or dividend) rate shall be computed on a pro forma basis as if the rate in effect on the Transaction Date had been the applicable rate for the entire period, unless such Person or any of its Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall remain in effect for the 12-month period immediately following the Transaction Date) that has the effect of fixing the interest rate on the date of computation, in which case such rate (whether higher or lower) shall be used. "Consolidated EBITDA" means, with respect to any person, for any period, the Consolidated Net Income of such person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of (i) Consolidated income tax expense, (ii) Consolidated depreciation and amortization expense, PROVIDED that consolidated depreciation and amortization of a Subsidiary that is a less than wholly owned Subsidiary shall only be added to the extent of the equity interest of such person in such Subsidiary and (iii) Consolidated Fixed Charges, less any non-cash interest income. "Consolidated Fixed Charges" of any person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of such person and its Consolidated Subsidiaries during such period, including (i) original issue discount and non-cash interest payments or accruals on any Indebtedness, (ii) the interest portion of all deferred payment obligations and (iii) all commissions, discounts and other fees and charges owed with respect to bankers' acceptances and letters of credit financings and currency and Interest Swap and Hedging Obligations, in each case to the extent attributable to such period, but excluding interest payments on the Showboat Notes, and (b) the amount of dividends accrued or payable (or guaranteed) by such person or any of its Consolidated Subsidiaries in respect of preferred stock (other than by Subsidiaries of such person to such person or such person's wholly owned Subsidiaries). For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an 83 interest rate reasonably determined by Sun International to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and (y) interest expense attributable to any Indebtedness represented by the guaranty by such person or a Subsidiary of such person of an obligation of another person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed. "Consolidated Net Income" means, with respect to any person for any period, the net income (or loss) of such person and its Consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, adjusted to exclude (only to the extent included in computing such net income (or loss) and without duplication): (a) all gains (but not losses) which are either extraordinary (as determined in accordance with GAAP), unusual or nonrecurring (including any gain from the sale or other disposition of assets or currency transactions outside the ordinary course of business or from the issuance or sale of any capital stock), (b) the net income, if positive, of any person, other than a Consolidated Subsidiary, in which such person or any of its Consolidated Subsidiaries has an interest, except to the extent of the amount of any dividends or distributions actually paid in cash to such person or a wholly owned Consolidated Subsidiary of such person during such period, but in any case not in excess of such person's PRO RATA share of such person's net income for such period, (c) the net income or loss of any person acquired in a pooling of interests transaction for any period prior to the date of such acquisition, (d) the net income, if positive, of any of such person's Consolidated Subsidiaries to the extent that the declaration or payment of dividends or similar distributions is not at the time permitted by operation of the terms of its charter or bylaws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Consolidated Subsidiary, except for existing restrictions under the Credit Agreement and (e) the net income attributable to the Showboat Lease. "Consolidated Net Worth" of any person at any date means the aggregate consolidated stockholders' equity of such person (plus amounts of equity attributable to preferred stock) and its Consolidated Subsidiaries, as would be shown on the consolidated balance sheet of such person prepared in accordance with GAAP, adjusted to exclude (to the extent included in calculating such equity), the amount of any such stockholders' equity attributable to Disqualified Capital Stock or treasury stock of such person and its Consolidated Subsidiaries. "Consolidated Subsidiary" means, for any person, each Subsidiary of such person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such person in accordance with GAAP. "Credit Agreement" means the credit agreement dated as of November 1, 1996, by and among Sun Bahamas, the Company, certain of the Company's subsidiaries, certain financial institutions and The Bank of Nova Scotia, as administrative and collateral agent, providing for an aggregate $250 million revolving credit facility (excluding any amounts with respect to Interest Swap and Hedging Obligations complying with the provisions set forth below) (which amount may be increased to $375 million and may be increased to $500 million upon the later of the Paradise Island Expansion opening or December 31, 1998), including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Credit Agreement" shall include agreements in respect of Interest Swap and Hedging Obligations entered into for bona fide hedging purposes and not entered into for speculative purposes with lenders party to the Credit Agreement or their affiliates and shall also include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Agreement and all refundings, refinancings and replacements of any Credit Agreement, including any agreement (i) extending or shortening the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of Sun International and its Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder, PROVIDED that on the date such 84 Indebtedness is incurred it would not be prohibited by clause (a) of the definition of "Permitted Indebtedness," or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms hereof. "Disqualified Capital Stock" means (i) except as set forth in (ii), with respect to any person, Equity Interests of such person that, by its terms or by the terms of any security into which it is convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased (including at the option of the holder thereof) by such person or any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the Notes and (ii) with respect to any Subsidiary of such person (other than the Guarantors), any Equity Interests other than any common equity with no preference, privileges, or redemption or repayment provisions. "Equity Interest" of any person means any shares, interests, participations or other equivalents (however designated) in such person's equity, and shall in any event include any Capital Stock issued by, or partnership or membership interests in, such person. "Event of Loss" means, with respect to any property or asset, any (i) loss, destruction or damage of such property or asset or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset. "Exempted Affiliate Transaction" means transactions solely between Sun International and any of its wholly owned Subsidiaries or solely among wholly owned Subsidiaries of Sun International. "FF&E Indebtedness" means any Indebtedness of a person to any seller or other person incurred to finance the acquisition (including in the case of a Capitalized Lease Obligation, the lease) of any gaming facility or hotel or gaming or hotel related fixtures, furniture or equipment which is directly related to a Related Business of Sun International and which is incurred concurrently with such acquisition and is secured only by the assets so financed. "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession in the United States as in effect on the Issue Date. "Indebtedness" of any person means, without duplication, (a) all liabilities and obligations, contingent or otherwise, of such any person, (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, except those incurred in the ordinary course of its business that would constitute ordinarily trade payables to trade creditors that are not more than 60 days past their original due date, (iv) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, (v) relating to any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement obligation of such person with respect to any letter of credit; (b) all net obligations of such person under Interest Swap and Hedging Obligations; (c) all liabilities and obligations of others of the kind described in the preceding clause (a) or (b) that such person has guaranteed or that is otherwise its legal liability or which are secured by any assets or property of such person and (d) any and all deferrals, renewals, extensions, refinancing and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b) or (c), or this clause (d), whether or not between or among the same parties, and (e) all Disqualified Capital Stock of such Person (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends). For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market 85 Value of such Disqualified Capital Stock, such Fair Market Value to be determined in good faith by the board of directors of the issuer (or managing general partner of the issuer) of such Disqualified Capital Stock. "Interest Swap and Hedging Obligation" means any obligation of any person pursuant to any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate exchange agreement, currency exchange agreement or any other agreement or arrangement designed to protect against fluctuations in interest rates or currency values, including, without limitation, any arrangement whereby, directly or indirectly, such person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such person calculated by applying a fixed or floating rate of interest on the same notional amount. "Investment" by any person in any other person means (without duplication) (a) the acquisition (whether by purchase, merger, consolidation or otherwise) by such person (whether for cash, property, services, securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities, including any options or warrants, of such other person or any agreement to make any such acquisition; (b) the making by such person of any deposit with, or advance, loan or other extension of credit to, such other person (including the purchase of property from another person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable or deposits arising in the ordinary course of business); (c) other than guarantees of Indebtedness of Sun International or any Subsidiary to the extent permitted by the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock", the entering into by such person of any guarantee of, or other credit support or contingent obligation with respect to, Indebtedness or other liability of such other person; (d) the making of any capital contribution by such person to such other person; and (e) the designation by the Board of Directors of Sun International of any person to be an Unrestricted Subsidiary. Sun International shall be deemed to make an Investment in an amount equal to the fair market value of the net assets of any subsidiary (or, if neither Sun International nor any of its Subsidiaries has theretofore made an Investment in such subsidiary, in an amount equal to the Investments being made), at the time that such subsidiary is designated an Unrestricted Subsidiary, and any property transferred to an Unrestricted Subsidiary from Sun International or a Subsidiary shall be deemed an Investment valued at its fair market value at the time of such transfer. "Investment Grade Rating" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's (or any successor to the rating agency business thereof) or BBB- (or the equivalent) by S&P (or any successor to the rating agency business thereof). "Investment Grade Status" means any time at which the ratings of the Notes by both Moody's (or any successor to the rating agency business thereof) and S&P (or any successor to the rating agency business thereof) are Investment Grade Ratings. "Issue Date" means the date of first issuance of the Notes under the Indenture. "Junior Security" means any Qualified Capital Stock and any Indebtedness of an Issuer or a Guarantor, as applicable, that (i) is subordinated in right of payment to Senior Debt at least to the same extent as the Notes or the Guarantee, as applicable, (ii) has no scheduled installment of principal due, by redemption, sinking fund payment or otherwise, on or prior to the Stated Maturity of the Notes (iii) does not have covenants or default provisions materially more beneficial to the holders of the Notes than those in effect with respect to the Notes on the Issue Date and (iv) was authorized by an order or decree of a court of competent jurisdiction that gave effect to (and states in such order or decree that effect has been given to) the subordination of such securities to all Senior Debt of the applicable Issuer or Guarantor not paid in full in cash or Cash Equivalents in connection with such reorganization; provided that all such Senior Debt is assumed by the reorganized corporation and the rights of the holders of any such Senior Debt are not, 86 without the consent of such holders, altered by such reorganization, which consent shall be deemed to have been given if the holders of such Senior Debt, individually or as a class, shall have approved such reorganization. "Lien" means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. "Moody's" means Moody's Investor Services, Inc. "Net Cash Proceeds" means the aggregate amount of Cash or Cash Equivalents received by Sun International in the case of a sale of Qualified Capital Stock and by Sun International and its Subsidiaries in respect of an Asset Sale plus, in the case of an issuance of Qualified Capital Stock upon any exercise, exchange or conversion of securities (including options, warrants, rights and convertible or exchangeable debt) of Sun International that were issued for cash on or after the Issue Date, the amount of cash originally received by Sun International upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt) less, in each case, the sum of all payments, fees, commissions and reasonable and customary expenses (including, without limitation, the fees and expenses of legal counsel and investment banking fees and expenses) incurred in connection with such Asset Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only, less the amount (estimated reasonably and in good faith by Sun International) of income, franchise, sales and other applicable taxes required to be paid by Sun International or any of its respective Subsidiaries in connection with such Asset Sale. "Non-Recourse Indebtedness" means Indebtedness of a person to the extent that under the terms thereof or pursuant to applicable law (i) no personal recourse shall be had against such person for the payment of the principal of or interest or premium, if any, on such Indebtedness, and (ii) enforcement of obligations on such Indebtedness is limited only to recourse against interests in property purchased with the proceeds of the incurrence of such Indebtedness and as to which none of the Issuers or any of its Subsidiaries provides any crredit support or is liable. "Permitted Holder" means Solomon Kerzner, his immediate family or a trust or similar entity existing solely for his benefit or for the benefit of his immediate family. "Permitted Indebtedness" means Indebtedness incurred as follows: (a) the Issuers and the Guarantors may incur Indebtedness (i) pursuant to the Credit Agreement up to an aggregate principal amount outstanding (including any Indebtedness issued to refinance, refund or replace such Indebtedness) at any time of $375 million (excluding any amounts with respect to Interest Swap and Hedging Obligations) (which amount may be increased to $500 million upon the later to occur of the Paradise Island Expansion opening or December 31, 1998), minus the amount of any such Indebtedness retired with Net Cash Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale (provided any commitment in respect of such Indebtedness is permanently reduced) and (ii) the Issuers and the Guarantors may incur Indebtedness with respect to Interest Swap and Hedging Obligations entered into for bona fide hedging purposes and not entered into for speculative purposes; (b) the Issuers and the Guarantors may incur Indebtedness evidenced by the Notes and the Guarantees and represented by the Indenture up to the amounts specified therein as of the date thereof; (c) the Issuers and the Guarantors may incur FF&E Indebtedness on or after the Issue Date, PROVIDED, that (i) such FF&E Indebtedness is Non-Recourse Indebtedness and (ii) such Indebtedness shall not constitute more than 100% of the cost (determined in accordance with GAAP) to the Issuers or such Guarantor, as applicable, of the property so purchased or leased; (d) the Issuers and the Guarantors may incur Indebtedness solely in respect of bankers' acceptances and performance bonds (to the extent that such incurrence does not result in the incurrence of any obligation to repay any obligation relating to borrowed money of others), all in the ordinary course of business in accordance with customary industry practices, in amounts and for the purposes customary in their industry; 87 (e) the Issuers may incur Indebtedness to any wholly owned Subsidiary, and any wholly owned Subsidiary may incur Indebtedness to any other wholly owned Subsidiary or to an Issuer; PROVIDED, that, in the case of Indebtedness of the Issuers (other than Indebtedness that is required to be pledged to the lenders under the Credit Agreement), such obligations shall be unsecured and subordinated in all respects to the Issuers' obligations pursuant to the Notes, and the date of any event that causes a Subsidiary to no longer be a wholly owned Subsidiary shall be an Incurrence Date; and (f) the Issuers and their Subsidiaries, as applicable, may incur Refinancing Indebtedness with respect to any Indebtedness or Disqualified Capital Stock, as applicable, described in clauses (b) and (f) of this definition or incurred under the Debt Incurrence Ratio contained in the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock" or which is outstanding on the Issue Date (after giving effect to consummation of the Tender Offer) so long as such Refinancing Indebtedness is secured only by the assets that secured the Indebtedness so refinanced or otherwise replaced. "Permitted Investment" means (a) any Investment in any of the Notes; (b) any Investment in Cash Equivalents; (c) any Investment in intercompany notes to the extent permitted under clause (b) of the definition of "Permitted Indebtedness"; (d) any Investment in a person in a Related Business who, after such Investment, becomes a Subsidiary of an Issuer and a Guarantor of the Notes; and (e) any Investment in any property or assets to be used by an Issuer or Guarantor in a Related Business. "Permitted Lien" means (a) any Lien securing the Notes; (b) any Lien securing Indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged with or into either of the Issuers or a Subsidiary of either of the Issuers or Liens securing Indebtedness incurred in connection with an Acquisition, PROVIDED that such Liens were in existence prior to the date of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets; (c) any Lien in favor of either of the Issuers or any Guarantor; and (d) any Lien arising from FF&E Indebtedness permitted to be incurred under clause (c) of the definition of "Permitted Indebtedness", PROVIDED such Lien relates solely to the property which is subject to such FF&E Indebtedness. "Public Equity Offering" means an underwritten public offering of Common Stock of Sun International. "Qualified Capital Stock" means any Capital Stock of Sun International that is not Disqualified Capital Stock. "Qualified Exchange" means any legal defeasance, redemption, retirement, repurchase or other acquisition of Capital Stock or Indebtedness of Sun International issued on or after the Issue Date with the Net Cash Proceeds received by Sun International from the substantially concurrent sale of Qualified Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock or Indebtedness of Sun International issued on or after the Issue Date. "Rating Agencies" means S&P and Moody's or any successor to the respective rating agency businesses thereof. "Reference Period" with regard to any person means the four full fiscal quarters (or such lesser period during which such person has been in existence) ended immediately preceding any date upon which any determination is to be made pursuant to the terms of the Notes or the Indenture. "Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock (a) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, discharge or otherwise retire for value, in whole or in part, or (b) constituting an amendment, modification or supplement to, or a deferral or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any Indebtedness or Disqualified Capital Stock in a principal amount or, in the case of Disqualified Capital Stock, liquidation preference, not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of (i) the principal amount or, in the case of Disqualified Capital Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an original issue 88 discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such Refinancing; provided, that (A) such Refinancing Indebtedness of any Subsidiary of Sun International shall only be used to Refinance outstanding Indebtedness or Disqualified Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x) not have an Average Life shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced at the time of such Refinancing and (y) in all respects, be no less subordinated or junior, if applicable, to the rights of Holders of the Notes than was the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such Refinancing Indebtedness shall have a final stated maturity or redemption date, as applicable, no earlier than the final stated maturity or redemption date, as applicable, of the Indebtedness or Disqualified Capital Stock to be so refinanced. "Related Business" means the gaming or hotel business and other businesses necessary for, or in the good faith judgment of the Board of Directors of Sun International, incident to, connected with, arising out of, or developed or operated to permit or facilitate the conduct or pursuit of the gaming or hotel business (including developing or operating sports or entertainment facilities, retail facilities, restaurants, night clubs, transportation and communications services or other related activities or enterprises and any additions or improvements thereto) and potential opportunities in the gaming or hotel business. "Representative" means The Bank of Nova Scotia or any successor or successors under the Credit Agreement. "Restricted Payment" means, with respect to any person, (a) the declaration or payment of any dividend or other distribution in respect of Equity Interests of such person or any parent or Subsidiary of such person, (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Equity Interests of such person or any Subsidiary or parent of such person, (c) other than with the proceeds from the substantially concurrent sale of, or in exchange for, Refinancing Indebtedness, any purchase, redemption, or other acquisition or retirement for value of, any payment in respect of any amendment of the terms of or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by such person or a parent or Subsidiary of such person prior to the scheduled maturity, any scheduled repayment of principal, or scheduled sinking fund payment, as the case may be, of such Indebtedness and (d) any Investment by such person, other than a Permitted Investment; PROVIDED, HOWEVER, that the term "Restricted Payment" does not include (i) any dividend, distribution or other payment on or with respect to Equity Interests of an Issuer to the extent payable solely in shares of Qualified Capital Stock of such Issuer; or (ii) any dividend, distribution or other payment to the Issuers, or to any Guarantors, by Sun International or any of its Subsidiaries. "S&P" means Standard and Poor's Ratings Group, a division of the McGraw-Hill Companies, Inc. "Senior Debt" of Sun International, SINA or any Guarantor means Indebtedness (including and together with all monetary obligations in respect of the Credit Agreement, and interest, whether or not allowable, accruing on Indebtedness incurred pursuant to the Credit Agreement after the filing of a petition initiating any proceeding under any bankruptcy, insolvency or similar law or which would have accrued but for such filing) of Sun International, SINA or such Guarantor arising under the Credit Agreement or that, by the terms of the instrument creating or evidencing such Indebtedness, is expressly designated Senior Debt and made senior in right of payment to the Notes or the applicable Guarantee; PROVIDED, that in no event shall Senior Debt include (a) Indebtedness to any Subsidiary of Sun International or any officer, director or employee of Sun International or any Subsidiary of Sun International (other than Indebtedness that is required to be pledged to the lenders under the Credit Agreement), (b) Indebtedness incurred in violation of the terms of the Indenture including, without limitation, Indebtedness claiming to be subordinated to any other Indebtedness and senior to the Notes, (c) Indebtedness to trade creditors, (d) Disqualified Capital Stock, and (e) any liability for taxes owed or owing by Sun International, SINA or such Guarantor. "Significant Subsidiary" shall have the meaning provided under Regulation S-X under the Securities Act, as in effect on the Issue Date. "Stated Maturity", when used with respect to any Note, means . 89 "Subordinated Indebtedness" means Indebtedness of Sun International, SINA or a Guarantor that is subordinated in right of payment to the Notes or such Guarantee, as applicable, in any respect or, for purposes of the definition of Restricted Payments only, has a stated maturity on (except for the Notes) or after the Stated Maturity. "Subsidiary", with respect to any person, means (i) a corporation a majority of whose Equity Interests with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such person, by such person and one or more Subsidiaries of such person or by one or more Subsidiaries of such person, (ii) any other person (other than a corporation) in which such person, one or more Subsidiaries of such person, or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof has at least majority ownership interest, or (iii) a partnership in which such person or a Subsidiary of such person is, at the time, a general partner. Notwithstanding the foregoing, an Unrestricted Subsidiary shall not be a Subsidiary of Sun International or any Subsidiary of Sun International. Unless the context requires otherwise, Subsidiary means each direct and indirect Subsidiary of Sun International. "Unrestricted Subsidiary" means any subsidiary of Sun International (other than SINA) that does not own any Capital Stock of, or own or hold any Lien on any property of, Sun International or any other Subsidiary of Sun International or SINA and that shall be designated an Unrestricted Subsidiary by the Board of Directors of Sun International; PROVIDED, that (i) such subsidiary shall not engage, to any substantial extent, in any line or lines of business activity other than a Related Business, (ii) neither immediately prior thereto nor after giving pro forma effect to such designation would there exist a Default or Event of Default and (iii) immediately after giving pro forma effect thereto, Sun International could incur at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio in the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock". The Board of Directors of Sun International may designate any Unrestricted Subsidiary to be a Subsidiary, PROVIDED, that (i) no Default or Event of Default is existing or will occur as a consequence thereof and (ii) immediately after giving effect to such designation, on a pro forma basis, Sun International could incur at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio in the covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock". Each such designation shall be evidenced by filing with the Trustee a certified copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "wholly owned Subsidiary" means a Subsidiary all the Equity Interests of which are owned by Sun International or one or more wholly owned Subsidiaries of Sun International, except for directors' qualifying shares. 90 TAX CONSEQUENCES The statements herein regarding taxation are based on the laws of The Bahamas and the United States in force as of the date of this Prospectus and are subject to any changes in law occurring after such date, which changes could be made on a retroactive basis. Holders of the Outstanding Notes contemplating acceptance of the Exchange Offer are advised to consult their tax advisors regarding the tax consequences of the Exchange Offer. CERTAIN BAHAMIAN TAX CONSIDERATIONS The following is a brief and general summary of certain Bahamian tax matters as they may relate to the Issuers and the Holders of the Notes. The discussion is not exhaustive and is based on Bahamian law currently in effect. The Bahamas does not impose any income, capital gains or withholding taxes. Therefore, the Company is not subject to income tax in The Bahamas on an ongoing basis, although the Company is subject to gaming taxes and other governmental fees and charges. See "Business--Certain Matters Affecting the Company's Bahamas Operations". In addition, payments of interest with respect to the Notes will not be subject to any withholding tax. Any capital gains realized on the sale or exchange of the Notes will not be subject to Bahamian taxes, and no Bahamian stamp duty will be due with respect to such disposition. Any capital gains realized on the sale or exchange of the Ordinary Shares will not be subject to Bahamian taxes, and no Bahamian stamp duty will be due with respect to such disposition. CERTAIN UNITED STATES TAX CONSIDERATIONS The following summary describes the material U.S. federal income tax consequences to initial holders of the Notes who are subject to U.S. net income tax with respect to the Notes ("U.S. persons") and who hold the Notes as capital assets. There can be no assurance that the U.S. Internal Revenue Service (the "IRS") will take a similar view of the purchase, ownership or disposition of the Notes. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, Treasury regulations, rulings and judicial decisions now in effect, all of which are subject to change. It does not include any description of the tax laws of any state, local or foreign governments or any estate or gift tax considerations that may be applicable to the Notes or holders thereof. It does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular investor in light of his particular investment circumstances or to certain types of investors subject to special treatment under the U.S. federal income tax laws (for example, dealers in securities or currencies, S corporations, life insurance companies, tax-exempt organizations, taxpayers subject to the alternative minimum tax and non-U.S. persons) and also does not discuss Notes held as a hedge against currency risks or as part of a straddle with other investments or part of a "synthetic security" or other integrated investment (including a "conversion transaction") comprised of a Note and one or more other investments, or situations in which the functional currency of the holder is not the U.S. dollar. The exchange of an Outstanding Note by a holder for an Exchange Note should not constitute a taxable exchange. The exchange will not result in income, gain or loss to holders of Notes who participate in the Exchange Offer, or to the Issuers. Such holders shall have the same adjusted basis and holding period in Exchange Notes immediately after the exchange as the holders had in the Outstanding Notes immediately prior to the exchange. PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account in connection with the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes if such Outstanding Notes were acquired as a result of market-making activities or other trading activities. The Issuers have agreed that for a period of 180 days after the Expiration Date, they will make this Prospectus, as amended or supplemented, available to any broker-dealer that requests such documents in the Letter of 91 Transmittal, for use in connection with any such resale. In addition, until , 1997 (90 days after the date of this Prospectus), all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Issuers will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account in connection with the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time or resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account in connection with the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. LEGAL MATTERS Certain legal matters with respect to the issuance of the Exchange Notes will be passed upon for the Issuers and the Guarantors by Cravath, Swaine & Moore, New York, with respect to matters of United States law, Harry B. Sands and Company with respect to matters of Bahamian law, Smith-Hughes, Raworth & McKenzie with respect to British Virgin Islands law, Kozlov, Seaton, Romanini, Brooks & Greenberg with respect to New Jersey law and Rome McGuigan Sabanosh, P.C. with respect to Connecticut law. EXPERTS The consolidated financial statements of Sun International Hotels Limited for the years ended December 31, 1994, 1995 and 1996 included herein, to the extent and for the periods indicated in the reports thereon, have been audited by Arthur Andersen LLP, independent public accountants, and are included herein in reliance upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements and schedule of Sun International North America, Inc. incorporated by reference in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, to the extent indicated in their report thereon also incorporated by reference herein and in the Registration Statement. Such consolidated financial statements and schedule have been incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 92 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SUN INTERNATIONAL HOTELS LIMITED
PAGE --------- Report of Independent Public Accountants................................................................... F-2 Audited Financial Statements: Consolidated Balance Sheets as at December 31, 1995 and 1996............................................. F-3 Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and 1996............... F-4 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1994, 1995 and 1996................................................................................................ F-5 Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996............... F-6 Notes to Consolidated Financial Statements............................................................... F-7
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO SUN INTERNATIONAL HOTELS LIMITED: We have audited the accompanying consolidated balance sheets of Sun International Hotels Limited and subsidiaries as of December 31, 1995 and 1996, and the related consolidated statement of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sun International Hotels Limited and subsidiaries as of December 31, 1995 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Roseland, New Jersey February 21, 1997 F-2 SUN INTERNATIONAL HOTELS LIMITED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF U.S. DOLLARS) ASSETS
DECEMBER 31, DECEMBER 31, 1995 1996 ------------ ------------ Current Assets: Cash and cash equivalents.......................................................... $ 14,770 $ 97,206 Restricted cash equivalents........................................................ 120 25,658 Trade receivables, net............................................................. 17,619 27,386 Due from affiliates................................................................ 3,629 5,068 Inventories........................................................................ 3,682 5,837 Prepaid expenses................................................................... 2,139 6,243 ------------ ------------ Total current assets............................................................. 41,959 167,398 Property and equipment, net.......................................................... 248,136 731,185 Subordinated notes receivable........................................................ 39,784 66,919 Due from affiliates.................................................................. 1,288 1,089 Investment in associated companies................................................... 32,015 33,126 Deferred charges and other assets.................................................... 7,245 23,979 Goodwill............................................................................. 98,923 ------------ ------------ Total assets..................................................................... $ 370,427 $1,122,619 ------------ ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt............................................... $ 5,000 $ 747 Accounts payable and other liabilities............................................. 41,613 107,819 Due to affiliates.................................................................. 8,507 Capital creditors.................................................................. 2,446 ------------ ------------ Total current liabilities........................................................ 55,120 111,012 ------------ ------------ Long-term debt, net of current maturities............................................ 116,153 262,618 ------------ ------------ Deferred income taxes................................................................ 46,000 ------------ ------------ Commitments and contingencies (Note 15).............................................. Redeemable Common Stock.............................................................. 63,543 Shareholders' equity: Ordinary shares.................................................................... 17 32 Capital in excess of par........................................................... 143,257 666,262 Accumulated earnings (deficit)..................................................... (7,663) 36,695 ------------ ------------ Total shareholders' equity....................................................... 135,611 702,989 ------------ ------------ Total liabilities and shareholders' equity......................................... $ 370,427 $1,122,619 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these balance sheets. F-3 SUN INTERNATIONAL HOTELS LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- 1994 1995 1996 ---------- ---------- ---------- Revenues: Gaming...................................................................... $ 34,204 $ 79,605 $ 77,342 Rooms....................................................................... 9,114 50,412 67,243 Food and beverage........................................................... 14,097 50,806 60,372 Tour operations............................................................. 7,809 16,338 15,048 Management and other fees................................................... 4,171 4,858 8,896 Other revenues.............................................................. 10,562 21,195 23,317 ---------- ---------- ---------- Gross revenues................................................................ 79,957 223,214 252,218 Less: Promotional allowances................................................ (3,217) (9,274) (12,102) ---------- ---------- ---------- Net revenues.................................................................. 76,740 213,940 240,116 ---------- ---------- ---------- Costs and expenses: Gaming...................................................................... 22,222 44,388 42,975 Rooms....................................................................... 5,357 9,696 12,047 Food and beverage........................................................... 14,392 34,167 41,069 Other operating expenses.................................................... 18,430 33,677 37,505 Selling, general and administrative......................................... 21,060 33,153 34,663 Tour operations............................................................. 8,669 16,148 15,262 Corporate expenses.......................................................... 5,054 9,485 10,895 Depreciation................................................................ 997 10,236 11,442 ---------- ---------- ---------- Total operating expenses.................................................. 96,181 190,950 205,858 ---------- ---------- ---------- Income (loss) from operations................................................. (19,441) 22,990 34,258 ---------- ---------- ---------- Other income (expense): Interest income............................................................. 750 2,426 12,499 Interest expense............................................................ (192) (9,746) (3,133) Equity in earnings from associated companies................................ 1,566 2,313 2,530 Gain on sale of equity interest in subsidiary............................... 1,861 Business combination costs.................................................. (1,000) Other, net.................................................................. 911 144 ---------- ---------- ---------- 2,985 (4,096) 12,040 ---------- ---------- ---------- Income (loss) before provision for income taxes............................... (16,456) 18,894 46,298 Provision for income taxes.................................................... 19 535 576 ---------- ---------- ---------- Net income (loss)............................................................. $ (16,475) $ 18,359 $ 45,722 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share............................................................ $ (1.06) $ 0.87 $ 1.58 ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding (in thousands).................. 15,482 21,194 28,915 ---------- ---------- ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these statements. F-4 SUN INTERNATIONAL HOTELS LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS OF U.S. DOLLARS)
ORDINARY SHARES CAPITAL IN ACCUMULATED ------------------------ EXCESS OF EARNINGS NUMBER AMOUNT PAR (DEFICIT) TOTAL ----------- ----------- ------------ ------------ ---------- Balance at December 31, 1993 8,852 $ 44 $ 25,462 $ 608 $ 26,114 Issuance of Series B Shares..................... 6,000 30 91,613 91,643 Stock issuance costs............................ (1,526) (1,526) Accretion of Series A Shares.................... (925) (925) Translation reserves............................ 205 205 Net loss........................................ (16,475) (16,475) Dividends declared.............................. (4,516) (4,516) ----------- --- ------------ ------------ ---------- Balance at December 31, 1994 14,852 74 114,624 (20,178) 94,520 Issuance of Ordinary Shares..................... 2,100 11 31,489 31,500 Stock issuance costs............................ (1,401) (1,401) Accretion of Series A Shares.................... (1,523) (1,523) Change in par value............................. 68 68 Translation reserves............................ (68) 71 3 Net income...................................... 18,359 18,359 Distributions in accordance with the Combination Agreement...................................... (5,915) (5,915) ----------- --- ------------ ------------ ---------- Balance at December 31, 1995 16,952 17 143,257 (7,663) 135,611 Conversion of Series A Shares................... 4,000 4 63,839 63,843 Issuance of Ordinary Shares..................... 8,314 8 284,337 284,345 Stock issuance costs............................ (17,868) (17,868) Accretion of Series A Shares.................... (300) (300) Translation reserves............................ (1,364) (1,364) Net income...................................... 45,722 45,722 Issuance of Ordinary Shares pursuant to the Merger......................................... 3,441 3 192,997 193,000 ----------- --- ------------ ------------ ---------- Balance at December 31, 1996 32,707 $ 32 $ 666,262 $ 36,695 $ 702,989 ----------- --- ------------ ------------ ---------- ----------- --- ------------ ------------ ----------
The accompanying notes are an integral part of these statements. F-5 SUN INTERNATIONAL HOTELS LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF U.S. DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- 1994 1995 1996 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)........................................................... $ (16,475) $ 18,359 $ 45,722 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization............................................. 997 10,794 11,948 Provision for doubtful receivables........................................ 1,094 2,161 1,639 Increase in receivables................................................... (4,384) (9,763) (11,679) (Increase) decrease in inventories and prepaid expenses................... 76 (1,765) (3,010) Increase in deferred charges and other assets............................. (284) (858) (1,524) Increase (decrease) in accounts payable and other liabilities............. 15,862 8,961 (1,603) Gain on sale of assets.................................................... (1,861) (911) (144) Equity in earnings of associated companies................................ (1,566) (2,313) (2,530) ---------- ---------- ---------- Net cash flows provided by (used in) operating activities..................... (6,541) 24,665 38,819 ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments for capital expenditures........................................... (108,048) (46,800) (79,476) Acquisition of business..................................................... (44,659) Cash acquired in connection with Merger..................................... 33,805 Proceeds from the sale of assets............................................ 1,811 1,392 681 Dividends received from associated companies................................ 1,234 1,453 1,419 Increased investment in associated companies................................ (1,888) (1,739) Loans to associated companies............................................... (1,181) ---------- ---------- ---------- Net cash flows used in investing activities................................... (150,843) (45,843) (45,310) ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock...................................... 91,643 31,500 284,345 Borrowings.................................................................. 74,022 45,000 Payments for expenses of offered ordinary shares............................ (1,526) (1,401) (17,868) Payments to affiliates...................................................... (3,300) (8,506) Purchase of subordinated loan notes......................................... (38,300) (42,000) Sale of subordinated loan notes............................................. 22,502 Decrease in amounts due to affiliates....................................... (2,346) (1,568) Payments to secure borrowings............................................... (579) (3,909) Repayment of borrowings..................................................... (91) (120,099) Proceeds from/repayment of bridge loans..................................... 30,000 (30,000) ---------- ---------- ---------- Net cash provided by financing activities..................................... 191,702 1,352 114,465 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents.......................... 34,318 (19,826) 107,974 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................. 398 34,716 14,890 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................... $ 34,716 $ 14,890 $ 122,864 ---------- ---------- ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these statements. F-6 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN U.S. DOLLARS) NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION Sun International Hotels Limited ("SIHL") is an international resort and gaming company which develops and manages premier resort and casino properties. The term "Company" as used herein includes SIHL and its subsidiaries. The Company currently operates resort hotels and casinos in The Bahamas, Atlantic City, Connecticut, the Indian Ocean and France. The Company's largest property is Atlantis, an 1,147 room resort and casino located on Paradise Island, The Bahamas. The majority of the Company's revenues are derived from its hotel and gaming operations. THE BAHAMAS SIHL was incorporated under the laws of the Commonwealth of The Bahamas on August 13, 1993 for the purpose of acquiring the Paradise Island operations (the "Paradise Island Business") of Resorts International, Inc. ("RII"). On May 3, 1994, the Company consummated the acquisition of the Paradise Island Business in a transaction which resulted in the ownership of 60% of SIHL by Sun International Investments Limited ("SIIL"). As a result of the purchase of the Paradise Island Business, the Company, through certain Bahamian subsidiaries, owns and operates the Atlantis Resort and Casino Complex, the Ocean Club Golf & Tennis Resort, the Paradise Paradise Beach Resort, a golf course, a water plant, an airport facility and other improvements on Paradise Island as well as land available for sale or development. The Company accounted for the purchase of the Paradise Island Business in accordance with APB 16, "Business Combinations" utilizing the purchase method of accounting. In accordance with the purchase method of accounting the purchase price was allocated to the assets and liabilities acquired based on their fair market value on the date of the acquisition and the revenues and expenses of the Paradise Island Business were included in the financial statements of the Company from May 3, 1994. If the acquisition had occurred on January 1, 1994, pro forma results of operations for the year ended December 31, 1994 would have been (in thousands, except per share data): revenues--$144,705; net loss--$3,093; loss per share--$.20. ATLANTIC CITY On December 16, 1996 (the "Effective Date"), Griffin Gaming & Entertainment, Inc. ("GGE"), formerly RII, became a wholly owned subsidiary of SIHL. Subsequent to the merger, GGE's name was changed to Sun International North America, Inc. ("SINA"). Pursuant to the Merger Agreement, (the "Merger") each share of SINA common stock outstanding immediately prior to the Effective Date of the Merger was converted into .4324 of the Company's Ordinary Shares. Also, each outstanding share of SINA's Class B common stock was converted into .1928 Ordinary Shares. Each .1928 Share received in exchange for a share of SINA's Class B common stock trades as part of a unit along with $1,000 principal amount of 11.375% Junior Mortgage Notes due December 15, 2004 (the "Junior Mortgage Notes") issued by a subsidiary of SINA. The Company accounted for the Merger in accordance with APB 16, "Business Combinations" utilizing the purchase method of accounting. The purchase method of accounting requires that SINA's net assets and liabilities acquired be recorded at their fair values based on independent appraisals, evaluation, estimations and other studies. As such appraisals and other valuations are incomplete at this time, the fair value adjustments reflected herein are management's preliminary determination of such values based on information currently available. Once all appraisals and valuations are complete, it is possible that additional valuation adjustments may be required. F-7 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) The following unaudited pro forma information reflects the results of the Company's operations as though the Merger had occurred on January 1, 1996. The pro forma information is not necessarily indicative of future results or what the Company's results of operations would have been had the Merger occurred on January 1, 1996.
1996 ---------- Net revenues...................................................................... $ 532,061 Net income........................................................................ $ 52,584 Earnings per share................................................................ $ 1.60
CONNECTICUT The Company has a 50% interest in Trading Cove Associates ("TCA"), a Connecticut general partnership that entered into a management agreement (the "Management Agreement") with the Mohegan Tribal Gaming Authority ("MTGA"), an instrumentality of the Mohegan Tribe (the "Tribe"), to develop and manage a casino resort and entertainment complex situated in the town of Montville, Connecticut (the "Mohegan Sun Casino"). The Mohegan Sun Casino opened on October 12, 1996. The Management Agreement has a seven year term (subject to a buy-out option after five years) and provides that TCA is entitled to receive between 30% and 40% of the net profits, as defined, of the Mohegan Sun Casino. The Management Agreement covers development, management, marketing and administration services. In addition, the Company and TCA acquired $38,300,000 and $1,700,000 respectively, of subordinated notes (the "Subordinated Notes") issued by the MTGA. As of November 8, 1996, the Company sold $19,150,000 of the Subordinated Notes and the accrued interest thereon to one of the partners of TCA at book value as of the date of the sale. Also, as of that date, TCA distributed $850,000 of Subordinated Notes plus accrued interest to the Company as a return of capital. Interest income on the Subordinated Notes is 15% per annum. Interest payable on the Subordinated Notes can be satisfied by the issuance of additional Subordinated Notes. All interest payments to date have been satisfied in this manner. In addition, TCA is obligated to pay certain amounts to the Company, as a priority payment from its management fee, for services provided by the Company. These amounts are paid as TCA receives sufficient management fees to meet the priority distribution. The Company believes the fair market value of the Subordinated Notes approximates their carrying value. INDIAN OCEAN AND FRANCE Effective July 1, 1993, SIIL acquired the stock of Aberdeen Management Limited, a Guernsey corporation (AML), Sun Hotels International Bermuda Limited, a Bermuda corporation (SHIB), Sun International Management Limited, a British Virgin Islands corporation (SIML), Sun International Finance Limited, a British Virgin Islands corporation (SIF), Sun Hotels International Management NV, a Netherlands Antilles corporation (SHIM), and BIRBO NV, a Netherlands Antilles corporation (BIRBO NV), collectively the "SIIL Businesses", in a business combination accounted for as a purchase. The principal activities of the entities are the investment in hotels and casinos and the provision of hotel and casino management, project consulting and executive management services. As a result of the Combination and Restructuring Agreement described below, the SIIL businesses were transferred to the Company in April 1995. RIGHTS OFFERING AND COMBINATION OF SIHL AND SIIL BUSINESSES In April 1995, the Company completed a rights offering (the "Rights Offering") pursuant to which holders of the Company's capital stock the ("Ordinary Shares") were issued rights to acquire 2,100,000 ordinary shares at a price of $15 per share. F-8 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) Simultaneously with the completion of the Rights Offering, the Company consummated a Combination and Restructuring Agreement (the "Combination Agreement") with SIIL pursuant to which SIIL transferred the SIIL Businesses to the Company in exchange for additional equity of the Company. For financial reporting purposes the transfer of the SIIL Businesses to SIHL was accounted for as a reorganization of entities under common control and treated in a manner similar to a pooling of interests. Accordingly, the accompanying financial statements of SIHL have been restated for all periods presented to include the SIIL Businesses. Under the terms of the agreement all profits of the businesses prior to May 1, 1995 are attributable to SIIL and therefore these profits have been recorded as a distribution of reserves in 1995, and are included within amounts due to affiliates at December 31, 1995. In connection with the Combination, SIIL also transferred to the Company its 50% interest in TCA. SHARE OFFERING On March 1, 1996, the Company completed a public offering of 8,049,737 of its Ordinary Shares at a price of $35 per share (the "Public Offering"). Prior to the Public Offering the Company had two series of stock, the Series A Ordinary Shares (the "Series A Shares") and the Series B Ordinary Shares (the "Series B Shares"). As a result of the Public Offering, the Company's Series A Ordinary Shares and Series B Ordinary Shares were automatically redesignated as Ordinary Shares without reference to series (the "Redesignation"). In addition, the Redesignation resulted in the elimination of a put right associated with the Series A Ordinary Shares and an increase of $63,843,000 in shareholders' equity on the Company's consolidated balance sheet. Prior to the Redesignation holders of the Series A Shares were entitled to sell, and require the Company to purchase, any Series A Shares tendered at a price of $17.50 per share on May 3, 1999 (the "Put Right"). While the Series A Shares were outstanding, the Company accreted the difference between the original issue price of $15 and the Put Right price by charging amounts to equity based on the effective interest method. NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of SIHL and its subsidiaries. All significant intercompany transactions and balances have been eliminated on consolidation. Investments in associated companies, which are less than 50% and more than 20% owned, are accounted for under the equity method of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company provides an allowance for doubtful accounts arising from casino, hotel, and other services, which is based upon a specific review of certain outstanding receivables. In determining the amount of the allowance the Company is required to make certain estimates and assumptions and actual results may differ from these estimates and assumptions. REVENUE RECOGNITION The Company recognizes the net win from casino gaming activities (the difference between gaming wins and losses) as gaming revenues. Revenues from hotel and related services and from theater ticket sales are F-9 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) recognized at the time the related service is performed. Management fees and other operating revenues include fees charged to unconsolidated affiliates for casino hotel management, executive management and project consulting fees. Revenues are recorded at the time the service is provided. PROMOTIONAL ALLOWANCES The retail value of accommodations, food, beverage and other services provided to customers without charge is included in gross revenue and deducted as promotional allowances. The estimated departmental costs of providing such promotional allowances are included in gaming costs and expenses as follows (in thousands):
1994 1995 1996 --------- --------- --------- Rooms............................................................ $ 776 $ 670 $ 919 Food and Beverage................................................ 2,461 4,047 4,131 Other............................................................ 60 167 260 --------- --------- --------- $ 3,297 $ 4,884 $ 5,310 --------- --------- --------- --------- --------- ---------
FOREIGN CURRENCY Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet dates are reported at the rates of exchange prevailing at those dates. Any gains or losses arising on monetary assets and liabilities from a change in exchange rates subsequent to the date of the transaction have been included in other operating expenses in the accompanying financial statements. These amounts were not significant for the years ended December 31, 1994, 1995, and 1996. For the purposes of consolidation and application of the equity method of accounting the current rate method is used, under which translation gains or losses are shown as a component of shareholders' equity. CASH EQUIVALENTS The Company considers all of its short-term money market securities purchased with maturities of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short maturity of these instruments. INVENTORIES Inventories of provisions and supplies are carried at the lower of cost (first-in, first-out) and market value. PROPERTY AND EQUIPMENT Property and equipment are depreciated over their estimated useful lives using the straight-line method. Interest costs of $1,464,000 and $438,000 were capitalized in 1994 and 1996, respectively. No interest costs were capitalized in 1995. GOODWILL Goodwill is amortized on a straight line basis over 40 years. Goodwill relating to the equity interests in associates is included as part of investment in associates in the accompanying consolidated balance sheets. It is the Company's policy to amortize goodwill over a period not exceeding 40 years. Included in equity in earnings of associated companies for the years ended December 31, 1994, 1995 and 1996 was $529,000, $264,000 and $263,000, respectively, of amortization expense relating to such goodwill. F-10 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STOCK OPTION COMPENSATION The Company has elected to apply Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees," ("APB 25") in accounting for compensation under its stock option plans in lieu of the alternative fair value accounting provided for under Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"). Certain pro forma disclosures related to SFAS 123 are included in Note 11. LONG-LIVED ASSETS The Company adopted the provisions of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long Lived Assets ("SFAS 121"). SFAS 121 requires, among other things, that an entity review its long-lived assets and certain related intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. As a result of its review, the Company does not believe that any asset impairment exists in the recoverability of its long-lived assets. INCOME TAXES The Company is subject to income taxes in certain jurisdictions. Accordingly, the accompanying financial statements include provisions and benefits for income taxes based on prevailing tax laws of those jurisdictions. The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under this method, the deferred tax liability is determined based on the difference between the financial reporting and tax bases of assets and liabilities at enacted tax rates which will be in effect for the years in which the differences are expected to reverse. Deferred tax liabilities are recognized for differences that will result in taxable amounts in future years. Deferred tax assets are recognized for differences that will result in deductible amounts in future years and for carry-forwards. A valuation allowance is recognized based on estimates of likelihood that some portion or all of the deferred tax asset will not be realized. PER SHARE DATA Per share data was computed using the weighted average number of Ordinary Shares outstanding. STOCK SPLIT All share, and per share, information given herein has been restated to reflect a two-for-one stock split announced by the Company on September 29, 1995 and effective from October 13, 1995. NOTE 3 -- CASH AND CASH EQUIVALENTS Cash equivalents at December 31, 1996 and 1995 included reverse repurchase agreements (federal government securities purchased under agreements to resell those securities) under which the Company had not taken delivery of the underlying securities and investments in a money market fund which invests exclusively in U.S. Treasury obligations. F-11 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 4 -- RESTRICTED CASH EQUIVALENTS Components of restricted cash equivalents were as follows (in thousands):
DECEMBER 31, -------------------- 1995 1996 --------- --------- Cash to secure letter of credit......................................... $ 15,000 Cash to secure borrowings............................................... 6,000 Showboat lease escrow................................................... 3,694 Other................................................................... $ 120 964 --------- --------- $ 120 $ 25,658 --------- --------- --------- ---------
NOTE 5 -- TRADE RECEIVABLES Components of trade receivables were as follows (in thousands):
DECEMBER 31, -------------------- 1995 1996 --------- --------- Gaming.................................................................. $ 8,822 $ 13,610 Less: allowance for doubtful accounts................................. (2,620) (5,574) --------- --------- 6,202 8,036 --------- --------- Non-gaming: Hotel and related..................................................... 8,858 14,696 Other................................................................. 3,867 7,597 --------- --------- 12,725 22,293 Less: allowance for doubtful accounts................................. (1,308) (2,943) --------- --------- 11,417 19,350 --------- --------- $ 17,619 $ 27,386 --------- --------- --------- ---------
NOTE 6 -- PROPERTY AND EQUIPMENT Components of property and equipment were as follows (in thousands):
DECEMBER 31, ---------------------- 1995 1996 ---------- ---------- Land and land rights.................................................... $ 78,837 $ 354,936 Land improvements and utilities......................................... 83,525 84,915 Hotels and other buildings.............................................. 56,186 219,806 Furniture, machinery and equipment...................................... 38,611 72,271 Construction in progress................................................ 2,008 22,159 ---------- ---------- 259,167 754,087 Less: accumulated depreciation........................................ (11,031) (22,902) ---------- ---------- $ 248,136 $ 731,185 ---------- ---------- ---------- ----------
F-12 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 7 -- DEFERRED CHARGES AND OTHER ASSETS Components of deferred charges and other assets were as follows (in thousands):
DECEMBER 31, -------------------- 1995 1996 --------- --------- CRDA bonds and deposits, net................................................................ $ 10,393 Mohegan Sun Casino.......................................................................... $ 4,397 5,089 Debt issuance costs......................................................................... 1,379 5,320 Other....................................................................................... 1,469 3,177 --------- --------- $ 7,245 $ 23,979 --------- --------- --------- ---------
Costs incurred in relation to the Mohegan Sun Casino are either refundable or are being amortized over the seven year term of the management agreement. NOTE 8 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Components of accounts payable and accrued liabilities were as follows (in thousands):
DECEMBER 31, --------------------- 1995 1996 --------- ---------- Trade payables............................................................................. $ 18,771 $ 38,951 Accrued payroll and related taxes and benefits............................................. 4,225 15,163 Customer deposits and unearned revenues.................................................... 8,750 7,939 Accrued gaming taxes, fees and related assessments......................................... 3,344 9,176 Accrued Merger and related costs........................................................... 8,527 Accrued interest........................................................................... 1,560 8,346 Other accrued liabilities.................................................................. 4,963 19,717 --------- ---------- $ 41,613 $ 107,819 --------- ---------- --------- ----------
F-13 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 9 -- LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
DECEMBER 31, ---------------------- 1995 1996 ---------- ---------- Mortgage Notes............................................................................ $ 125,000 Unamortized premium..................................................................... 7,500 ---------- 132,500 ---------- Junior Mortgage Notes..................................................................... 22,101 Unamortized premium..................................................................... 1,326 ---------- 23,427 ---------- Showboat Notes............................................................................ 105,333 ---------- Borrowing under bank credit facilities: Paradise Island......................................................................... $ 80,000 Mohegan Sun Casino...................................................................... 40,000 Other..................................................................................... 1,153 2,105 ---------- ---------- 121,153 263,365 Less: amounts due within one year....................................................... (5,000) (747) ---------- ---------- $ 116,153 $ 262,618 ---------- ---------- ---------- ----------
MORTGAGE NOTES AND JUNIOR MORTGAGE NOTES In 1994, SINA issued $125,000,000 of 11% Mortgage Notes (the "Mortgage Notes") due September 15, 2003 and $35,000,000 of 11.375% Junior Mortgage Notes. The Mortgage Notes and the Junior Mortgage Notes are guaranteed by Resorts International Hotels, Inc., ("RIH") a wholly owned subsidiary of SINA. The Mortgage Notes and the Junior Mortgage Notes are secured by liens on the Resorts Casino Hotel, consisting of RIH's fee and leasehold interest in the Resorts Casino Hotel, the contiguous parking garage and property, and related personal property. The indenture pursuant to which the Mortgage Notes was issued permits the liens securing the Mortgage Notes to be subordinated to a lien securing a working capital facility of up to $20,000,000. The Junior Mortgage Notes were issued as part of Units with SINA's Class B common stock. Pursuant to the Merger, these Units consist of $1,000 principal amount of Junior Mortgage Notes and .1928 of an Ordinary Share. These fractional Ordinary Shares may not be transferred separately from the related Junior Mortgage Note. In certain circumstances, interest payable on the Junior Mortgage Notes may be satisfied by the issuance of additional Units. The indenture pursuant to which the Mortgage Notes and the Junior Mortgage Notes were issued (collectively the "Indentures") prohibit RIH and its subsidiaries from paying dividends, from making other distributions in respect of their capital stock, and from purchasing or redeeming their capital stock, with certain exceptions, unless certain interest coverage ratios are attained. In addition, the Indentures restrict RIH and its subsidiaries from incurring additional indebtedness, with certain exceptions and limit intercompany loans by RIH to SINA to loans from proceeds of a senior working capital facility of up to $20,000,000 and other advantages not in excess of $1,000,000 in the aggregate at any time outstanding. As of December 31, 1996, RIH had $21,642,000 of cash and equivalents, all of which was restricted as to distribution under these provisions. F-14 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 9 -- LONG-TERM DEBT (CONTINUED) The First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000 (the "Showboat Notes") are non-recourse notes, secured by a mortgage encumbering by a collateral assignment of the Showboat Lease, and by a pledge of any proceeds of the sale of such mortgage and collateral assignment. Interest on the Showboat Notes consists of a pass-through (subject to certain adjustments) of the lease payments received pursuant to the lease of 10-acres of land under the Showboat Casino Hotel (the "Showboat Lease"). PARADISE ISLAND CREDIT FACILITY In 1996, the Company amended an existing credit facility (the "Revolving Credit Facility") with a syndicate of banks led by The Bank of Nova Scotia, to allow for borrowings up to $250 million. Loans under the Revolving Credit Facility bear interest at (i) the higher of (a) The Bank of Nova Scotia's base rate plus one and one half percent or (b) the Federal Funds rate plus 2% or (ii) The Bank of Nova Scotia's reserve-adjusted LIBO rate plus 2.25%. Loans under the Revolving Credit Facility may be prepaid and reborrowed at any time and are due in full on October 15, 2001. Commitment fees are calculated at one half of one percent per annum on the undrawn amount of the Revolving Credit Facility and are due, along with accrued interest, quarterly. The Revolving Credit Facility contains restrictive covenants which include (a) restrictions on the payment of dividends, (b) minimum levels of earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") and (c) a minimum relationship between EBITDA and interest expense and debt. Prior to its amendment, the Revolving Credit Facility allowed borrowing up to $80,000,000 and base interest at an annual rate of 2.5% above the LIBO rate (6.625% at December 31, 1995). A standby commitment fee was payable on the unused portion of the line at the rate of one half of one percent per annum. Substantially all of the Company's assets, except its investment in SINA, are pledged in connection with the Revolving Credit Facility. Amounts outstanding under the Revolving Credit Facility were repaid in March 1996. MOHEGAN SUN CASINO CREDIT FACILITY The Company borrowed $40,000,000 under a credit facility from a syndicate of banks led by The Bank of Nova Scotia. This credit facility accrued interest at an annual rate of 2.75% above the LIBO rate. The credit facility was repaid in March 1996. OVERDRAFT LOAN FACILITY Pursuant to a letter of commitment dated September 30, 1994, as amended, between the Company and The Bank of Nova Scotia, the Company has a revolving overdraft loan facility (the "Overdraft Facility") in the amount of Bahamian $5,000,000 which was equal to United States $5,000,000 as of December 31, 1995 and 1996. The Overdraft Facility bears interest at The Bank of Nova Scotia's Base Rate for Bahamian dollar loans plus 1.5% with repayment subject to annual review. The Overdraft Facility is secured by substantially all of the Company's Bahamian assets and ranks pari passu with the Paradise Island Credit Facility. The carrying value of the long-term debt at December 31, 1995 and 1996 approximates its fair market value as the credit facilities' interest rates fluctuate with current market rates and the Senior Notes and the Junior Notes were restated to fair market value in connection with the Merger. F-15 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 10 -- SHAREHOLDERS' EQUITY The Company's authorized and issued shares were as follows:
DECEMBER 31, ---------------------------- 1995 1996 ------------- ------------- Series A-- $0.001 each Authorized.......................................................... 150,000,000 Issued.............................................................. 4,000,000 Series B-- $0.001 each Authorized.......................................................... 100,000,000 Issued.............................................................. 16,952,380 Total Ordinary Shares-- Authorized.......................................................... 250,000,000 250,000,000 Issued.............................................................. 20,952,380 32,707,462
In addition, there are 100,000,000 authorized preference shares of $.001 par value each (the "Preference Shares"). As of December 31, 1996, no Preference Shares had been issued. NOTE 11 -- STOCK OPTIONS AND WARRANTS On May 1, 1995, the shareholders of the Company approved a stock option plan (the "Plan"). The option prices are equal to the market value per share of the Ordinary Shares on the date of the grant. The Plan provides for the options to become exercisable, unless otherwise specified by the Board of Directors and subject to certain acceleration and termination provisions, after two years from the date of grant in respect of 20% of such options, and thereafter in installments of 20% per year over a four-year period. The options have a term of 10 years from the date of grant. The option plan provides for options with respect to Ordinary Shares to be granted to directors, officers and employees of SIHL and its subsidiaries. Pursuant to the Merger, options that were granted under SINA's previous stock options plans and which were outstanding as of the Effective Date (the "SINA Options") remain outstanding and were amended in accordance with the Merger Agreement. The SINA Options as amended entitle the holder to purchase the same number of Ordinary Shares as the holder would have been entitled to receive pursuant to the Merger, had such holder exercised his or her SINA Options immediately prior to the Effective Date. Also, the exercise price was adjusted accordingly. As a result of the Merger, and in accordance with the provisions in the previous SINA stock option plans, all SINA Options became fully vested upon consummation of the Merger. F-16 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 11 -- STOCK OPTIONS AND WARRANTS (CONTINUED) A summary of the Company's stock option activity for 1996 and 1995 was as follows:
1996 1995 ------------------------- ------------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE EXERCISE EXERCISE SHARES PRICE SHARES PRICE ---------- ------------- ---------- ------------- Outstanding at beginning of year.......................... 1,732,754 $ 13.73 1,461,986 $ 12.86 Granted................................................... 103,429 45.68 270,768 18.44 Exercised................................................. (264,131) 11.78 Cancelled................................................. (200,029) 10.77 Converted SINA options to SIHL options.................... 268,316 19.76 ---------- ---------- Outstanding at end of year................................ 1,640,339 14.18 1,732,754 13.73 ---------- ---------- ---------- ---------- Exercisable at end of year................................ 368,462 18.67 -0- ---------- ---------- ---------- ----------
For purposes of supplemental disclosures required by SFAS 123, the fair value of options granted during 1995 and 1996 was estimated as of the respective dates of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1995 and 1996, respectively: risk-free interest rates of 6.5% and 6.2%; volatility factors of the expected market price of the Ordinary Shares of 42% for both periods; expected life of the options of 5 years for the periods, and expected dividend yields of zero. The weighted average grant date fair value of options granted during 1995 and 1996 was $8.94 and $20.25, respectively. For pro forma purposes, the estimated fair value of options is amortized to expense over the options' vesting period. Net earnings on a pro forma basis, determined as if the Company had accounted for its stock options under the fair value method of SFAS 123, were $18,030,000 and $44,877,000, respectively, for the years 1995 and 1996, and earnings per share were $0.85 and $1.55, respectively, for the years 1995 and 1996. In 1994, SINA issued warrants (the "Warrants'), which were exercisable through May 3, 1998, to purchase 933,370 shares of SINA Common Stock at $6.00 per share. Pursuant to the Merger Agreement and the terms of the Warrants, the Warrants were adjusted into rights to purchase 403,589 Ordinary Shares at $13.88 per share. At December 31, 1996, no warrants had been exercised. NOTE 12 -- RELATED PARTY TRANSACTIONS LICENSE AND SERVICES AGREEMENTS In connection with the Merger, SINA and RIH entered into a license and services agreement (the "License and Services Agreement") with the Griffin Group, Inc. ("Griffin Group"), which agreement grants to the Company a non-exclusive license to use the name and likeness of Merv Griffin to advertise and promote the Company's casino/hotel properties (the "Casino Properties"). The Company also has the non-exclusive right to use certain shows and gaming concepts set forth therein and the non-exclusive right to services provided by Mr. Griffin, on a pay or play basis, as marketing consultant and as host, producer, presenter and featured performer in various shows to be presented at the Casino Properties. As compensation under the License and Services Agreement, immediately prior to the Merger, SINA paid Griffin Group fees totaling $10,973,000 for the license and services through September 16, 2001. Also, all business, travel and other expenses incurred by Griffin Group in connection with providing requested services are to be paid by the Company as such expenses are incurred. The License and Services Agreement is to continue until September 16, 2001 and provides for earlier termination by either the Company or Griffin Group under certain circumstances. Upon any termination of the agreement, Griffin Group is entitled to retain all monies paid to it and is entitled to be paid all amounts F-17 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 12 -- RELATED PARTY TRANSACTIONS (CONTINUED) owing to it as of the date of termination. Additionally, in the event of any sale or other disposition of any of the Casino Properties, the use of the name and likeness of Mr. Griffin must cease with respect to such property. In the License and Services Agreement the Company agreed to indemnify, defend and hold harmless Griffin Group and Mr. Griffin against certain claims, losses and costs, and to maintain certain insurance coverage with Mr. Griffin and Griffin Group as named insured. In connection with the Merger, all prepaid fees under the License and Services Agreement were written off as having indeterminable future value. MANAGEMENT SERVICES In the normal course of business, the Company undertakes transactions with a number of unconsolidated affiliated companies. Certain of the Company's subsidiaries provide project consulting and management services to such affiliates, principally Mohegan Sun, Sun Indian Ocean and Sun France (see Note 1). Due from Affiliates--Current were as follows (in thousands):
DECEMBER 31, -------------------- 1995 1996 --------- --------- Mohegan Sun................................................................ $ 902 Sun France................................................................. $ 391 346 Sun Indian Ocean........................................................... 3,077 3,820 Other...................................................................... 161 --------- --------- $ 3,629 $ 5,068 --------- --------- --------- ---------
At December 31, 1995 and 1996, the Company had a non-current receivable from Sun France of $1,288,000 and $1,089,000, respectively. In addition, at December 31, 1995, the Company had affiliated payables of $8,507,000, of which $8,418,000 was due to SIIL. NOTE 13 -- RETIREMENT PLANS Certain of the Company's subsidiaries participate in a defined contribution plan covering substantially all of their full-time employees. The companies make contributions to this plan based on a percentage of eligible employee contributions. Total expense for this plan was $29,000, $58,000 and $55,000 for the years ended December 31, 1994, 1995 and 1996, respectively. In addition to the plan described above, union and certain other employees of the Company's Bahamian subsidiaries are covered by multi-employer defined benefit pension plans to which employers make contributions. In connection with these plans, the Company was billed and paid $609,000, $1,745,000 and $1,771,579 for the years ended December 31, 1994, 1995 and 1996, respectively. NOTE 14 -- INCOME TAXES A significant portion of the Company's operations are located in The Bahamas where there are no income taxes. Substantially all of the 1995 and 1996 provisions of $535,000 and $576,000 has been made based upon the earnings of the Company's U.S. subsidiaries. F-18 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 14 -- INCOME TAXES (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In connection with the Merger, the Company acquired the deferred tax asset and liabilities of SINA. A summary of the deferred tax assets and liabilities as of December 31, 1996 is as follows (in thousands): Deferred tax liabilities: Basis differences on land held for investment, development or resale........................................................ $ (42,100) Basis differences on property and equipment.................... (64,400) Other.......................................................... (2,800) --------- Total deferred tax liabilities............................. (109,300) --------- Deferred tax assets: Net operating loss carryforwards............................... 197,500 Basis differences on land held for investment, development or resale........................................................ 10,100 Book reserves not yet deductible for tax return purposes....... 26,300 Basis difference on debt....................................... 23,300 Tax credit carryforwards....................................... 1,000 Other.......................................................... 7,800 --------- Total deferred tax assets.................................. 266,000 Valuation allowance for deferred tax assets.................... (202,700) --------- Deferred tax assets, net of valuation allowance............ 63,300 --------- Net deferred tax liabilities..................................... $ (46,000) --------- ---------
For federal income tax purposes, SINA had net operating loss carryforwards of approximately $564,000,000 at December 31, 1996; however, due to the Merger, these net operating loss carryforwards (the "Pre-Change NOLs") are limited in their availability to offset future taxable income of the Company. As a result of these limitations, approximately $10,000,000 of Pre-Change NOLs will become available for use each year through the year 2009. An additional $130,000,000 of these Pre-Change NOLs would be available to offset gains on sales of assets owned at the date of the Merger which are sold within five years of that date. The remaining Pre-Change NOLs are expected to expire unutilized. The restricted net operating loss carryforwards which the Company believes will become available for utilization in spite of the limitations expire as follows: $123,000,000 in 2005, $23,000,000 in 2006, $31,000,000 in 2007, $56,000,000 in 2008, $1,000,000 in 2009 and $6,000,000 in 2010. Also at December 31, 1996, SINA had federal income tax credit carryforwards of approximately $400,000, which are restricted as to use and expire $100,000 per year between 2006 and 2009, and federal AMT tax credits of approximately $600,000, which carry forward indefinitely. At December 31, 1996, SINA had approximately $206,000,000 of net operating loss carryforwards in New Jersey which expire as follows: $20,000,000 in 1997, $30,000,000 in 1998, $46,000,000 in 1999, $66,000,000 in 2000, $43,000,000 in 2001 and $1,000,000 in 2002. At December 31, 1996, RIH had approximately $117,000,000 of net operating loss carryforwards in New Jersey which expire as follows: $111,000,000 in 1997, $1,000,000 in 2001 and $5,000,000 in 2003. As SINA could not determine that a substantial portion of its deferred tax assets will more likely than not be realized, a valuation allowance has been recorded in the financial statements. F-19 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 15 -- COMMITMENTS AND CONTINGENCIES CASINO LICENSE The operations of a casino in both The Bahamas and Atlantic City are subject to regulatory controls. A casino license must be obtained in each jurisdiction by the operator and the license must be periodically renewed and is subject to revocation at any time. In Atlantic City, the Company currently acts as a holding company under an interim casino authorization. In the event that the Company were not able to maintain its licenses, management believes that the Company would still realize the carrying value of its related assets. CASINO REINVESTMENT DEVELOPMENT AUTHORITY ("CRDA") OBLIGATIONS Effective with the Merger, the Company, through its ownership of SINA (a "licensee") is required to comply with the State of New Jersey Casino Control Act (the "Casino Control Act"). The Casino Control Act, as amended, requires a licensee to purchase bonds issued by the CRDA, or to make other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's gross revenue. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of gross revenue. Licensees are required to make quarterly deposits with the CRDA against its current year investment obligation. The CRDA bonds have interest rates ranging from 3.9% to 7% and have repayment terms of between 20 and 50 years. At December 31, 1996, SINA had $6,859,000 face value of bonds issued by the CRDA and had $19,701,000 on deposit with the CRDA. These bonds and deposits, net of an estimated discount to reflect the below-market interest rate payable on the bonds, are included in deferred charges and other assets in the Company's Consolidated Balance Sheet. COMPLETION GUARANTY In connection with the development of the Mohegan Sun Casino, the Company executed a Secured Completion Guarantee, under which the Company guaranteed that the Mohegan Sun Casino would be completed and that all costs required for such completion would be paid. The Secured Completion Guarantee is subject to a cap of $50,000,000 and is secured in part by a $15,000,000 letter of credit and a pledge by SIIL of 1,500,000 Ordinary Shares. As of December 31, 1996, the Company had funded $42,000,000 under the Secured Completion Guarantee with the remaining $8,000,000 funded in January 1997. NEW HEADS AGREEMENT In connection with the Paradise Island Expansion, on December 13, 1995 the Company and the Bahamian Government entered into the New Heads of Agreement (the "New Heads of Agreement"), which supplements the Heads of Agreement, pursuant to which the Company will receive certain tax relief, incentives and other benefits. These benefits will be granted in exchange for the Company agreeing to, among other things, spend a minimum of $250 million on the Paradise Island Expansion, build a minimum of 1,000 additional guest rooms and employ and keep employed between 2,000 and 2,500 additional Bahamian workers after completion of the Paradise Island Expansion. CONTROL OF SUN INTERNATIONAL SIIL has agreed with the Bahamian Government not to reduce its equity interest in SIHL below 45% until six months after completion of an expansion project currently underway at Atlantis, and thereafter to control a majority of the SIHL Board of Directors for a period of five additional years. LAND LEASE OPTION SINA entered into a five year lease effective August 1, 1996 (the "Lease Agreement"), to lease certain real property. SINA is required to pay rent of $825,000 per year plus related real estate taxes, and has the F-20 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) option to purchase the leased property each year on July 31 until July 31, 2001 for $12,000,000. If SINA does not exercise the purchase option, the lessor may require SINA to purchase the leased property for $12,000,000 at July 31, 2001. LITIGATION The Company is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the accompanying consolidated financial statements. NOTE 16 -- GEOGRAPHIC INFORMATION The following is an analysis of combined gross revenues by geographical location (in thousands):
YEAR ENDED DECEMBER 31, --------------------------------- 1994 1995 1996 --------- ---------- ---------- United States.............................................. $ 3,565 Indian Ocean............................................... $ 3,583 $ 5,114 4,497 France..................................................... 802 900 834 Bermuda.................................................... 2,661 2,607 2,603 Bahamas.................................................... 72,911 214,593 240,719 --------- ---------- ---------- $ 79,957 $ 223,214 $ 252,218 --------- ---------- ---------- --------- ---------- ----------
NOTE 17 -- EQUITY IN EARNINGS OF ASSOCIATED COMPANIES The consolidated financial statements include equity in earnings of affiliates as a result of the Company's 22.8% interest in Sun Indian Ocean and 25% equity holding in Sun France. The following summarized financial information of Sun France has been prepared under United States generally accepted accounting principles as at and for the years ended October 31, 1994, 1995 and 1996; converted to thousands of U.S. dollars at the prevailing exchange rate.
1994 1995 1996 --------- --------- --------- Revenues....................................... $ 72,171 $ 100,084 $ 106,574 Income from operations......................... 7,836 12,277 13,016 Income before income taxes..................... 756 5,175 8,074 Current assets................................. $ 8,386 $ 12,580 $ 10,898 Total assets................................... 78,320 84,143 73,097 Current liabilities............................ 52,623 54,022 45,485 Shareholders' equity........................... 7,809 11,760 15,502
The following summarized financial information of Sun Indian Ocean has been prepared under United States generally accepted accounting principles as at and for the years ended December 31, 1994, 1995 and 1996; converted to thousands of U.S. dollars at the prevailing exchange rate:
1994 1995 1996 --------- --------- --------- Revenues....................................... $ 49,955 $ 63,817 $ 74,850 Income from operations......................... 10,056 11,565 13,626 Income before income taxes..................... 6,105 7,782 9,858 Current assets................................. $ 11,043 $ 23,862 $ 24,497 Total assets................................... 95,965 140,786 167,634 Current liabilities............................ 23,588 28,954 40,428 Shareholders' equity........................... 49,501 93,188 92,241
F-21 SUN INTERNATIONAL HOTELS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN U.S. DOLLARS) NOTE 18 -- SUBSEQUENT EVENTS In February 1997, RIHF offered to purchase (the "Tender Offer") all the outstanding Mortgage Notes and Junior Mortgage Notes at a purchase price equal to 108.047% and 108.750%, respectively, of the principal amounts outstanding of such securities. In addition, in connection with the Tender Offer, RIHF solicited consents to certain amendments to the indentures governing these securities and to the termination of certain security documents. In March 1997, the Company, together with SINA, issued $200.0 million of 9% unsecured senior subordinated notes due 2007 (the "Senior Subordinated Notes"). The Senior Subordinated Notes are subordinated in right of payment to all existing and future senior debt of the Company. The Senior Subordinated Notes contain certain restrictive covenants, including limitations on the incurrence of additional indebtedness. Part of the net proceeds from the issue were used in March 1997 to acquire approximately 96% of the Mortgage Notes and the Junior Mortgage Notes that were tendered pursuant to the Tender Offer. As a result of the consummation of the Tender Offer and the amendments to the respective indentures, $5.4 million of Mortgage Notes and $1.1 million of Junior Mortgage Notes remain outstanding, but are no longer secured or subject to the restrictions described in Note 9. F-22 - ------------------------------------------- ------------------------------------------- - ------------------------------------------- ------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUERS SINCE THE DATE HEREOF. -------------- TABLE OF CONTENTS
PAGE ----- Available Information.......................... 4 Enforceability of Civil Liabilities............ 5 Incorporation of Certain Documents by Reference..................................... 5 Disclosure Regarding Forward Looking Statements.................................... 6 Prospectus Summary............................. 7 Risk Factors................................... 19 Use of Proceeds................................ 28 The Company.................................... 29 Capitalization................................. 30 Pro Forma Consolidated Statements of Operations.................................... 31 Selected Financial and Operating Data.......... 34 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 36 The Exchange Offer............................. 40 Business....................................... 46 Management..................................... 63 Principal Shareholder.......................... 65 The Commonwealth of The Bahamas................ 66 Republic of Mauritius.......................... 66 Description of Notes........................... 67 Tax Consequences............................... 91 Plan of Distribution........................... 91 Legal Matters.................................. 92 Experts........................................ 92 Index to Consolidated Financial Statements..... F-1
$200,000,000 SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. OFFER FOR 9% SENIOR SUBORDINATED NOTES DUE 2007 IN EXCHANGE FOR 9% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2007 -------------- PROSPECTUS -------------- , 1997 - ------------------------------------------- ------------------------------------------- - ------------------------------------------- ------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 56 of the IBCA empowers a company incorporated under the IBCA to indemnify against all expenses, including legal fees, and against all judgements, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who (a) is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, an officer or a liquidator of the company; or (b) is or was, at the request of the company, serving as a director, officer or liquidator of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, PROVIDED, HOWEVER, that such indemnification may only be provided to a person if the person acted honestly and in good faith with a view to the best interests of the company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful. The decision of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the company and as to whether the person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the IBCA unless a question of law is involved. Sun International provides for indemnification of its directors and officers pursuant to Article 85 of its Articles of Association as amended, which provides that, net of any indemnification an officer or director of Sun International receives from another source, Sun International will indemnify its officers and directors to the fullest extent permitted by the IBCA. Sun International has purchased directors' and officers' liability insurance policies indemnifying its officers and directors and the officers and directors of its subsidiaries against claims and liabilities (with stated exceptions) to which they may become subject by reason of their positions with Sun International or its subsidiaries as directors and officers. ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES (a) Exhibits. 2.1 Agreement and Plan of Merger dated as of August 19, 1996, among Sun International, Sun Merger Corp. and Griffin Gaming & Entertainment, Inc. as amended (incorporated by reference to Annex I of Registration Statement No. 333-15409 of Sun International on Form F-4). 2.2 Combination and Restructuring Agreement dated as of December 12, 1994, between SIIL and Sun International (incorporated by reference to Exhibit 2.1 of Registration Statement No. 33-89250 of Sun International on Form F-1). 2.3 Form of Amendment No. 1 to the Combination and Restructuring Agreement between SIIL and Sun International (incorporated by reference to Exhibit 2.3 of Registration Statement No. 33-89250 of Sun International on Form F-1). 3.1 Amended and Restated Memorandum of Association of Sun International (incorporated by reference to Exhibit 3.1 of Registration Statement No. 333-15409 of Sun International on Form F-4). 3.2 Articles of Association of Sun International adopted April 28, 1995, as amended (incorporated by reference to Exhibits 3.3 and 3.4 of Registration Statement No. 33-80477). 3.3 Restated Certificate of Incorporation, as amended, of SINA. 3.4 Amended and Restated By-laws of SINA. 3.5 Memorandum of Association of Sun International Bahamas Limited. 3.6 Articles of Association of Sun International Bahamas Limited.
II-1 3.7 Memorandum of Association of Paradise Acquisitions Limited. 3.8 Articles of Association of Paradise Acquisitions Limited. 3.9 Memorandum of Association of Paradise Island Limited. 3.10 Articles of Association of Paradise Island Limited. 3.11 Memorandum of Association of Paradise Enterprises Limited. 3.12 Articles of Association of Paradise Enterprises Limited. 3.13 Memorandum of Association of Island Hotel Company Limited. 3.14 Articles of Association of Island Hotel Company Limited. 3.15 Memorandum of Association of Paradise Beach Inn Limited. 3.16 Articles of Association of Paradise Beach Inn Limited. 3.17 Memorandum of Association of Sun International Management Limited. 3.18 Articles of Association of Sun International Management Limited. 3.19 Certificate of Incorporation of GGRI, Inc., as amended. 3.20 By-laws of GGRI, Inc. 3.21 Certificate of Incorporation, as amended, of Resorts International Hotel, Inc. 3.22 By-laws of Resorts International Hotel, Inc. 3.23 Certificate of Incorporation of Sun Cove, Ltd. 3.24 By-laws of Sun Cove, Ltd. 4.1 Form of Ordinary Share Certificate of Sun International (incorporated by reference to Exhibit 4.1 of Registration Statement No. 33-80477 of Sun International on Form F-3). 4.2 Form of Registration Rights Agreement among Sun International, Fidelity Management and Research Company and TCW Special Credits (incorporated by reference to Exhibit 2.3 of the 1994 Annual Report of Sun International on Form 20-F, as amended by Amendment No. 1 thereto, File No. 0-22794). 4.3 Form of Amendment No. 1 to the Registration Rights Agreement among Sun International, Fidelity Management and Research Company and TCW Special Credits (incorporated by reference to Exhibit 4.4 of Registration Statement No. 33-89250 of Sun International on Form F-1, as amended by Amendment No. 2 thereto). 4.4 Form of Indenture dated as of March 10, 1997, among the Issuers, the Guarantors and The Bank of New York, as trustee, and exhibits thereto (incorporated by reference to Exhibit (4)(e)(2) of the 1996 SINA 10-K). 4.5 Form of Outstanding Note (included in Exhibit 4.4). 4.6 Form of Exchange Note. 4.7 Form of Guarantee (included in Exhibit 4.4). 4.8 Form of Purchase Agreement dated as of March 10, 1997 among the Issuers, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit (4)(e)(1) of the 1996 SINA 10-K). 4.9 Form of Registration Rights Agreement dated as of March 10, 1997 among the Issuers, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit (4)(e)(3) of the 1996 SINA 10-K).
II-2 4.10 Inter-Borrower Agreement dated as of March 10, 1997 between Sun International and SINA (incorporated by reference to Exhibit (4)(e)(4) of the 1996 SINA 10-K). 5.1 Opinion of Cravath, Swaine & Moore. 5.2 Opinion of Kozlov, Seaton, Romanini, Brooks & Greenberg. 5.3 Opinion of Rome McGuigan Sabanosh, P.C. 5.4 Opinion of Harry B. Sands and Company. 5.5 Opinion of Smith-Hughes, Raworth & McKenzie. 8.1 Opinion of Cravath, Swaine & Moore as to certain U.S. federal income tax matters (included in Exhibit 5.1). 8.2 Opinion of Harry B. Sands and Company as to certain Bahamian tax matters (included in Exhibit 5.4). 10.1 Sun International's Stock Option Plan (incorporated by reference to Exhibit 10.10 of Registration Statement No. 33-89250 of Sun International on Form F-1). 10.2 Employment Agreement dated as of May 1, 1995 between Sun International and Solomon Kerzner (incorporated by reference to Exhibit 10.2 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.3 Heads of Agreement among the Government of the Commonwealth of The Bahamas, Sun International and SIIL dated August 18, 1993 (incorporated by reference to Exhibit 3.3 of the 1994 Annual Report of Sun International on Form 20-F, as amended by Amendment No. 1 thereto, File No. 0-22794). 10.4 Heads of Agreement between the Government of the Commonwealth of The Bahamas and Sun International dated December 13, 1995 (incorporated by reference to Exhibit 10.4 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.5 Amended and Restated Partnership Agreement of Trading Cove Associates dated as of August 29, 1995, among Sun Cove Limited, RJH Development Corp., Leisure Resort Technology, Inc., Slavik Suites, Inc. and LMW Investments, Inc. (incorporated by reference to Exhibit 10.7 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.6 Note Purchase Agreement dated as of September 29, 1995 between the Mohegan Tribal Gaming Authority and Sun International (incorporated by reference to Exhibit 10.8 of the Registration Statement No. 33-80477 of Sun International on Form F-3). 10.7 Secured Completion Guarantee dated as of September 29, 1995, made by Sun International in favor of First Fidelity Bank, as trustee (incorporated by reference to Exhibit 10.9 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.8 Omnibus Financing Agreement dated as of September 21, 1995 between Sun International and TCA. 10.9 Amended and Restated Gaming Facility Development and Construction Agreement between the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates dated September 1, 1995 (incorporated by reference to Exhibit 10.10 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.10 Amended and Restated Gaming Facility Management Agreement Between the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates dated August 30, 1995 (incorporated by reference to Exhibit 10.11 of Registration Statement No. 33-80477 of Sun International on Form F-3).
II-3 10.11 Representative Management Agreement for properties located in the Indian Ocean region and managed by a subsidiary of Sun International, together with an Addendum thereto and a related Novation Agreement (incorporated by reference to Exhibit 10.12 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.12 Technical Assistance Agreement dated April 24, 1992 between a subsidiary of Sun International and Societe de Participation et d'Investissements dans les Casinos (incorporated by reference to Exhibit 10.13 of Registration Statement No. 33-80477 of Sun International on Form F-3). 10.13 Form of Amended and Restated Revolving Credit Agreement among Sun International, certain subsidiaries of the Registrant and certain lenders party thereto (incorporated by reference of Registration Statement No. 333-15409 of Sun International on Form F-4). 10.14 Stockholder Agreement dated as of August 19, 1996 among Sun International and the stockholders named therein, as amended (incorporated by reference to Annex II of Registration Statement No. 333-15409 of Sun International on Form F-4). 10.15 Stockholder Agreement dated as of August 19, 1996 among SINA and SIIL, as amended (incorporated by reference to Annex III of Registration Statement No. 333-15409 of Sun International on Form F-4). 10.16 Agreement for Sale dated September 18, 1996 among Sun International, Ocean Properties Bahamas Limited and Paradise Corporation (incorporated by reference of Registration Statement No. 333-15409 of Sun International on Form F-4). 10.17 Declaration of Trust and Agreement dated as of October 29, 1996 among Sun International, Sun Merger Corp. and the Honorable Thomas H. Kean (incorporated by reference of Registration Statement No. 333-15409 of Sun International on Form F-4). 12.1 Statement re computation of ratios. 21.1 Subsidiaries of Sun International (incorporated by reference to Exhibit 21.1 of Registration Statement No. 333-15409 of Sun International on Form F-4). 21.2 Subsidiaries of SINA (incorporated by reference to Exhibit (21) of the 1996 SINA 10-K). 23.1 Consent of Arthur Andersen (in respect of their January 31, 1996 report incorporated by reference to the 1995 Sun 20-F) (included in Exhibit 23.4). 23.2 Consent of Arthur Andersen LLP (in respect of their December 15, 1995 report regarding the Mohegan Tribal Gaming Authority incorporated by reference to Sun's Current Report on Form 6-K dated January 30, 1996) (included in Exhibit 23.4). 23.3 Consent of Ernst & Young LLP (in respect of their July 14, 1994 report incorporated by reference to the 1995 Sun 20-F). 23.4 Consent of Arthur Andersen LLP (in respect of their February 21, 1997 report). 23.5 Consent of Ernst & Young LLP (in respect of their report dated February 14, 1997 (except for Note 18, as to which the date is March 17, 1997) incorporated by reference to the 1996 SINA 10-K). 23.6 Consent of Cravath, Swaine & Moore (included in Exhibit 5.1). 23.7 Consent of Kozlor, Seaton, Romanini, Brooks & Greenberg (included in Exhibit 5.2). 23.8 Consent of Rome McGuigan Sabanosh, P.C. (included in Exhibit 5.3). 23.9 Consent of Harry B. Sands and Company (included in Exhibit 5.4). 23.10 Consent of Smith-Hughes, Raworth & McKenzie (included in Exhibit 5.5). 24.1 Power of Attorney for Sun International Hotels Limited.
II-4 24.2 Power of Attorney for Sun International North America, Inc. 24.3 Power of Attorney for Sun International Bahamas Limited. 24.4 Power of Attorney for Paradise Acquisitions Limited. 24.5 Power of Attorney for Paradise Island Limited. 24.6 Power of Attorney for Paradise Enterprises Limited. 24.7 Power of Attorney for Island Hotel Company Limited. 24.8 Power of Attorney for Paradise Beach Inn Limited. 24.9 Power of Attorney for Sun International Management Limited. 24.10 Power of Attorney for GGRI, Inc. 24.11 Power of Attorney for Resorts International Hotel, Inc. 24.12 Power of Attorney for Sun Cove, Ltd. 25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York on Form T-1. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery.
(b) Not applicable. ITEM 22. UNDERTAKINGS. The undersigned registrants hereby undertake to do the following. (a) For purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrants pursuant to the above provisions, the registrants have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) (i) They will respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b) 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) they will arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) They will supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. SUN INTERNATIONAL HOTELS LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: EXECUTIVE VICE PRESIDENT-CORPORATE DEVELOPMENT & GENERAL COUNSEL Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Solomon Kerzner (Principal Executive Officer) * - ------------------------------ Director March 20, 1997 Derek Hawton * - ------------------------------ Director March 20, 1997 Peter Buckley * - ------------------------------ Director March 20, 1997 Howard Marks * - ------------------------------ Director March 20, 1997 Eric Siegel Chief Financial Officer * and - ------------------------------ Secretary (Principal March 20, 1997 John Allison Financial and Accounting Officer) * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-6 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. SUN INTERNATIONAL NORTH AMERICA, INC. By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Howard Kerzner (Principal Executive Officer) * Director (Principal - ------------------------------ Financial and Accounting March 20, 1997 Kevin DeSanctis Officer) * - ------------------------------ Director March 20, 1997 Charles Adamo *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-7 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. SUN INTERNATIONAL BAHAMAS LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Solomon Kerzner (Principal Executive Officer) * Director (Principal - ------------------------------ Financial and Accounting March 20, 1997 Kevin DeSanctis Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * - ------------------------------ Director March 20, 1997 John Allison * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-8 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. PARADISE ACQUISITIONS LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of Directors and Chief * Executive Officer - ------------------------------ (Principal March 20, 1997 Kevin DeSanctis Executive, Financial and Accounting Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-9 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. PARADISE ISLAND LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of Directors and Chief * Executive Officer - ------------------------------ (Principal March 20, 1997 Kevin DeSanctis Executive, Financial and Accounting Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * - ------------------------------ Director March 20, 1997 John Allison * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-10 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. PARADISE ENTERPRISES LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Solomon Kerzner (Principal Executive Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * Director (Principal - ------------------------------ Financial and Accounting March 20, 1997 Kevin DeSanctis Officer) * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-11 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. ISLAND HOTEL COMPANY LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of Directors and Chief * Executive Officer - ------------------------------ (Principal March 20, 1997 Kevin DeSanctis Executive, Financial and Accounting Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * - ------------------------------ Director March 20, 1997 John Allison * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-12 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. PARADISE BEACH INN LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of Directors and Chief * Executive Officer - ------------------------------ (Principal March 20, 1997 Kevin DeSanctis Executive, Financial and Accounting Officer) * - ------------------------------ Director March 20, 1997 J.B. Farrington * - ------------------------------ Director March 20, 1997 John Allison * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-13 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. SUN INTERNATIONAL MANAGEMENT LIMITED By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Solomon Kerzner (Principal Executive Officer) * Director (Principal - ------------------------------ Financial and Accounting March 20, 1997 Howard Kerzner Officer) * - ------------------------------ Director March 20, 1997 Charles Adamo * - ------------------------------ Authorized Representative March 20, 1997 Mandy Miller in the United States *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-14 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. GGRI, INC. By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of Directors and Chief * Executive Officer - ------------------------------ (Principal March 20, 1997 Matthew Kearney Executive, Financial and Accounting Officer) *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-15 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. RESORTS INTERNATIONAL HOTEL, INC. By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors (Principal - ------------------------------ Financial and Accounting March 20, 1997 Matthew Kearney Officer) President and Chief * Executive Officer - ------------------------------ (Principal Executive March 20, 1997 Dan Cassella Officer) *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-16 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 20th day of March, 1997. SUN COVE, LTD. By: /s/ CHARLES D. ADAMO ----------------------------------------- NAME: CHARLES D. ADAMO TITLE: AUTHORIZED SIGNATORY Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board of * Directors and Chief - ------------------------------ Executive Officer March 20, 1997 Howard Kerzner (Principal Executive Officer) * Director (Principal - ------------------------------ Financial and Accounting March 20, 1997 Kevin DeSanctis Officer) * - ------------------------------ Director March 20, 1997 John Allison *By: /s/ CHARLES D. ADAMO ------------------------- Charles D. Adamo ATTORNEY-IN-FACT II-17 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE - ----------- ------------------------------------------------------------------------------------------------ ----- 3.3 Restated Certificate of Incorporation, as amended, of SINA. 3.4 Amended and Restated By-laws of SINA. 3.5 Memorandum of Association of Sun International Bahamas Limited. 3.6 Articles of Association of Sun International Bahamas Limited. 3.7 Memorandum of Association of Paradise Acquisitions Limited. 3.8 Articles of Association of Paradise Acquisitions Limited. 3.9 Memorandum of Association of Paradise Island Limited. 3.10 Articles of Association of Paradise Island Limited. 3.11 Memorandum of Association of Paradise Enterprises Limited. 3.12 Articles of Association of Paradise Enterprises Limited. 3.13 Memorandum of Association of Island Hotel Company Limited. 3.14 Articles of Association of Island Hotel Company Limited. 3.15 Memorandum of Association of Paradise Beach Inn Limited. 3.16 Articles of Association of Paradise Beach Inn Limited. 3.17 Memorandum of Association of Sun International Management Limited. 3.18 Articles of Association of Sun International Management Limited. 3.19 Certificate of Incorporation of GGRI, Inc., as amended. 3.20 By-laws of GGRI, Inc. 3.21 Certificate of Incorporation, as amended, of Resorts International Hotel, Inc. 3.22 By-laws of Resorts International Hotel, Inc. 3.23 Certificate of Incorporation of Sun Cove, Ltd. 3.24 By-laws of Sun Cove, Ltd. 4.6 Form of Exchange Note. 5.1 Opinion of Cravath, Swaine & Moore. 5.2 Opinion of Kozlov, Seaton, Romanini, Brooks & Greenberg. 5.3 Opinion of Rome McGuigan Sabanosh, P.C. 5.4 Opinion of Harry B. Sands and Company. 5.5 Opinion of Smith-Hughes, Raworth & McKenzie. 10.8 Omnibus Financing Agreement dated as of September 21, 1995 between Sun International and TCA. 12.1 Statement re computation of ratios. 23.3 Consent of Ernst & Young LLP (in respect of their July 14, 1994 report incorporated by reference to the 1995 Sun 20-F). 23.4 Consents of Arthur Andersen LLP.
EXHIBIT NO. DESCRIPTION PAGE - ----------- ------------------------------------------------------------------------------------------------ ----- 23.5 Consent of Ernst & Young LLP (in respect of their report dated February 14, 1997, except for Note 18, as to which the date is March 17, 1997, incorporated by reference to the 1996 SINA 10-K). 24.1 Power of Attorney for Sun International Hotels Limited. 24.2 Power of Attorney for Sun International North America, Inc. 24.3 Power of Attorney for Sun International Bahamas Limited. 24.4 Power of Attorney for Paradise Acquisitions Limited. 24.5 Power of Attorney for Paradise Island Limited. 24.6 Power of Attorney for Paradise Enterprises Limited. 24.7 Power of Attorney for Island Hotel Company Limited. 24.8 Power of Attorney for Paradise Beach Inn Limited. 24.9 Power of Attorney for Sun International Management Limited. 24.10 Power of Attorney for GGRI, Inc. 24.11 Power of Attorney for Resorts International Hotel, Inc. 24.12 Power of Attorney for Sun Cove, Ltd. 25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York on Form T-1. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery.
EX-3.3 2 RESTATED CERT. OF INCORPORATION AS AMEND OF SINA Exhibit 3.3 CERTIFICATE OF AMENDMENT of RESTATED CERTIFICATE OF INCORPORATION (PUPSUANT TO SECTION 242) Griffin Gaming & Entertainment, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That, pursuant to Section 228 of the General Corporation Law, on January 31, 1997, the Board of Directors and Sole Shareholder of the Corporation adopted the following resolution to amend the Restated Certificate of Incorporation of the Corporation: RESOLVED, that Article I of the Restated Certificate of Incorporation of Griffin Gaming & Entertainment, Inc. be amended to change the name of the Corporation to Sun International North America, Inc. IN WITNESS WHEREOF, said Griffin Gaming & Entertainment, Inc. has caused this certificate to be signed by Matthew B. Kearney, its Executive Vice President, this 4th day of February, 1997. GRIFFIN GAMING & ENTERTAINMENT, INC. /s/ Matthew B. Kearney ------------------ Matthew B. Kearney Executive Vice President RESTATED CERTIFICATE OF INCORPORATION OF GRIFFIN GAMING & ENTERTAINMENT, INC. We, Matthew B. Kearney, Executive Vice President-Finance and Treasurer and David G. Bowden, Vice President-Controller and Secretary, of Griffin Gaming & Entertainment, Inc., a corporation existing under the laws of the State of Delaware (the "Corporation"), do hereby certify that: ONE: The name of the Corporation is "Griffin Gaming & Entertainment, Inc."; the Corporation was formerly known as "Resorts International, Inc." and was formed under the name "Mary Carter Paint Co.". TWO: The original Certificate of Incorporation of the Corporation was filed in the office of the Secretary of State of the State of Delaware on the 24th day of October, 1958. THREE: This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation in accordance with Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of the Corporation as theretofore amended or supplemented, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation. FOUR: This Restated Certificate of Incorporation has been duly executed and acknowledged by the officers of the Corporation in accordance with Sections 245 and 103 of the General Corporation Law of the State of Delaware. FIVE: The text of the Certificate of Incorporation of the Corporation is hereby restated, in its entirety, to read as follows: ARTICLE I NAME The name of the Corporation is "Griffin Gaming & Entertainment, Inc.". ARTICLE II ADDRESS The address of the Corporation's registered office in the State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, and the name of its registered agent at such address is United States Corporation Company. ARTICLE III PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE IV CAPITALIZATION A. Authorization; Transfer Restrictions. The total number of shares of capital stock of all classifications which the Corporation shall have authority to issue is 110,120,000 consisting of (i) 10,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), and (ii) 100,120,000 shares of common stock, consisting of 100,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock"), and 120,000 shares of Class B Common Stock, par value $.01 per share (the "Class B Stock", and collectively with the Common Stock, the "GGE Common Stock"). Each share of Class B Stock shall be issued in connection with and upon the issuance of each $1,000 in principal amount of Junior Notes (as defined in Article IX hereof), whether upon original issuance of the Junior Notes or upon surrender for transfer or exchange of any outstanding Junior Notes or pursuant to the interest payment provisions thereof, and may not be transferred separately from such principal amount of Junior Notes. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors hereby is vested with authority from time to time to issue the Preferred Stock as Preferred Stock of any series. In connection with the creation of each such series of Preferred Stock, the Board of Directors hereby is vested with authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of such series, to the full extent now or hereafter permitted by the laws of the State of Delaware, including without limitation the dividend rate, conversion or exchange rights, redemption price and liquidating preference of any series of Preferred Stock, and to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof outstanding); provided, however, that no shares of Preferred Stock may be designated or issued with any rights to 2 vote together with the holders of the Class B Stock for any purpose. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series. B. Voting and Quorum. 1. Each holder of GGE Common Stock entitled to vote shall have one vote for each share thereof held. Except for the election of Class B Directors (as defined in Article IX hereof), the holders of the Common Stock shall be entitled to vote on all matters on which stockholders are entitled to vote. Except as may be prescribed by Delaware law, the holders of the Class B Stock shall not be entitled to vote on any matter except that the holders of the Class B Stock are entitled to vote separately as a class on the following matters: (a) the election of Class B Directors; (b) to the extent required under Delaware law, any amendment to the last sentence of the first paragraph of Paragraph (A) of Article IV hereof; the proviso in the second paragraph of Paragraph (A) of Article IV hereof; Paragraphs (B)(1), (C)(2), (D) or (E) of Article IV hereof; Paragraphs (A), (B)(3), (B)(4), (B)(5) or (E)(2) of Article VII hereof; or Paragraph (A) of Article IX hereof; (c) any amendment to the last sentence of Section 3 of Article II of the By-Laws of the Corporation; (d) any amendment to the second sentence of Section 7 of Article III of the By-Laws of the Corporation; or (e) any amendment to the last sentence of Section 8 of Article III of the By-Laws of the Corporation. 2. At any meeting of the stockholders of the Corporation at which the holders of any class of GGE Common Stock are entitled to vote, the presence, in person or by proxy, of the holders of a majority of the outstanding shares of such class shall constitute a quorum of the class entitled to vote of such class. No action may be taken by any class of GGE Common Stock at a meeting at which a quorum of such class is not present, except a vote to adjourn such meeting. C. Dividends. 1. The Board of Directors of the Corporation may cause dividends to be paid to the holders of shares of Common Stock from time to time out of funds legally available therefor. When and as dividends are declared, they may be payable in cash, in property or in shares of Common Stock. 2. Holders of Class B Stock are not entitled to the payment of dividends, except that in the event of an interest payment on the Junior Notes which is paid in Additional Junior Notes (as defined in Article IX hereof), holders shall be entitled to, and there shall be declared and paid, a stock dividend such that one share of Class B Stock shall be issued in respect of each $1,000 in principal amount of Additional Junior Notes. 3 D. Mandatory Redemption of Class B Stock. Upon the payment in full of any Junior Note, or the redemption, or cancellation following purchase thereof, of each $1,000 principal amount of Junior Notes, the Corporation shall redeem the share of Class B Stock issued in respect of such Junior Note at a redemption price of $.01 per share (adjusted to reflect stock splits and stock combinations since the original date of issuance). E. Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of GGE Common Stock then outstanding shall be entitled to receive ratably, in accordance with the number of shares held by each holder, out of the assets of the Corporation legally available for distribution to its stockholders, $.O1 per share (adjusted to reflect stock splits and stock combinations since the original date of issuance). After the payment in full of the amount described in the immediately preceding sentence to the holders of GGE Common Stock, the holders of Common Stock shall be entitled to share ratably, in accordance with the number of shares held by each holder, in all the remaining assets of the Corporation available for distribution and the holders of Class B Stock shall not be entitled to share in the distribution of such remaining assets. F. No Nonvoting Stock. No nonvoting equity securities of the Corporation shall be issued. This provision is included in this Restated Certificate of Incorporation in compliance with section 1123 of the United States Bankruptcy Code, 11 U.S.C. Section 1123, and shall have no further force and effect beyond that required by said section and for so long as said section is in effect and applicable to the Corporation. ARTICLE V INDEMNIFICATION A. Elimination of Certain Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation law is amended after the Effective Date (as defined in Article IX hereof) to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this Section by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 4 B. Actions, Suits or Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation. C. Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. D. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the other provisions of this Article V, to the extent that a director or officer of the Corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections A and B of this Article V, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses 5 (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. E. Determination of Right to Indemnification. Any indemnification under Sections A and B of this Article V (unless ordered by a court) shall be paid by the Corporation unless a determination is made (i) by a majority of the members of the Board of Directors who were not parties to such action, suit or proceeding even if less than a quorum, or (ii) if such a majority of the disinterested members of the Board of Directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections A and B of this Article V. F. Advance of Costs, Charges and Expenses. Costs, charges and expenses (including attorneys' fees) incurred by a person referred to in Sections A or B of this Article V in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses (including attorneys' fees) incurred by a director or officer in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Article V. Such costs, charges and expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the majority of the Board of Directors deems appropriate. The majority of the Board of Directors may, in the manner set forth above, and upon approval of such director, officer, employer, employee or agent of the Corporation, authorize the Corporation's counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. G. Procedure for Indemnification. Any indemnification under Sections B, C and D, or advance of costs, charges and expenses (including attorney's fees) under Section F of this Article V, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer. The right to indemnification or advances as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person's costs and expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action that the claimant has not met the standard of conduct set forth in Sections B or C of this Article V, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the 6 circumstances because he has met the applicable standard of conduct set forth in Sections B or C of this Article V, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. H. Other Rights: Continuation of Right to Indemnification. The indemnification provided by this Article V shall not be deemed exclusive of any other rights to which any director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article V shall be deemed to be a contract between the Corporation and each director, officer, employee or agent of the Corporation who serves or served in such capacity at any time while this Article V is in effect. Any repeal or modification of this Article V or any repeal or modification of relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the Corporation arising hereunder. This Article V shall be binding upon any successor corporation to this Corporation, whether by way of acquisition, merger, consolidation or otherwise. I. Insurance. The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article V, provided, however, that such insurance is available on reasonable and acceptable terms, which determination shall be made by a vote of a majority of the Board of Directors. J. Savings Clause. If this Article V or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation (i) shall nevertheless indemnify each director and officer of the Corporation, and (ii) may nevertheless indemnify each employee and agent of the Corporation, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article V that shall not have been invalidated and to the full extent permitted by applicable law. 7 K. Subsequent Amendment. No amendment, modification or repeal of this Article V shall affect or impair in any way the rights of any director or officer of the Corporation to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such amendment, modification or repeal. L. Subsequent Legislation. If the General Corporation Law of the State of Delaware is amended to further expand the indemnification permitted to directors, officers, employees or agents of the Corporation, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. ARTICLE VI NEW JERSEY CASINO CONTROL ACT This Certificate of Incorporation shall be subject to the New Jersey Casino Control Act, N.J.S.A. 5:12-1et seq., and the rules and regulations of the New Jersey Casino Control Commission (the "Commission") as they currently exist or as they hereinafter may be amended (the "Act"), including without limitation the following: A. The securities of the Corporation shall always be subject to redemption by the Corporation, by action of the Board of Directors, if, in the judgment of the Board of Directors, such action should be taken, pursuant to Section 151(b) of the General Corporation Law of Delaware or any other applicable provision of law, to the extent necessary to prevent the loss or secure the reinstatement of any reinstatement of any government-issued license or franchise held by the Corporation or any Subsidiary (as defined in Paragraph E of this Article VI) to conduct any portion of the business of the Corporation or such Subsidiary, which license or franchise is conditioned upon some or all of the holders of the Corporation's securities possessing prescribed qualifications. In the event a holder of the Corporation's securities is found not to possess such prescribed qualifications by the Commission pursuant to the Act (a "Disqualified Holder"), such Disqualified Holder shall indemnify the Corporation for any and all direct or indirect costs, including attorneys' fees, incurred by the Corporation as a result of such holder's continuing ownership or failure to divest promptly. B. Except as is otherwise expressly provided in instruments containing the terms of the Corporation's securities, which instruments have been approved by the Commission, so long as the Corporation shall remain a publicly traded holding company as defined in the Act, in accordance with NJSA. 5:12-82(d)(7) and (9), all securities of the Corporation shall be held subject to the condition that if a holder thereof is found to be a Disqualified Holder, such holder shall dispose of his interest in the Corporation within 120 days following the Corporation's receipt of notice (the "Notice Date") of the holder's disqualification. 8 Promptly following its receipt of notice from the Commission that a holder of securities of the Corporation has been found disqualified, the Corporation shall either deliver such written notice personally to the Disqualified Holder, mail it to such Disqualified Holder at the address shown on the Corporation's books and records, or use any other reasonable means. Failure of the Corporation to provide notice to a Disqualified Holder after making reasonable efforts to do so shall not preclude the Corporation from exercising its rights. If any Disqualified Holder fails to dispose of his securities within 120 days following receipt by the Corporation of notice that such holder has been found disqualified, the Corporation may redeem such securities at the lesser of (i) the lowest closing sale price of such securities between the Notice Date and the date 120 days after the Notice Date, or (ii) such holder's original purchase price. C. If the Corporation shall become, and so long as it shall remain, a privately-held holding company as defined in the Act, in accordance with N.J.S.A. 5:12-82(d)(7), (8) and (10), the Commission shall have the right of prior approval with regard to transfers of securities, shares, and other interests in the Corporation and the Corporation shall have the absolute right to redeem at the market price or purchase price, whichever is the lesser, any security, share or other interest in the Corporation in accordance with the Act. D. So long as the Corporation shall remain a holding company as defined in the Act, in accordance with N.J.S.A. 5:12-105(e), commencing on the date the Commission serves notice on the Corporation that a security holder has been found disqualified, it shall be unlawful for the Disqualified Holder to (i) receive any dividends or interest upon any such securities of the Corporation held by such holder; (ii) exercise, directly or through any trustee or nominee, any right conferred by such securities; or (iii) receive any remuneration in any form, for services rendered or otherwise, from any subsidiary of the Corporation that holds a casino license. E. For purpose of this Article VI, the term "Subsidiary" shall be defined in accordance with N.J.S.A. 5:12-47. 9 ARTICLE VII BOARD OF DIRECTORS A. Number and Designations of Directors. Until such time as a Class B Triggering Event (as defined in Article IX hereof) shall have occurred, the number of directors which shall constitute the Board as of the Effective Date (as defined in Article IX hereof) shall be six, consisting of four Common Stock Directors (as defined in Article IX hereof) and two Class B Directors (but subject to Paragraph F below). After the Effective Date, the number of directors which shall constitute the whole Board may be increased or decreased to such other number as from time to time shall be fixed by resolution of the Board; provided, however, that at all times the number of Class B Directors prior to the occurrence of a Class B Triggering Event shall be one-third (rounded up to the nearest whole number) of the number of directors which constitutes the entire Board (but subject to Paragraph F below). Upon the occurrence of a Class B Triggering Event, the number of directors which shall constitute the Board shall be increased, with such vacancies created thereby filled by the vote of a majority of the Class B Directors then in office, such that the number of Class B Directors equals a majority of the number of directors which constitutes the entire Board after giving effect to the creation of such vacancies (but subject to Paragraph F below). B. Election of Directors. 1. Election of directors need not be by written ballot unless the By-Laws so provide. 2. The Board of Directors shall be divided into three classes: Class I, Class II, and Class III. Such Classes shall be as nearly equal in number of directors as possible. Each director shall serve for a term ending at the third annual stockholders' meeting following the annual meeting at which such director was elected; provided, however, that the directors first appointed to Class I shall serve for a term ending at the annual meeting held in 1995, the directors first appointed to Class II shall serve for a term ending at the annual meeting held in 1996, and the directors first appointed to Class III shall serve for a term ending at the annual meeting held in 1997. Notwithstanding any of the foregoing provisions of this Article VII and subject to Paragraph F below, each director shall serve until his successor is elected and qualified or until his earlier death, resignation or removal. 3. At each annual meeting of stockholders (which shall be held on such date as shall be determined pursuant to the By-Laws of the Corporation), or at any duly called special meeting of stockholders, the Common Stock Directors to be elected shall be elected by the holders of the Common Stock voting as a separate class and the Class B Director(s) to be elected shall be elected by the holders of the Class B Stock voting as a separate class. 4. At each annual election, the directors chosen to succeed those whose terms then expire shall be identified as being the same Class as the directors they succeed, unless, 10 by reason of any intervening changes in the authorized number of directors, the Board of Directors shall designate one or more directorships whose term then expires as directorships of another Class in order to more nearly achieve equality in the number of directors among the Classes. When the directors fill a vacancy resulting from the death, resignation or removal of a director in accordance with paragraph E below, the director chosen to fill that vacancy shall be of the same Class as the director he succeeds. 5. Notwithstanding the rule that the three Classes shall be as nearly equal in number of directors as possible, in the event of any change in the authorized number of directors, each Common Stock Director and each Class B Director then continuing to serve as such will nevertheless continue as a director of the Class of which such director is a member until the expiration of his current term or his earlier death, resignation or removal. C. Effective Date Board. As of the Effective Date, the Board of Directors of the Corporation shall be reconstituted to consist of the following persons in the Classes and of the designations indicated: Director Class Designation - -------- ----- ----------- Thomas E. Gallagher I Common Stock Director Jay M. Green I Common Stock Director William Fallon II Common Stock Director Vincent J. Naimoli II Class B Director Merv Griffin III Common Stock Director Charles Masson III Class B Director D. Removal of Directors. Subject to Paragraph F below, any director, may be removed from office at any time, but only (i) for cause, and (ii) by the affirmative vote of the holders of 80% of the voting power of all the shares of the class of stock which elected such director. E. Filling of Vacancies. 1. Any vacancy among the Common Stock Directors, occurring from any cause whatsoever, may be filled by a majority of the remaining Common Stock Directors, even if such remaining Common Stock Directors do not constitute a quorum; provided, however, that the holders of the Common Stock removing any Common Stock Director may at the same meeting fill the vacancy caused by such removal; provided further, however, that if the remaining Common Stock Directors fall to fill any such vacancy, the holders of the Common Stock entitled to vote thereon may fill such vacancy at any special meeting of stockholders called for that purpose. Any person elected or appointed to fill a vacancy shall hold office, subject to the right of removal as herein before provided, until the next election for such Class of directors and until his successor is elected and qualifies. 11 2. Subject to Paragraph F below, any vacancy among the Class B Directors, occurring from any cause whatsoever (including (i) as a result of an increase in the number of directors which shall constitute the entire Board, or (ii) as a result of the occurrence of a Class B Triggering Event), may be filled only by a majority of the remaining Class B Directors, even if such remaining Class B Directors do not constitute a quorum; provided, however, that the holders of the Class B Stock removing any Class B Director may at the same meeting fill the vacancy caused by such removal; provided further, however, that if the remaining Class B Directors fall to fill any such vacancy, the holders of the Class B Stock entitled to vote thereon may fill such vacancy at any special meeting of stockholders called for that purpose. Any person elected or appointed to fill a vacancy shall hold office, subject to the right of removal as herein before provided, until the next election for such Class of directors and until his successor is elected and qualifies. F. Final Payment Date. After the Final Payment Date (as defined in Article IX hereof), (i) all the Class B Directors then in office shall resign and if such Class B Directors fall to resign, a majority of the Common Stock Directors shall be entitled to remove, without cause, such Class B Directors then in office, and (ii) the number of directors constituting the Board shall be decreased to six directors, who shall be elected by the holders of Common Stock. ARTICLE VIII AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS A. In addition to any affirmative vote required by applicable law, any alteration, amendment, repeal or rescission of any provision of this Restated Certificate of Incorporation must be approved by a majority of the directors of the Corporation then in office and by the affirmative vote of the holders of a majority of the outstanding shares of the Common Stock. B. Except as provided in Paragraph (B)(1) of Article IV hereof, the Board of Directors shall have the power without the assent or vote of the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. 12 ARTICLE IX DEFINITIONS A. As used in this Restated Certificate of Incorporation, the following terms shall have the meanings indicated below: "Additional Junior Notes" shall mean Junior Notes issued by RIHF in payment of interest on outstanding Junior Notes, in accordance with the terms of the Junior Notes and the New RIHF Second Mortgage Junior Note Indenture. "Class B Directors" shall mean the directors of the Corporation elected by the holders of the Class B Stock. "Class B Triggering Event" shall mean either (i) the payment on any Interest Payment Date by RIHF of interest on the Junior Notes in me form of Additional Junior Notes or (ii) the failure on any Interest Payment Date by RIHF to pay interest in full on the Junior Mortgage Notes, if, in either case, on any prior six Interest Payment Dates (whether consecutive or non-consecutive), interest on the Junior Notes either has been paid in Additional Junior Notes or has not been paid in full. "Final Payment Date" means the date on which all the Junior Notes are retired, redeemed or paid in full. "Interest Payment Date" shall mean each date on which interest is due and payable on the Junior Notes, in accordance with the New RIHF Second Mortgage Junior Note Indenture. "Junior Notes" shall mean the 11.375% Junior Mortgage Notes due 2004 of RIHF, including the Additional Junior Notes. "New RIHF Second Mortgage Junior Note Indenture" shall mean the Indenture dated as of May 3, 1994, between RIHF and U.S. Trust Company of California, N.A., as Trustee, under which the Junior Notes have been or will be issued. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. B. As used in this Restated Certificate of Incorporation, the following terms shall have the meanings indicated below: "Common Stock Directors" shall mean the directors of the Corporation elected by the holders of the Common Stock. 13 "Effective Date" shall mean May 3, 1994. IN WITNESS WHEREOF, the undersigned have signed this Restated Certificate of Incorporation, under penalties of perjury, and caused the corporate seal of the Corporation to be hereunto affixed this 10th day of May, 1996. By /s/ Matthew B. Kearney ---------------------- Matthew B. Kearney Executive Vice President- Finance and Treasurer [Corporate Seal] Attest: By: /s/ David G. Bowden ------------------- David G. Bowden Vice President-Controller and Secretary 14 EX-3.4 3 AMENDED AND RESTATED BY-LAWS Exhibit 3.4 AMENDED AND RESTATED BY-LAWS OF GRIFFIN GAMING & ENTERTAINMENT, INC. ARTICLE I OFFICES SECTION 1. Principal Office. The principal office of Griffin Gaming & Entertainment, Inc. (the "Corporation") in the State of Delaware shall be established and maintained at the office of the United States Corporation Company in the City of Wilmington, County of New Castle, and said corporation shall be the resident agent of this Corporation in charge thereof. SECTION 2. Other Offices. The Corporation may also have an office or offices and keep the books and records of the Corporation, except as may otherwise be required by the laws of the State of Delaware, at such other place or places either within or without the State of Delaware as the Board of Directors of the Corporation (the "Board") may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meetings. All meetings of the stockholders shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by the Board or as shall be specified or fixed in the respective notices or waivers of notice thereof. SECTION 2. Annual Meetings. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on a date and at a time and place as designated by resolution of the Board of Directors of the Corporation. SECTION 3. Special Meetings. Special meetings of the stockholders, unless otherwise provided by law, may be called at any time by the Chairman of the Board or by a majority of the Board of Directors. Special meetings of the holders of Class B Stock (as such term is defined in the Certificate of Incorporation) may be called at any time by the Chairman of the Board or by a majority of the Class B Directors (as such term is defined in the Certificate of Incorporation). SECTION 4. Notice of Meetings. Except as otherwise expressly required by law or the Certificate of Incorporation of the Corporation, written notice stating the place and time of the meeting and, in the case of a special meeting, the purpose or purposes of such meeting, shall be given by the Secretary to each stockholder entitled to vote thereat at the last known post office address not less than ten nor more than sixty days prior to the date of meeting. No business other than that stated in the notice shall be transacted at any special meeting. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy; and if any stockholder shall, in person or by attorney thereunto duly authorized, in writing or by telegraph, cable or wireless, waive notice of any meeting, whether before or after such meeting be held, the notice thereof need not be given to him. Notice of any adjourned meeting of stockholders need not be given except as provided in SECTION 7 of this ARTICLE II. SECTION 5. List of Stockholders. It shall be the duty of the Secretary or other officer who shall have charge of the stock ledger of the Corporation, either directly or through a transfer agent appointed by the Board, to prepare and make, at least 10 days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open for said 10 days to the examination of any stockholder in the place where said election is to be held and shall be produced and kept at the time and place of the election for the whole time thereof, and subject to the inspection of any stockholder who may be present. The original or a duplicate stock ledger shall be the only evidence as to who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such election. SECTION 6. Quorom. At any meeting of the stockholders of the Corporation, the presence, in person or by proxy, of stockholders then entitled to cast a majority in number of votes upon a question to be considered at the meeting shall constitute a quorum for the consideration of such question. SECTION 7. Adjournments. In the absence of a quorum at any annual or special meeting of stockholders, a majority in interest of those present in person or by proxy and entitled to vote may adjourn the meeting from time to time without further notice, other than by announcement at the meeting at which such adjournment shall be taken, until a quorum shall be present; provided, however, that if an adjournment is for more than thirty days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote. At any such adjourned 2 meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. SECTION 8. Order of Business. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum shall be present may be changed by a vote of the stockholders present in person or by proxy at the meeting and holding a majority of the shares entitled to vote thereat. SECTION 9. Voting. Except as otherwise provided by the General Corporation Law of the State of Delaware or in the Certificate of Incorporation, each stockholder shall at each meeting of the stockholders be entitled to one vote in person or by proxy for each share entitled to be voted thereat and held by him and registered in his name on the books of the Corporation: (a) On such date as may be fixed pursuant to SECTION 3 of ARTICLE VI of these By-Laws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or (b) In the event that no record date shall have been so fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Shares of stock belonging to the Corporation shall not be voted directly or indirectly. Persons holding stock having voting power in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock having voting power is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. Any vote on stock may be given at any meeting of the stockholders by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto duly authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted on after three years from its date, unless said proxy provides for a longer period. At all meetings of the stockholders all matters, except those the manner of deciding upon which is otherwise expressly regulated by statute or by the Certificate of Incorporation or by these By-Laws, shall be decided by the vote of the stockholders holding a majority of the shares present in person or by proxy and entitled to vote on such matters. Unless demanded by a stockholder present in person or by proxy at such meeting and entitled to vote thereat or determined by the chairman of the meeting to be advisable, the vote on any matter need not be by written ballot. 3 SECTION 10. Inspectors of Election or Judges. Before, or at, each meeting of the stockholders at which a vote by ballot is to be taken, the Board, or the chairman of such meeting, shall appoint two Inspectors of Election or judges to act thereat. Each Inspector of Election or Judge so appointed shall first subscribe an oath or affirmation faithfully to execute the duties of an Inspector of Election or Judge at such meeting with strict impartialty and according to the best of his ability. Such Inspectors of Election or Judges shall take charge of the ballots at such meeting and after the balloting thereat on any question shall count the ballots cast thereon and shall make a report in writing to the secretary of such meeting of the results thereof. The Inspectors of Election or Judges need not be stockholders; and any officer or director may be an Inspector of Election or Judge on any question other than a vote for or against his election to any position with the Corporation or on any other question in which he may be directly interested. ARTICLE III DIRECTORS SECTION 1. General Powers. The Board shall manage the business and affairs of the Corporation and may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these By-Laws directed or required to be exercised or done by the stockholders. SECTION 2. Number, Qualification and Term of Office. The number of directors of the Corporation shall be as set forth in the Certificate of Incorporation. Directors need not be stockholders. The Certificate of Incorporation of the Corporation provides for a classified Board, wherein each director shall serve for a term as provided therein. The Certificate of Incorporation also provides for two designations of directors, elected by the holders of the Common Stock and the Class B Stock (as such terms are defined in the Certificate of Incorporation), respectively. SECTION 3. Election of Directors. At each meeting of the stockholders for the election of a director or directors, the person or persons receiving the greater number of votes, up to the number of directors then to be elected, cast by the stockholders present in person or by proxy and entitled to vote for such director or directors shall be the director or directors elected by such stockholders. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified Board and any provisions relating to the election of Common Stock Directors (as such term is defined in the Certificate of Incorporation) and Class B Directors, respectively. 4 SECTION 4. Quorum. At all meetings of the Board the presence of a majority of the whole Board shall be necessary to constitute a quorum for the transaction of business at such meeting. Any act of a majority present at a meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these By-Laws. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum shall be present. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Notice of any adjourned meeting need not be given. SECTION 5. Place of Meeting. The Board may hold its meetings at such place or places within or without the State of Delaware as it may from time to time by resolution determine or as shall be fixed or specified in the respective notices or waivers of notice thereof. Members of the Board, or any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and communicate with each other. SECTION 6. Regular Meetings. Regular meetings of the Board may be held without notice at such places and times as may be fixed from time to time by resolution of the Board. SECTION 7. Special Meetings. Special meetings of the Board may be called by the Chairman of the Board. Special meetings of the Class B Directors with respect to matters to be determined by the Class B Directors only may be called by any Class B Director. At least twenty-four hours' written or telegraphic notice of each special meeting shall be given to each director. The notice of any meeting, or any waiver thereof, need not state the purpose or purposes of such meeting. SECTION 8. Action by Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or all members of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. Any action required or permitted to be taken at any meeting of the Class B Directors may be taken without a meeting, if prior to such action a written consent thereto is signed by all Class B Directors, and such written consent is filed with the minutes of proceedings of the Board. SECTION 9. Resignations; Removal. Any director may resign at any time by giving written notice to the Chairman of the Board or the Secretary. Such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt of such notice. The acceptance of a resignation shall not be necessary to make it 5 effective. Directors may only be removed in accordance with the Certificate of Incorporation. SECTION 10. Vacancies. A vacancy in the Board caused by death, resignation or removal may only be filled in accordance with the Certificate of Incorporation. Each director so chosen to fill a vacancy shall, unless otherwise provided or as provided in the Certificate of Incorporation, hold office until his successor shall have been elected and shall qualify or until he shall resign or shall have been removed. SECTION 11. Compensation. Each director, in consideration of his or her serving as such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at directors' meetings, or both, as the Board shall from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Each director who shall serve as a member of the Executive Committee or any other committee of the Board in consideration of his serving as such, shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board shall from time to time determine. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving proper compensation therefor. ARTICLE IV COMMITTEES SECTION 1. Designation and Powers of Committees. The Board may, by resolution or resolutions passed by a majority of the whole Board, designate two or more of its members to constitute an Executive Committee, which, during the intervals between the meetings of the Board, shall have, and may exercise, all the powers of the Board in the management of the business, affairs, and property of the Corporation, to the extent permitted by Delaware law. The Board, by resolution passed by a majority of the whole Board, may designate members of the Board to constitute other committees, including an Audit Committee and a Compensation Committee, which shall consist of such numbers of directors and shall have, and may exercise, such powers as the Board may determine and specify in the respective resolutions appointing them, to the extent permitted by Delaware law. The Board shall have power at any time to change the members of the Executive Committee or any such other committee, to fill vacancies and to discharge the Executive Committee or any such other committee. 6 ARTICLE V OFFICERS SECTION 1. Election and Number. The principal officers of the Corporation shall be a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be chosen by the Board, and such other officers as may be appointed in accordance with the provisions of SECTION 3 of this ARTICLE V. One person may hold the office and perform the duties of any two or more of said officers other than those of President and Secretary. SECTION 2. Term of Office and Qualifications. Each officer, except such as may be appointed in accordance with the provisions of SECTION 3 of this ARTICLE V, shall hold office until the next annual election of officers and until his successor shall have been chosen and shall qualify or until his death or until he shall have resigned or until he shall have been removed in the manner provided in SECTION 4 of this ARTICLE V. SECTION 3. Appointive Officers. The Chairman of the Board or the Board may from time to time appoint such other officers as they may deem necessary, including one or more Assistant Treasurers, one or more Assistant Secretaries and such other agents and employees of the Corporation as they may deem proper. Such officers and agents and employees shall hold office for such period, have such authority and perform such duties, subject to the control of the Board, as the Chairman of the Board or the Board may from time to time prescribe. SECTION 4. Removal. Any elected officer may be removed, either with or without cause, at any time, by the vote of a majority of the whole Board at any meeting of the Board, and any appointive officer may be removed, either with or without cause, at any time by the Chairman of the Board. SECTION 5. Resignations. Any officer may resign at any time by giving written notice to the Board or to the President or to the Secretary. Such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. Vacancies. A vacancy in any office because of death, resignation, removal or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in SECTIONS 2 and 3 of this ARTICLE V for election or appointment, respectively, to such office. SECTION 7. Chairman of the Board. The Chairman of the Board if present shall preside at all meetings of stockholders and at all meetings of the Board and 7 shall have such other powers and duties as from time to time may be assigned to him by the Board or these By-Laws. SECTION 8. President. The President shall be the chief executive officer of the Corporation, and shall have general supervision over the business of the Corporation, subject to the control of the Board. In general, he shall perform all duties incident to the office of President and have such other powers and duties as from time to time may be assigned to him by the Board. SECTION 9. Vice President. Each Vice President shall have such powers and shall perform such duties as from time to time may be assigned to him by the Board. The Board may elect, or designate, one or more of the Vice Presidents as an Executive Vice President. At the request of the President, or in the case of his absence or inability to act, the Executive Vice President or, if there shall be more than one Executive Vice President, an Executive Vice President designated by the Board, or if the Board shall have not have elected or designated an Executive Vice President then one of the Vice Presidents who shall be designated for the purpose by the Board, shall perform the duties of the President, and, when so acting, shall have all the powers of the President. SECTION 10. Secretary. The Secretary shall keep or cause to be kept in books provided for this purpose the minutes of all meetings of the stockholders and of the Board; shall see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; shall be the custodian of the seal of the Corporation and shall affix the seal or cause it to be affixed to all certificates of stock of the Corporation and to all documents the execution of which on behalf of the Corporation under its seal shall be duly authorized in accordance with the provisions of these By-Laws; shall have charge of the stock records of the Corporation; shall see that all reports, statements and other documents required by law are properly kept and filed; may sign, with any other proper officer of the Corporation thereunto authorized, certificates for stock of the Corporation; and, in general, shall perform all the duties incident to the office of Secretary, and such other duties as from time to time may be assigned to him by the Board. SECTION 11. Assistant Secretaries. The Assistant Secretaries shall have such powers and duties as from time to time may be assigned to them by the Board. At the request of the Secretary or in case of his absence or inability to act, any Assistant Secretary may act in his place. SECTION 12. Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds, securities, evidences of indebtedness and other valuable documents of the Corporation; shall deposit all such funds in the name of the Corporation in such banks or other depositaries as shall be selected by the Board; shall receive, and give or cause to be given receipts and acquittances for, 8 moneys paid in on account of the Corporation and shall pay out of the funds on hand all just debts of the Corporation of whatever nature upon maturity of the same; shall enter or cause to be entered in books of the Corporation to be kept for that purpose full and accurate accounts of all moneys received and paid out on account of the Corporation, and whenever required by the Board, shall render a statement of his cash accounts; shall keep or cause to be kept such other books as will show the true record of the expenses, losses, gains, asset and liabilities of the Corporation; and in general shall perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board. SECTION 13. Assistant Treasurers. The Assistant Treasurers shall have such powers and duties as from time to time may be assigned to them by the Board. At the request of the Treasurer, or in case of his absence or inability to act, any Assistant Treasurer may act in his place. SECTION 14. Salaries. The salaries of the elective officers and any appointive officers of the Corporation shall be fixed from time to time by the Board. An officer shall not be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation or a member of any committee contemplated by the By-Laws. ARTICLE VI CAPITAL STOCK SECTION 1. Certificate for Stock. Every holder of shares of stock shall be entitled to have a certificate, in such form as the Board shall prescribe, certifying the number and class of shares of stock of the Corporation owned by him. Each such certificate shall be signed in the name of the Corporation by the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary; provided, however, that where such certificate is signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of any such officer may be a facsimile. SECTION 2. Transfer of Shares. The shares of stock of the Corporation shall be transferable only upon its books by the registered holders thereof or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the Secretary or to such other person as the Board may designate, by whom such old certificates shall be cancelled and new certificates shall thereupon be issued. A record shall be made of each transfer. Each share of Class B Stock shall be issued in connection with and upon the issuance of each $1,000 in principal amount of 9 Junior Notes (as such term is defined in the Certificate of Incorporation), and may not be transferred separately from such principal amount of Junior Notes. SECTION 3. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 4. Lost or Destroyed Certificates. The Board may determine the conditions upon which a new certificate of stock will be issued in place of a certificate which is alleged to have been lost or destroyed, and may, in its discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety to the Corporation to indemnify it against any and all losses or claims which may arise by reason of the issue of a new certificate in the place of the one so lost or destroyed. 10 SECTION 5. Condition Requiring Disposition. Any and all equity securities of the Corporation are held subject to the condition that if a holder thereof is found to be "disqualified" by the New Jersey Gaming Commission pursuant to the provisions of the New Jersey Casino Control Act (P.L. 1977 c. 110) then such holder shall dispose of his interest in the Corporation's equity securities within 120 days after receipt of notice of such finding. ARTICLE VII CORPORATE SEAL The seal of the Corporation shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the words "CORPORATE SEAL DELAWARE". ARTICLE VIII SIGNATURES All checks, bonds, notes, contracts, agreements or other obligations or instruments of the Corporation shall be signed by such officer or officers as the Board may from time to time designate. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 1. Waiver of Notice. Whenever any notice whatever is required to be given by these By-Laws or by statute, the person entitled thereto may in person, or in the case of a stockholder by his attorney thereunto duly authorized, waive such notice in writing (including telegraph, cable, radio or wireless), whether before or after the meeting or other matter with respect of which such notice is to be given, and in such event such notice need not be given to such person and such waiver shall be equivalent to such notice, and any action to be taken after such notice or after the lapse of a prescribed period of time may be taken without such notice and without the lapse of any period of time. SECTION 2. Employment Contracts. No contract of employment shall be entered into for or on behalf of the Corporation for a period of more than one year without prior approval of the Board. 11 ARTICLE X AMENDMENTS Except as otherwise may be provided herein or in the Certificate of Incorporation, these By-Laws, or any of them, may be amended, modified or repealed, or new By-Laws may be adopted, either by vote of a majority of the directors present at any annual, regular or special meeting, or by a vote constituting a majority in number of the votes cast by stockholders present in person or represented by proxy and entitled to vote at any annual or special meeting. 5/10/96 12 EX-3.5 4 MEMORANDUM OF ASSOC OF SUN INTL BAHAMAS LTD Exhibit 3.5 Registration No: 8355 RESORTS INTERNATIONAL (BAHAMAS) 1984 LIMITED Resolution of the Shareholders of the above-named Company made pursuant to Article 35 of the Articles of Association of the Company = = = = = RESOLVED that the name of the Company be changed to "SUN INTERNATIONAL BAHAMAS LIMITED". CERTIFICATE I, J. BARRIE FARRINGTON , Secretary of RESORTS INTERNATIONAL(BAHAMAS) 1984 LIMITED hereby certify the foregoing to be a true and correct copy of a Resolution of the Members of the Company duly passed on the 2nd day of May, A.D. 1994. IN WITNESS WHEREOF I have here- unto set my hand and the Common Seal of the Company this 2nd day of May, A.D 1994. /s/ J. Barrie Farrington -------------------- Secretary ------------------------- SEAL Registrar General's Dept. MAY 3 1994 NASSAU, BAHAMAS ------------------------- Registration No. 8355 RESORTS INTERNATIONAL (BAHAMAS) 1984 LIMITED Resolution of the Shareholders of the above-named Company made pursuant to Article 35 of the Articles of Association of the Company = = = = = RESOLVED that the Capital of the Company be converted to B$5,148.00 divided into 1,800 Ordinary shares of B$2.86 each by amalgamating the existing Classes of Shares (namely, 500 Class "A" shares of B$2.86 each, 400 Class "B" shares of B$2.86 each and 900 Class "C" Non-Voting shares of B$2.86 each) into a single class ranking pari passu in all respects including voting and RESOLVED FURTHER that the existing Share Certificates be cancelled on presentation to the Company and replacement Certificates be issued on the basis of One (1) Ordinary Share for each of the existing shares of any Class. CERTIFICATE I. DAVID G. BOWDEN, Secretary of Resorts International (Bahamas) 1984 Limited, hereby certify the foregoing to be a true and correct copy of a Resolution of the Members of the Company duly passed on the 29th day of April, A.D. 1994. IN WITNESS WHEREOF I have hereunto set my hand and the Common Seal of the Company this day of , A.D. 1994. /s/ David G. Bowden ------------------- Secretary ------------------------- SEAL Registrar General's Dept. MAY 16 1994 NASSAU, BAHAMAS ------------------------- PARADISE REALTY LIMITED At an Extraordinary General Meeting of the above-named Company held at the Registered Office of the Company, Third Floor, Charlotte House, Charlotte Street, Nassau, Bahamas on the 11th day of July, A.D., 1984, the sub-joined Special Resolution was duly passed, and at a subsequent Extraordinary General Meeting of the said Company held at the same place on the 25th day of July, A.D., 1984, the sub-joined Special Resolution was duly approved, ratified and confirmed. RESOLVED that the name of the Company be changed to "RESORTS INTERNATIONAL (BAHAMAS) 1984 LIMITED". I, David G. Bowden, Secretary of Paradise Realty Limited, hereby certify that the foregoing is a true copy of a Special Resolution which was duly passed as a Special Resolution at a meeting of the above-named Company held at the Registered Office of the Company, Third Floor, Charlotte House, Charlotte Street, Nassau, Bahamas on the 11th day of July, A.D., 1984 at which meeting all of the members of the Company for the time being entitled, according to the regulations of the Company to vote were present by proxy and that the said Special Resolution was duly confirmed at a meeting of the above-named Company held at the same place on the 25th day of July, A. D., 1984 at which said meeting all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present by proxy. WITNESS WHEREOF I have hereunto set my hand and the Common Seal of the Company this 25th day of July, A.D., 1984. SEAL Sgd.) D.G. Bowden Secretary. PARADISE REALTY LIMITED At an Extraordinary General Meeting of the above-named Company held at the Registered Office of the Company, Third Floor, Charlotte House, Charlotte Street, Nassau, Bahamas on the 16th day of April, A.D., 1984, the sub-joined Special Resolution was duly passed, and at a subsequent Extraordinary General Meeting of the said Company held at the same place on the 30th day of April, A.D., 1984, the sub-joined Special Resolution was duly approved, ratified and confirmed. RESOLVED that the capital of the Company be increased to B$5,148 divided into 500 "A" shares of B$2.86 each, 400 "B" shares of B$2.86 each and 900 "C" Non-voting shares of B$2.86 each by the creation of an additional 900 "C" Non-Voting shares of B$2.86 each ranking in all respects pari passu with the existing shares of B$2.86 each. I, David G. Bowden, Secretary of Paradise Realty Limited, hereby certify that the foregoing is a true copy of a Special Resolution which was duly passed as a Special Resolution at a meeting of the above-named Company held at the Registered Office of the Company, Third Floor, Charlotte House, Charlotte Street, Nassau, Bahamas on the 16th day of April, A.D., 1984 at which meeting all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present by proxy, and that the said Special Resolution was duly confirmed at a meeting of the above-named Company held at the same place on the 30th day of April, A.D., 1984 at which meeting all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present by proxy. IN WITNESS WHEREOF I have hereunto set my hand and the PARADISE REALTY LIMITED At an Extraordinary General Meeting of the above-named Company held at the Registered Office of the Company, Building No. 309, Bay Street, Nassau, Bahamas on the 9th day of July, 1965, the sub-joined Special Resolution was duly passed, and at a subsequent Extraordinary General Meeting of the said Company held at the same place on the 24th day of July, 1965, the sub-joined Special Resolution was duly approved, ratified and confirmed, namely:- "RESOLVED that the Articles of Association of the Company be amended by deleting Article 64 of the Articles of Association and substituting in lieu thereof the following new Article, namely:- 64. The management of the business of the company shall be vested in the directors, who, in addition to the powers and authorities by those presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to the provisions of any Act, and of these presents, and to any regulations from time to time made by the company in general meeting, provided that no regulation so made shall invalidate any prior act of the directors which would have been valid if such regulation had not been made. Notwithstanding the foregoing the company shall not, except with the prior authority of a resolution of the directors passed with the concurring vote of at least two of the 'A' directors, or their alternates, and at least two of the 'B' directors, or their alternates, enter into any agreement (a) to sell, lease, charge or in any other way dispose of or part with the possession of any asset of the company having a value exceeding Five thousand pounds (b) to purchase or acquire any asset for a price exceeding Five thousand pounds, or (c) for the employment by the company of any person, whether a director, officer or otherwise, at an annual salary in excess of Five thousand pounds". I, Douglas Eugene Duncombe, Secretary of Paradise Realty Limited, hereby certify that the foregoing is a true copy of a Special Resolution which was duly passed as a Special Resolution at a meeting of the above-named Company held at the Registered Office of the Company, Building No. 309, Bay Street, Nassau, Bahamas on the 9th day of July, 1965, at which meeting all of the members of the Company for the time being entitled, according to the regulations of the -2- Company, to vote were present in person and that the said Special Resolution was duly confirmed at a meeting of the above-named Company held at the same place on the 24th day of July, 1965 at which said meeting all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present in person. IN WITNESS WHEREOF I have hereunto set my hand and (SEAL) the Common Seal of the Company this 24th day of July, 1965. (sgd.) D.E. Duncombe Secretary. PARADISE REALTY LIMITED BAHAMA ISLANDS, Registrar General's Office. I certify the foregoing to be a true copy of the original deposited in this office. /s/ Geraldine Murdoch ----------------------------------------- 20/9/65 Ag. Asst. Registrar General BAHAMA ISLANDS - - - The Companies Act. Company Limited by Shares. - - - MEMORANDUM OF ASSOCIATION OF PARADISE REALTY LIMITED - - - 1. The name of the company is "Paradise Realty Limited". 2. The registered office of the company will be situated in the Island of New Providence, one of the Bahama Islands. 3. The objects for which the company is established are: (1) To purchase, take on lease or in exchange, or otherwise acquire and to hold any lands and buildings in the Bahama Islands or elsewhere, and any estate or interest in, and any rights connected with, any such lands and buildings. (2) To develop and turn to account any land acquired by or in which the company is interested, and in particular by laying out and preparing the same for building purposes, constructing, altering, fitting up, and improving buildings and by planting, paving, draining, landscaping, farming, and cultivating the same, and by advancing money to, and entering into contracts and arrangements of all kinds with builders, tenants, and others. (3) To purchase for investment or resale, and to traffic in land and other property of any tenure and any interest therein, and to make advances upon the security of land or other property, or any interest therein, and to deal in, traffic by way of sale, lease, exchange, or otherwise with land and any other property, whether real or personal; and to act as real estate brokers and agents. (4) To purchase or otherwise acquire, construct, execute, carry out, equip, improve, develop, -2- maintain, administer, manage, supervise or control buildings, works and conveniences of all kinds, and without prejudice to the generality of the foregoing words, in particular townships, roads, bridges, reservoirs, waterways, harbours, embankments, irrigations, reclamations, improvements, sewage, drainage, sanitary, water, gas, electric light, telephonic, telegraph, wireless and power supply works, hotels, apartment houses, houses, clubs, restaurants, theatres, cinemas, office buildings, stadia, baths, swimming pools, places of worship, places of amusement, pleasure grounds, golf courses, race-tracks, parks, gardens, reading rooms, stores, shops, offices, warehouses, and all other buildings, works and coveniences which the company may think directly or indirectly conducive to these objects, and to contribute or otherwise assist or take part in the construction, maintenance, development, working, control, management and supervision thereof. (5) To carry on in all their respective branches, the businesses of builders and general construction contractors and sub-contractors, and without prejudice to the generality of the foregoing words, in particular to undertake, manage, supervise, administer, control, or give advice in connection with the erection, construction, decoration, repairing, amending, cleansing, finishing and furnishings of buildings, erections, constructions, and works of all kinds. (6) To carry on the businesses of amusement, entertainment and theatrical impresarios, entrepreneurs and contractors in all branches. (7) To cater for public and private amusements of every description and in particular, and without limiting the generality thereof, to present, produce, manage, arrange and conduct any plays, reviews, promenade -3- and other concerts, musical and other pieces, cinema shows, ballets, shows, exhibitions, variety, late-night and other entertainments as the company may from time to time think fit. (8) To buy, lease, construct, build or otherwise acquire all plant and equipment necessary or convenient to carry the above objects or any of them into effect. (9) To carry on any kind of manufacture or trade, and to manufacture, buy, take on lease or in exchange or otherwise acquire, own, mortgage, pledge, sell, assign, and to transfer, or otherwise dispose of, invest, let, trade, and deal in and with goods, wares and merchandise of every class and description and without prejudice to the generality of the foregoing words, in particular building materials and requisites of all kinds, commercial, domestic and other apparatus, installations, fixtures, furniture and furnishings. (10) To establish, maintain and operate shipping, air transport, and road transport services and all ancillary services and, for these purposes to purchase, take in exchange, charter, hire, build, construct or otherwise acquire, and to own, work, manage, and trade with steam, sailing, motor and other ships, trawlers, drifters, tugs, and vessels, aircraft and motor and other vehicles with all necessary and convenient equipment, engines, tackle, gear, furniture, and stores, or any shares or interests in ships, vessels, aircraft, motor and other vehicles, including shares, stocks, or securities of companies possessed of or interested in any ships, aircraft or vehicles, and to maintain, repair, fit out, refit, improve, insure, alter, sell, exchange, or let out on hire or hire purchase or charter or otherwise deal with and dispose of any of the ships, vessels, aircraft, and vehicles, shares, stock and securities, or any of the engine tackle, gear, furniture, equipment, and stores of the company. -4- (11) To purchase or otherwise acquire, and to hold, sell, exchange, lease, mortgage, pledge, charge, convert, turn to account, dispose of, and deal with property and rights of all kinds, and in particular mortgages, debentures, debenture stock, stock, shares, bonds, patents, concessions, annuities, policies, options, contracts, produce, commodities, bullion, specie, gems and other minerals, book debts, business concerns and undertakings, and claims, privileges, and choses in action of all kinds. (12) To purchase or otherwise acquire any interest in any patents, brevets d'invention, licences, concessions, and the like, conferring an exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem to the company capable of being profitably dealt with, and with a view thereto to enter into and carry into effect all such agreements as may seem expedient, and to use, exercise, develop, grant licenses in respect of, or otherwise to turn to account any such patents, brevets d'invention, licenses, concessions, and the like, and information aforesaid. (13) To act as advisers and consultants to any person, firm, company or corporation in any part of the world in any capacity in which a body corporate may properly act as adviser or consultant. (14) To carry on a general financial agency, investment and brokerage business, and to act as agents and brokers for the purchase, sale, improvement, and management of any property, estate, business or undertaking. (15) To act as agents and brokers for any individual, company, firm, or court of law, for the investment, loan, payment, transmission, and collection of money, and to take, receive, hold, transfer, and -5- convey all property, real or personal, [ILLEGIBLE] be granted, conveyed, or committed to this company. (16) To carry on the business of general commission agents and manufacturers' representatives in all its branches. (17) To act as agents or attorneys for the transaction of any business, and the investment and collection of moneys, rents, interests, dividends, mortgages, bonds, bills, notes, and other securities. (18) To carry on a guarantee and agency business, and to give any guarantee for the payment of money or for the performance of any obligation or undertaking whether on behalf of the company or on behalf of any other person or corporation. (19) To advance, deposit, or lend money, securities, and property, to or with such persons and on such terms as may seem expedient, and to discount, buy, sell, and deal in bills, notes, warrants, coupons, and other negotiable or transferable securities or documents. (20) To promote, organise, manage, or develop, or to assist in the promotion, organisation, management, or development of any company, syndicate, enterprise, or undertaking. (21) To carry on any other business which may seem to the company capable of being conveniently carried on in connection with the above, or calculated directly or indirectly to enhance the value of or render profitable any of the company's property or rights. (22) To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which this company is authorized to carry on, or possessed of property suitable for the purposes of this company. (23) To take, or otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this company, or carrying on any business capable of being conducted so as directly or indirectly to benefit this company. (24) Generally to purchase, take on lease or in exchange, hire, or otherwise acquire, any real and personal property, and any rights or privileges which the company may think necessary or convenient for the purposes of its business, and to construct, maintain, and alter any buildings, or works, necessary or convenient for the purposes of the company. (25) To promote any company or companies for the purpose of acquiring all or any of the property and liabilities of this company, or for any other purpose which may seem directly or indirectly, calculated to benefit this company. (26) To sell or dispose of the undertaking of the company or any part thereof for such consideration as the company may think fit, and in particular for shares, debentures, bonds, mortgages, or other securities of any other company having objects altogether or in part similar to those of this company. (27) To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in, or about to carry on or engage in, any business or transaction which this company is authorised to carry on or engage in, or any business or transaction capable of being conducted so as to directly or indirectly benefit this company. (28) To amalgamate with any other company having objects altogether or in part similar to those of this company. (29) To enter into any arrangements with any governments or authorities, supreme, municipal, local or otherwise, that may seem conducive to the company's objects or any of them, and to obtain from any such government or authority, any rights, privileges, and concessions which the company [illegible] think it desirable to obtain, and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions. (30) To obtain any provisional Order or Act of the Legislature and to do any other act or thing for enabling the company to carry any of its objects into effect, or for effecting any modification of the company's constitution, or for any other purpose which may seem expedient, and to oppose any proceedings or applications which may seem calculated, directly or indirectly to prejudice the company's interests. (31) To draw, make, accept, indorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, warrants, debentures, and other negotiable or transferable instruments. (32) To invest and deal with the moneys of the company not immediately required upon such securities and in such manner as may from time to time be determined. (33) To lend money, either with or without security, generally to such persons and on such terms as the company may think fit, and in particular to customers and others having dealings with the company and to members, directors and officers of the company. (34) To borrow or raise or secure the payment of money in such manner as the company shall think fit, and in particular by the issue of debentures, or debenture stock, perpetual or otherwise, charged upon all or any of the company's property (both present and future), including its uncalled capital, and to redeem or pay off such securities. (35) To sell, improve, manage, develop, exchange, lease, mortgage, dispose of, turn to account, or otherwise deal with, all or any part of the property or rights of the company. (36) To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the company's capital, or any debentures or other securities of the company, or in or about the formation or promotion of the company or the conduct of its business. (37) To adopt such means of making known the business of the company as may seem expedient. (38) To grant pensions, allowances, gratuities and bonuses to directors, ex-directors, officers, ex-officers, employees, and ex-employees of the company and the dependents and connections of such persons, and to establish and maintain or concur in establishing and maintaining trusts, funds, or schemes (whether contributory or non-contributory) with a view to providing pensions or other benefits for any such persons as aforesaid, their dependents or connections, and to support or subscribe to any charity, funds, or institutions the support of which may in the opinion of the directors be calculated directly or indirectly to benefit the company or its employees, and to institute and maintain any club or other establishment or profit sharing scheme calculated to advance the interests of the company, its officers or employees. (39) To pay for any rights or property acquired by the company, and to remunerate any person or persons or body or bodies corporate, either by cash payment, transfer of property, or by the allotment of shares, debentures or other securities of the company credited as paid up in full, in part or otherwise. (40) Generally to do all such other acts and things as the company may think incidental or conducive to the attainment of the above objects or any of them. (41) To procure the company to be registered or recognised in any part of the world outside of the Bahama Islands. (42) To do all or any of the above things in any part of the world, and as principals, agents, contractors, trustees or otherwise, and by or through sub-contractors, trustees, agents or otherwise, and either alone or in conjunction with others. (43) To distribute any of the property of the company "in specie" among the members. And it is hereby declared that the word "company" in this clause, except where used in reference to this company, shall be deemed to include any partnership or other body of persons whether corporate or unincorporate, and whether domiciled in the Bahama Islands or elsewhere, and that the objects specified in the different paragraphs of this clause shall, except where otherwise expressed in such paragraphs, be in nowise limited by reference to any other paragraph or the name of the company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. 4. The liability of the members is limited. 5. The capital of the company is (pounds)900 divided into 500 "A" shares of (pounds)1 each and 400 "B" shares of (pounds)1 each and save as in the accompanying Articles of Association otherwise expressly provided the "A" shares and the "B" shares shall rank pari passu in all respects and be a single class, with power to divide the shares in the capital for the time being into several classes, and to attach thereto respectively any preferential, deferred, qualified, or special rights, privileges, conditions or restrictions and to modify or deal with in the manner mentioned in Clause 26 of the accompanying Articles of Association but not otherwise, any rights for the time being attached to any class or classes of shares in the company so that Clause 26 of the said Articles shall be deemed to be incorporated herein and have effect accordingly. WE, the several persons whose names and addresses are subscribed, are desirous of being formed into a company, in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names. EX-3.6 5 ARTICLES OF ASSOC OF SUN INTL BAHAMAS LTD Exhibit 3.6 BAHAMA ISLANDS. ------- The Companies Act. ------- ARTICLES OF ASSOCIATION OF PARADISE REALTY LIMITED. ------- Explanatory. 1. In these presents, unless there be something in the subject or context inconsistent therewith:- "The company" means the above-named company. "The office" means the registered office for the time being of the company. "The register" means the register of members to be kept pursuant to Section 22 of The Companies Act. "The seal" means the common seal of the company. "Month" means calendar month. "In writing" and "written" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form. "The directors" means the directors for the time being of the company. "Special resolution" and "extraordinary resolution" have the meanings assigned thereto respectively by The Companies Act. Words importing the singular number only include the plural number, and vice versa. Words importing the masculine gender only include the feminine gender. Words importing persons include corporations. 2. In addition to the registered office of the company in the Colony, the company may have an office for the transaction of business at any other place or places. -2- Capital. 3. The capital of the company is (pounds) 900 divided into 500 "A" shares of (pounds) 1 each and 400 "B" shares of (pounds) 1 each. Save as in these Articles otherwise expressly provided, the "A" and "B" shares shall rank pari passu in all respects and be a single class. Shares. 4. None of the funds of the company shall be employed in the purchase of, or lent on, shares of the company. 5. The business of the company may be commenced as soon after the incorporation of the company as the directors shall think fit, and notwithstanding that part only of the shares may have been allotted. 6. Subject to the provisions of these Articles relating to new shares, the shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions, and at such times as the directors think fit. 7. Save as herein otherwise provided, the company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a court of competent jurisdiction, or as by Act required, be bound to recognize any equitable or other claim to or interest in such share on the part of any other person. Certificates. 8. The certificates of title to shares shall be issued under the seal of the company, and shall be signed by the President or a Vice-President, and shall be countersigned by the Secretary or an Assistant Secretary or some other person appointed by the directors. 9. Every member shall be entitled to one certificate for the shares registered in his name, or to several certificates each for one or more of such shares, and every certificate of shares shall specify the number and the denoting numbers of the shares in respect of which it is issued, and the amount paid up thereon. -3- 10. If any certificate be worn out or defaced, then upon production thereof to the directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof; and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the directors, and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. Company's Lien on Shares. 11. The company shall have a first and paramount lien upon all the shares registered in the name of each member, and upon the proceeds of sale thereof, for his debts, liabilities, and engagements, solely or jointly with any other person, to or with the company whether the period for the payment, fulfilment, or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the footing and condition that Article 7 hereof is to have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company's lien, if any, on such shares. 12. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think fit, but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member or his personal representatives, and default shall have been made by him or them in the payment, fulfilment, or discharge of such debts, liabilities, or engagements for seven days after such notice. 13. The net proceeds of any such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements of such member and the residue (if any) paid to him, his personal representatives or assigns. -4- 14. Upon any sale for enforcing a lien in purported exercise of the powers hereinbefore given, the directors may cause the purchaser's name to be entered in the register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after his name has been entered in the register in respect of such shares the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the company exclusively. Transfer and Transmission. 15. The instrument of transfer of any share shall be signed by both the transferor and transferee, and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the register in respect thereof. 16. Shares in the company may be transferred in any form which the directors may think fit to register. 17. The directors may decline to register a transfer of any share on which the company has a lien. They may also decline to register a transfer of any share to any person of whom they do not approve. And they may also decline to register a transfer of any share without assigning any reason therefor. 18. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the directors may require to prove the title of the transferor or his right to transfer the shares. 19. The personal representatives of a deceased member (not being one of several joint holders) shall be the only persons recognised by the company as having any title to the shares registered in the name of such member, and in case of the death of any one or more of the joint registered holders of any registered share, the survivors shall be the only persons recognised by the company as having any title to or interest in such shares. -5- 20. Any person becoming entitled to shares in consequence of the death or bankruptcy of any member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article, or of his title, as the directors think sufficient, may be registered as a member in respect of the shares, or may, subject to the regulations as to transfers hereinbefore contained, transfer such shares. The directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in an ordinary transfer presented for registration. Alteration of Capital. 21. The company may, from time to time, by special resolution, increase the capital by the creation of new shares of such amount as may be deemed expedient. 22. The new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the special resolution creating the same shall direct, and if no direction be given, as the directors shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the company, and with a special or without any right of voting. 23. All new shares shall be offered to the members in proportion to the existing shares held by them, and such offer shall be made by notice specifying the number of shares to which the member is entitled, and limiting a time (not being less than thirty days) within which the offer, if not accepted, will be deemed to be declined; and after the expiration of such time, or on receipt of an intimation from the member to whom such notice is given, that he declines to accept the shares offered, the directors may dispose of the same in such manner as they think most beneficial to the company. 24. Except so far as otherwise provided by the conditions of issue, or by these presents, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained with reference to transfer and transmission, forfeiture, lien, and otherwise. -6- 25. The company may, from time to time, by special resolution, consolidate its shares or any of them. Variation of Rights. 26. Whenever the capital of the company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of any Act, be varied or abrogated by special resolution, either with the consent in writing of the holders of three-fourths of the issued shares of the class, or with the creation of an extraordinary resolution passed at a separate general meeting of such holders (but not otherwise), and may be as varied or abrogated whilst the company is a going concern or in contemplation of a winding up. To every such separate general meeting all the provisions of these presents relating to general meetings of the company, or to the proceedings thereat, shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy one-half in nominal amount of the issued shares of the class, but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares in the class present in person or by proxy may demand a poll, and that such holders shall on a poll have one vote for every share of the class held by them respectively. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided by the terms of issue, be deemed to be modified by the creation or issue of further shares ranking pari passu therewith. Borrowing Powers. 27. The directors may, from time to time, at their discretion, but only with the authority of a resolution passed with the concurrence of at least two of the 'A' directors, or their alternates, and two of the 'B' directors, or their alternates, raise or borrow, or secure the payment of, any sum or sums of money for the purposes of the company. 28. With the authority referred to in the preceding Article, the directors may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions -7- in all respects as they think fit, and, in particular by the issue of bonds, perpetual or redeemable debentures or debenture stock, or any mortgage, charge, or other security on the undertaking or the whole or any part of the property of the company (both present and future), including its uncalled capital for the time being. General Meetings. 29. General meetings of the company may be held anywhere in the world. 30. The first general meeting shall be held at such time (not being more than four months after the registration of the company) as the directors may determine, and in the Island of New Providence, or at such other place within or without the Colony as may be prescribed by the directors. 31. Other general meetings shall be held once at least in every calendar year at such time, not being more than fifteen months after the holding of the last preceding general meeting, and in the Island of New Providence, or at such place within or without the Colony as may be determined by the directors. At these meetings the Annual Report of the directors shall be presented, the directors elected for the ensuing year and the general business of the company transacted. Such general meetings shall be called "ordinary meetings", and all other meetings of the company shall be called "extraordinary meetings". 32. The directors may, whenever they think fit, convene an extraordinary meeting, and they shall, on the requisition of the holders of one-fourth in value of the subscribed and issued shares of the company, forthwith proceed to convene an extraordinary meeting of the company. 33. Fourteen days' notice, specifying the place, day and hour of the meeting, and in case of special business, the general nature of such business shall be given to the members in manner hereinafter mentioned; or in such other manner, if any, as may be prescribed by the company in general meeting; but the accidental omission to give notice of a meeting to, or the non- -8- receipt of such notice by any person entitled to receive notice shall not invalidate the proceedings at that meeting. 34. All business shall be deemed to be special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of the consideration of the accounts, balance sheets, and the ordinary reports of the directors and auditors. 35. When all the members in person or by proxy sign the minutes of an ordinary or extraordinary meeting, the same shall be deemed to have been duly held, notwithstanding that the members have not actually come together or that there may have been technical defects in the proceedings. And a resolution in writing, in one or more parts, signed by all the members shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. Proceedings at General Meetings. 36. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business except to take measures to obtain a quorum. 37. A quorum shall consist of two members present in person or by proxy and holding or representing between them not less than fifty-one per centum of the subscribed and issued shares of the company carrying the right to vote at such meeting. 38. The President, or in his absence, the senior Vice-President present shall preside as Chairman at every general meeting of the company. In the absence of the President and the Vice-Presidents, the members present shall choose some one of their number to be Chairman. 39. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, as the meeting shall determine. Whenever a meeting is adjourned for twenty-one days or more, notice of the adjourned meeting shall be given in the same manner as in the case of an original meeting. No business shall be transacted at any -9- adjourned meeting other than the business which might have been transacted at the meeting from which the adjournment took place. 40. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands. In the case of an equality of votes, the Chairman shall not, either on a show of hands or on a poll, have a casting vote. 41. At any general meeting, unless a poll is demanded by the Chairman or by members present in person or by proxy holding one-fourth in value of the subscribed and issued shares of the company, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the books of proceedings of the company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 42. If a poll is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs and either at once, or after an interval or adjournment, or otherwise, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the same, and such determination made in good faith shall be final and conclusive. Votes of Members. 43. On a show of hands every member present in person or by proxy shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. 44. Votes may be given either personally or by proxy. 45. The instrument appointing a proxy shall be in writing, under the hand of the appointor or of his attorney. Any person appointed a proxy need not be a member of the company. 46. The instrument appointing a proxy shall be deposited with the Secretary before or at the meeting for which it is to be used, and may be permanent or ad hoc. If a proxy is permanent it may be recorded with the Secretary. -10- 47. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal, or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of such death, revocation, or transfer shall have been received before the meeting. 48. An instrument appointing a proxy may be in any form which the directors think fit to approve. Directors. 49. (1) The number of directors shall be seven and the holders of the "A" shares shall at all times be entitled to appoint four directors and the holders of the "B" shares shall at all times be entitled to appoint three directors, respectively to represent them in accordance with this Article. Directors so appointed by the holders of the "A" shares are hereinafter called "'A' directors". Directors so appointed by the holders of the "B" shares are hereinafter called "'B' directors". (2) Every such appointment shall be made in writing signed by or on behalf of the holders (including a single holder) of a majority of the "A" shares or of a majority of the "B" shares (as the case may be) and left at the office. The holders of a majority of the "A" shares may at any time in like manner remove any 'A' director from office and appoint any person to be an 'A' director in his place or fill any other vacancy among the 'A' directors. The holders of a majority of the "B" shares may at any time in like manner remove any 'B' director from office and appoint any person to be a 'B' director in his place or fill any other vacancy among the 'B' directors. (3) The first directors shall be James M. Crosby, I. G. Davis, Jr., Charles E. Murphy, Jr., Ralph White, Georgette Groves, Robert Keith Stuart Gonsalves, and Ronald George Gowlding of whom the first four named shall be deemed to have been duly appointed 'A' directors, and the last three named shall be deemed to have been duly appointed 'B' directors. 50. No director shall be required to hold any share qualification. -11- Alternate Directors. 51. Any 'A' director may at any time appoint any person approved in writing by the remaining 'A' directors to be an alternate director of the company, and any 'B' director may at any time appoint any person approved in writing by the remaining 'B' directors to be an alternate director of the company; and any director may at any time remove any alternate director so appointed by him. An alternate director so appointed shall not in respect of such appointment be entitled to receive any remuneration from the company, but shall (subject to his giving to the company an address at which notices may be served upon him) be entitled to receive notices of all meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present, and generally to perform all the functions of his appointor as a director in the absence of such appointor. An alternate director shall ipso facto cease to be an alternate director if his appointor ceases for any reason to be a director. All appointments and removals of alternate directors shall be made in writing signed by the director making or revoking such appointment and left at the office. Director or Officer Contracting with Company. 52. No director or officer shall be disqualified by his office from contracting and/or dealing with the company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the company in which any director or officer shall be in any way interested, be avoided, nor shall any director or officer so contracting or being so interested be liable to account to the company for any profit realised by any such contract or arrangement by reason of such director or officer holding that office or the fiduciary relation thereby established, but it is declared that the nature of his interest must be disclosed by him at the meeting of the directors at which the contract or arrangement is determined on, if his interest then exists, or in any other case at the first meeting of the directors after -12- the acquisition of his interest, and having disclosed his interest as aforesaid such director shall be entitled to vote as a director in respect of any contract or arrangement in which he is so interested as aforesaid. Remuneration of Directors. 53. The directors shall be paid out of the funds of the company by way of remuneration for their services such sums as the company by extraordinary resolution may from time to time determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine, and in default of such determination within the year equally. The directors shall also be paid their travelling expenses (if any) of attending and returning from board and committee meetings. Proceedings of Directors. 54. The directors may meet together at such place as they may determine for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Three directors present in person or by their alternates shall be a quorum. 55. The President or any two directors may at any time convene a meeting of the directors. Subject as hereinafter provided in Article 63, all directors and their alternates shall be entitled to Five (5) clear days' notice at every meeting of the directors. Questions arising at any meeting shall be decided by a majority of votes, but in case of an equality of votes, the Chairman shall not have a second or casting vote. 56. A validly constituted meeting of the directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discre- -13- tions by or under the regulations of the company for the time being vested in or exercisable by the directors generally. 57. The President, or in his absence the senior Vice-President (being a director) present, shall preside at all meetings of the directors. In the absence of the President and the Vice-Presidents (being directors), the directors present shall choose some one of their number to be Chairman of the meeting. 58. The directors may by resolution having the concurrence of at least two of the 'A' directors, or their alternates, and two of the 'B' directors, or their alternates, delegate any of their powers to committees, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part and either as to persons or purposes. 59. Every committee so formed shall, in the exercise of the powers so delegated, conform to these Articles and to any regulations that may from time to time be imposed on it by the directors. 60. Each such committee may elect a Chairman of its meetings. If no such Chairman is elected, or if at any meeting the Chairman is not present within ten minutes after the time appointed for holding the same, the members present may choose some one of their number to be Chairmen of the meeting. 61. Each such committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present, but in the case of an equality of votes, the Chairman shall not have a second or casting vote. 62. All acts done at any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in office of any such directors or person acting as aforesaid, or -14- they or any them are disqualified or had vacated office, or are not entitled to vote, be as valid as if every such person had been duly appointed or had duly continued in office and was qualified and had continued to be a director, and had been entitled to be a director. 63. When all of the 'A' directors or their respective alternates and all of the 'B' directors or their respective alternates sign the minutes of a meeting of the directors, the same shall be deemed to have been duly held notwithstanding that notice of such meeting shall not have been given in accordance with the provisions of Article 55 and notwithstanding that the directors have not actually come together or that there may have been technical defects in the proceedings. And a resolution in writing, in one or more parts, signed by all of the 'A' directors and all of the 'B' directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted. Powers of Directors. 64. The management of the business of the company shall be vested in the directors, who, in addition to the powers and authorities by these presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to the provisions of any Act, and of these presents, and to any regulations from time to time made by the company in general meeting, provided that no regulation so made shall invalidate any prior act of the directors which would have been valid if such regulation had not be made. Notwithstanding the foregoing the company shall not enter into any agreement to sell, lease, charge or in any other way dispose of or part with the possession of any of the principal capital assets of the company except with the prior authority of a resolution of the directors passed with the concurring vote of at least two of the 'A' directors, or their alternates, and at least two of the 'B' directors, or their alternates, enter into any agreement (a) to sell, lease, charge or in any other way dispose of or part with the possession of any asset of the company having a value exceeding Five thousand pounds (b) to purchase or acquire any asset for a price exceeding Five thousand pounds or (c) for the employment by the company of any person, whether a director, officer or otherwise, at an annual salary in excess of Five thousand pounds. 65. Subject to the provisions of Article 54, the continuing directors may act at any time notwithstanding any vacancy in their body. -15- Officers. 66. The officers of the company shall be elected annually by the company or appointed annually by the directors, and shall consist of a President, one or more Vice-Presidents, a Secretary, a Treasurer, one or more Assistant Secretaries, and one or more Assistant Treasurers, and such other officers as the company or the directors may from time to time think necessary. The officers shall in addition to the duties prescribed by these Articles, perform such duties as may be prescribed by the directors. They shall hold office until their successors are elected or appointed. But any officer may be removed at any time by the company in general meeting or by the directors. If any office becomes vacant during the year the company in general meeting or the directors may fill the same for the unexpired term. 67. Until officers are elected or appointed Douglas Eugene Duncombe shall be deemed to be the Secretary of the company. 68. Any person may hold more than one of these offices, and no officer need be a member of the Company. President. 69. The President shall act as Chairman of all meetings of the members and of the directors. He shall also perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Vice-Presidents. 70. (1) Subject as hereinbefore provided, any one of the Vice-Presidents, in the absence or disability of the President, may perform the duties and exercise the powers of the President, and each Vice-President shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. (2) Any one of the Vice-Presidents may be designated by the directors as the Executive Vice-President, and as such -16- [illegible] senior ranking Vice-President, and in addition to performing the duties prescribed by these Articles, shall perform such other duties and exercise such powers as the directors may from time to time and for such time entrust to and confer upon him subject to such terms, conditions and restrictions as the directors may impose. Treasurer. 71. The Treasurer shall perform such duties as may be prescribed by these Articles, the company in general meeting, or the directors, and if and when directed so to do by the company or the directors, shall keep full and accurate accounts of the receipts and disbursements of the company in books belonging to the company and shall render to the directors at regular meetings of the directors, or whenever they may require it, a statement of the financial condition of the company. Assistant Treasurers. 72. Any one of the Assistant Treasurers, in the absence or disability of the Treasurer, may perform the duties and exercise the powers of the Treasurer, and each Assistant Treasurer shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Secretary. 73. The Secretary shall attend and keep the minutes of the meetings of the members and of the directors. He shall also summon meetings and keep such other books and records of the company and the directors as may be required by the company in general meeting, or the directors, and perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Assistant Secretaries. 74. Any one of the Assistant Secretaries, in the absence or disability of the Secretary, may perform the duties and exercise the powers of the Secretary, and each Assistant Secretary shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. -17- The Seal. 75. The directors shall provide for the safe custody of the seal, and the seal shall never be used except by the authority of a resolution of the directors or a general meeting. 76. The company may exercise the powers conferred by the Companies Seals Act of the Colony. Authentication of Deeds and Documents. 77. All deeds executed on behalf of the company may be in such form and contain such powers, provisos, conditions, covenants, clauses, and agreements as the directors, or the company in general meeting, shall think fit, and, in addition to being sealed with the seal of the company, shall be signed by the President or a Vice-President or such other person as the directors or the company in general meeting shall from time to time appoint, and countersigned by the Secretary or an Assistant Secretary or such other person as the directors or the company in general meeting shall from time to time appoint. Dividends. 78. The profits of the company shall be divisible among the members holding shares in proportion to the capital paid up on such shares held by them respectively. 79. The company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits, and may fix the time for payment. 80. No dividend shall be payable except out of the profits of the company. 81. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the company justifies. 82. The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company. -18- 83. Any one of several persons who are registered as the joint holders of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such share. 84. Unless otherwise directed any dividend may be paid by cheque or warrant sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the register in respect of the joint holding; and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent. 85. Notice of any dividend that may have been declared whether interim or otherwise, shall be given to each member either by advertisement or by notice in manner hereinafter mentioned. 86. No dividend shall bear interest as against the company. 87. Any general meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specific assets, and in particular of paid-up shares, debentures, or debenture stock of the company or paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and the directors shall give effect to such resolutions; and, where any difficulty arises in regard to the distribution, they may settle the same as they think expedient. Reserves. 88. The directors may, before recommending any dividend, but with the concurring vote of at least two of the 'A' directors, or their alternates, and at least two of the 'B' directors, or their alternates, set aside out of the profits of the company such sums as they think proper as a reserve or reserves, which shall, at the discretion of the directors, be applicable for any purpose to which the profits of the -19- company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the company or be invested in such investments (other then shares of the company) as the directors may from time to time think fit. Capitalization of Profits and Reserves. 89. The company by extraordinary resolution in general meeting may, upon the recommendation of the directors, resolve that it is desirable to capitalise the whole or any part of the amount for the time being standing to the credit of any of the company's reserve accounts, or to the credit of the profit and loss account, or otherwise available for distribution, and accordingly that such sum be set free for distribution amongst the members who would have been entitled thereto if distributed by way of dividend and in the same proportions on condition that the same be not paid in cash but be applied either in or towards paying up any amounts for the time being unpaid on any shares held by such members respectively, or paying up in full unissued shares or debentures of the company to be allotted and distributed, credited as fully paid up, to and amongst such members in the proportion aforesaid, or partly in the one way and partly in the other, and the directors shall give effect to such a resolution. 90. Whenever such a resolution as aforesaid shall have been passed, the directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares, debentures, or securities, if any, and generally shall do all acts and things required to give effect thereto, with full power to the directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit for the case of shares, debentures, or securities becoming distributable in fractions, and also to authorise any person to enter on behalf of all -20- members entitled thereto into an agreement with the company providing for the allotment to them respectively, credited as fully paid up, of any further shares, debentures, or securities to which they may be entitled upon such capitalisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares, and any agreement made under such authority shall be effective and binding on all such members. Accounts. 91. The directors shall cause true accounts to be kept of the stock-in-trade of the company, of the sums of money received and expended by the company, and the matters in respect of which such receipt and expenditure take place; and of the assets, credits and liabilities of the company. 92. The books of account shall be kept at one of the offices of the company. 93. Once at the least in every year the directors shall lay before the company in general meeting a statement of the income and expenditure for the past year, made up to a date not more than six months before such meeting. 94. A balance sheet shall be made out in every year, and laid before the company in general meeting, and such balance sheet shall contain a summary of the property and liabilities of the company. 95. The directors shall make all necessary arrangements for an annual audit of the books and accounts of the company. Any auditor appointed need not be a member of the company. Notices. 96. A notice may be served by the company upon any member or director either personally or by sending it through the post in a prepaid envelope or wrapper addressed to such member or -21- director at his last known address. If the last known address of any such member or director is outside of the Colony the notice shall be sent by prepaid registered airmail. 97. The signature to any such notice to be given by the company may be written, typewritten, or printed. 98. Any notice, if served by post, shall be deemed to have been served on the seventh day after the day on which the envelope or wrapper containing the same was posted; and in proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice was properly addressed, stamped and posted, and in the case of service outside of the Colony, that it was sent by prepaid registered airmail. 99. Notice of meetings of members shall be given by the Secretary at least fourteen days before the date of such meeting. 100. Notice of special meetings shall state the objects for which the meeting is called. 101. Any member or director may waive the right to receive notices by an instrument in writing signed by him before, at or after any meeting. Indemnity. 104. Every director, manager, auditor, president, vice-president, secretary, treasurer, and other officer or servant of the company shall be indemnified by the company against, and it shall be the duty of the directors out of the funds of the company to pay all costs, losses, and expenses which any such officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such director, manager, auditor, president, vice-president, secretary, treasurer, officer or servant as aforesaid, or in any way in the discharge of his duties, including travelling expenses. -22- IN WITNESS WHEREOF We the Subscribers to the Memorandum of Association have hereunto subscribed our names this Twenty-eighth day of June, A.D., 1965. (Sgd.) Lionel Levine (Sgd.) B. M. Gamblin (Sgd.) W. S. Pearce (Sgd.) Irma F. Albury (Sgd.) D. E. Duncombe Signed by the Subscribers to the Memorandum of Association in the presence of:- (Sgd.) F. E. Weech BAHAMA ISLANDS, Registrar General's Office. I certify the foregoing to be a true copy of the original deposited in this office. /s/ [Illegible] --------------------------------------- 22/1/68 Asst Registrar General EX-3.7 6 MEMORANDUM OF ASSOC OF PARADISE AQUISITIONS LTD Exhibit 3.7 THE COMPANIES ACT 1992 ---------------------- COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF PARADISE ACQUISITIONS LIMITED 1. The name of the Company is PARADISE ACQUISITIONS LIMITED. 2. The Registered Office of the Company will be situate in the Island of New Providence one of the Islands in The Commonwealth of The Bahamas. 3. The object or purpose for which the Company is established is to engage in any act or activity that is not prohibited under any law for the time being in force in The Commonwealth of The Bahamas. 4. The liability of the members is limited. 5. The capital of the Company is Five thousand Dollars (US$5,000.00) in the currency of the United States of America divided into Five thousand (5,000) shares of One Dollar (US$1.00) each, with power to increase the capital and to divide the shares in the capital for the time being, whether original or increased, into several classes, and to attach thereto respectively any preferential, deferred, qualified, or special rights, privileges or conditions, whether as to voting or otherwise. 6. The Company shall be a Private Company and accordingly no shares nor any class of shares shall be offered to the public for subscription. 7. The number of shareholders being signatories to this Memorandum and subscribing for shares hereunder shall be Two (2) who hereby subscribe for One (1) share each, each share having a par value of US$1.00, for an aggregate value of US$2.00. EX-3.8 7 ARTICLES OF ASSOC OF PARADISE AQUISITIONS LTD Exhibit 3.8 THE COMPANIES ACT 1992 ----------------------------- COMPANY LIMITED BY SHARES ----------------------------- ARTICLES OF ASSOCIATION OF PARADISE ACQUISITIONS LIMITED ----------------------------- INTERPRETATION 1. In these presents unless there be something in the subject or context inconsistent therewith: "The Act" means The Companies Act 1992 and any statutory modifications thereof. "The Company" means the above-named Company. "The Directors" means the Directors for the time being of the Company. "The Auditors" means the persons for the time being performing the duties of auditors. "The Office" means the registered office for the time being of the Company. "The Register" means the Register of Members to be kept as required by Section 56 of The Companies Act. "Month" means calendar month. "Dividend" includes bonus if so determined by the Directors. "The Seal" means the common seal of the Company. "The Secretary" includes an Assistant Secretary and any person appointed to perform the duties of Secretary of the Company. "In Writing"/ include printing, lithography, and other modes of "Written" representing or reproducing words in visible form. "Paid up" means paid up and/or credited as paid up. Words importing the singular number only include the plural number and vice versa. Words importing the masculine gender only include the feminine gender. Words importing persons include corporations. -2- 2. In addition to the registered office of the Company in the Commonwealth of The Bahamas, which shall be at such place as the Directors shall from time to time appoint, the Company may have an office for the transaction of business at any other place, and meetings of the Company or of the Directors may be held either within or without the Commonwealth, and if without the Commonwealth at such place as the Directors may determine. SHARES 3. Unless the Directors shall determine otherwise, all the shares in the Company shall be numbered in regular series; and every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished. 4. Subject to the provisions of Section 44 of the Act, the Company may purchase or acquire shares issued by it. 5. Subject to any directions at any time and from time to time given by the Company in general meeting the shares shall be under the control of the Directors, who may allot or otherwise dispose of the same to such persons, on such terms and conditions, and at such times as the Directors think fit. 6. The joint holders of a share shall be severally as well as jointly liable for payment of all instalments and calls due in respect of such share. 7. Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a court of competent jurisdiction, or as by the Act required, be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person. CERTIFICATES 8. The certificates of title to shares shall be issued under the seal of the Company, and shall be signed by one of the Directors and countersigned by the Secretary. 9. Every member shall be entitled to one certificate for all the shares registered in his name, or to several certificates, each for one or more of such shares. Every certificate of shares shall specify the number and denoting numbers of the shares in respect of which it is issued, and the amount paid up thereon and shall be numbered in regular series. 10. If any certificate be worn out or defaced, then upon production thereof to the Directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof, and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the Directors and on such indemnity as the Directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. 11. For every certificate issued under the last preceding Article there shall be paid to the Company the sum of Seventy-five cents or such smaller sum as the Directors may from time to time determine. 12. The certificate of shares registered in the names of two or more persons shall, unless otherwise directed by them, be delivered to the person first named on the register. CALLS 13. (1) The Directors may from time to time make such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them respectively and not by -3- the conditions of allotment thereof made payable at fixed times. A call may be made payable by instalments. (2) Each member shall pay the amount of every call so made on him to such persons and at such times and places as the Directors shall appoint. (3) Notice of the persons appointed to receive payment of every call and of the times and places appointed for payment shall be sent to the members by the Company as hereinafter provided. 14. A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed. 15. Seven (7) days' notice at least of any call shall be given. 16. If the sum payable in respect of any call or instalment be not paid on or before the day appointed for payment thereof, the holder for the time being of the share in respect of which the call shall have been made, or the instalment shall be due, shall pay interest for the same at such rate, not exceeding ten per centum per annum, as the Directors shall determine, from the day appointed for the payment thereof to the time of actual payment, but the Directors may if they shall think fit, remit payment of such interest or any part thereof 17. On the trial or hearing of any action for the recovery of any money due for any call, it shall be sufficient to prove that the name of the member sued is entered in the register as the holder, or one of the holders, of the shares in respect of which such debt accrued; that the resolution making the call is duly recorded in the minute book; and that notice of such call was duly given to the member sued, in pursuance of these presents; and it shall not be necessary to prove the appointment of the Directors who made such call, nor any other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt. 18. The Directors may, if they think fit, receive from any member willing to advance the same, all or any part of the capital due upon the shares held by him beyond the sums actually called for, and upon the amount so paid in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the Company may pay interest at such rate as the member paying the same in advance and the Directors agree upon. FORFEITURE AND LIEN 19. If any member fail to pay any call or instalment on or before the day appointed for the payment of the share, the Directors may at any time thereafter, during such time as the call or instalment remains unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued and all expenses that have been incurred by the Company by reason of such non-payment. 20. The notice shall name a day (not being less than Twenty-one (21) days from the date of the notice), and a place or places, on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of nonpayment at or before the time and at the place appointed, the shares in respect of which such call or instalment is payable will be liable to forfeiture. 21. (1) If the requirements of any such notice as aforesaid are not complied with, any shares in respect of which such notice has been given may, at any time thereafter, before payment -4- of all calls or instalments, interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. (2) A certificate in writing under the hand of one Director and countersigned by the Secretary stating that a share has been forfeited, shall be conclusive evidence of such forfeiture, and an entry of every such certificate shall be made in the minutes of the proceedings of the Directors. 22. When any share shall have been so forfeited, notice of the resolution shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register. 23. (1) Any shares so forfeited shall be deemed to be the property of the Company, and the Directors may sell, re-allot and otherwise dispose of the same in such manner as they think fit. (2) The Directors may, at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as they think fit. 24. Any member whose shares have been forfeited shall, notwithstanding, be liable to pay, and shall forthwith pay to the Company, all calls, instalments interest and expenses, owing upon or in respect of such shares at the time of forfeiture, together with interest thereon from the time of forfeiture until payment at ten per centum per annum, and the Directors may enforce the payment thereof if they shall think fit. 25. The Company shall have a first and paramount lien upon all the shares registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof, for his debts, liabilities and engagements, solely or jointly with any other person, to or with the Company, whether the period for the payment, fulfilment or discharge thereof shall have actually arrived or not, and no equitable interest shall be created in any share except upon the footing and condition that Article 8 hereof is to have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the Company's lien, if any, on such shares. 26. For the purpose of enforcing such lien, the Directors may sell the shares subject thereto in such manner as they think fit; but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member, his executors or administrators, and default shall have been made by him or them in the payment, fulfilment, or discharge of such debts, liabilities or engagements for Seven (7) days after such notice. 27. The net proceeds of any such sale shall be applied in or towards satisfaction of the said debts, liabilities or engagements and the residue (if any) paid to such member, his executors, administrators or assigns. 28. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers hereinbefore given, the Directors may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser's name to be entered in the register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings, or to the application of the purchase money, -5- and after his name has been entered in the register in respect of such shares, the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively. TRANSFER OF SHARES 29. Any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the Directors may approve. 30. The instrument of transfer of any share in the Company shall be in writing and shall be executed both by the transferor and the transferee, and the transferor shall be deemed to remain a holder of such share until the name of the transferee is entered in the register in respect thereof. 31. The Company shall be entitled to charge a fee not exceeding 50 cents on the registration of a transfer or of any probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument affecting the title to any share. 32. The Directors may decline to register a transfer of any share to any person of whom they do not approve. They may also decline to register any transfer of shares without assigning any reason therefor. 33. If the Directors refuse to register a transfer they shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal. 34. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the Directors may require to prove the title of the transferor or his right to transfer the shares. TRANSMISSION OF SHARES 35. In case of the death of a member the survivor or survivors where the deceased was a joint holder, and the legal personal representatives of the deceased where he was a sole holder, shall be the only persons recognized by the Company as having any title to his interest in the shares; but nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons. 36. Any person becoming entitled to a share in consequence of the death of any member, or in any other way than by transfer, may with the consent of the Directors, and upon the production of such evidence as may from time to time be required by the Directors, be registered as a member, or, subject to the provisions as to transfers hereinbefore contained, may transfer such share to some other person by executing to the latter an instrument of transfer. 37. The Directors may, if they think fit, withhold the payment of any dividend, payable in respect of any share to which any person may be entitled by transmission until such time as such person shall become the registered owner, or shall have effectually transferred such share, after which time such person, so becoming registered or transferring, shall receive such dividend. INCREASE OF CAPITAL 38. The Company may, from time to time by resolution of the members, increase the capital of the Company by the creation of new shares of such amount as may be deemed expedient. -6- 39. The new shares shall be issued upon such terms and conditions, and with such rights, priorities and privileges annexed thereto, as the general meeting resolving upon the creation thereof, shall direct, and if no direction be given, as the Directors shall determine; and in particular such shares may be issued with a preferential or qualified right to dividends, and in the distribution of assets of the Company, and with a special or without any right of voting. 40. If any difficulty shall arise in the apportionment of such new shares, or any of them, amongst the members, such difficulty shall, in the absence of direction by the Company be determined by the Directors. 41. Except so far as otherwise provided by the conditions of issue, or by these Articles, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained with reference to the payment of calls and instalments, transfer and transmission, forfeiture, lien and otherwise. 42. The Company may, from time to time, by resolution of the members, consolidate and divide all or any of its share capital into shares of larger amount than its existing shares. ALTERATION AND REDUCTION OF CAPITAL 43. The Company may pass all resolutions for the alteration or reduction of its Share Capital as are set forth in Sections 49 and 50 of the Act. MODIFICATION OF RIGHTS 44. Whenever the capital, by reason of the issue of Preference shares or otherwise, is divided into different classes of shares, all or any of the rights and privileges attached to each class may be modified, commuted, affected, abrogated or dealt with either with the consent in writing of the holders of a majority in nominal value of the issued shares of the class, or the sanction of a resolution of the members passed at a separate general meeting of the holders of shares of that class. All the provisions hereinafter contained as to general meetings shall, mutatis mutandis, apply to every such meeting but so that the Quorum thereof shall be members holding, or representing by proxy one-tenth in nominal amount of the issued shares of the class, (provided that if at any adjourned meeting of such holders a quorum as above defined is not present those members who are present in person or by proxy shall be a quorum) and that the holders of shares of the class shall, on a poll, have one vote for every share of the class held by them respectively. This Article is not to derogate from any power the Company would have had if this Article were omitted. MEETINGS 45. The statutory meeting of the Company shall be held within the period required by Section 70 of the Act. 46. General meetings shall be held once at least in each and every calendar year at such time and place as may be prescribed by the Directors. Such general meetings may be held anywhere in the world. At these meetings the Directors shall be elected for the ensuing year and the general business of the Company transacted. 47. General meetings held annually in accordance with the preceding Article shall be called ordinary meetings; all other meetings of the Company shall be called extraordinary general meetings. 48. In addition to the provisions of Section 71 of the Act two Directors or the President (if and when elected or appointed) may, whenever they or he thinks fit convene an extraordinary general meeting; and the Directors may, whenever they think fit, -7- and they shall on the requisition of one Director, or upon a requisition made in writing by members owning not less than one-tenth in nominal value of the issued shares of the Company, convene an extraordinary general meeting. 49. Any such requisition shall express the object of the meeting required, and shall be signed by the director or members making the same, and shall be sent by post or delivered to the Secretary of the Company, or sent by post to or delivered at the Office. 50. Upon the receipt of such requisition the Directors shall forthwith proceed to convene an extraordinary general meeting. If they do not proceed to convene the same within Seven (7) days from the date of the receipt of the requisition the requisitionist or requisitionists, or any member or members, being the owners of not less than one-tenth in nominal value of the issued shares of the Company, may themselves convene a meeting in The Bahamas aforesaid, or at such other place as they may determine. 51. Seven (7) clear days' notice at the least of any meeting specifying the place, the day and the hour of the meeting and, in case of special business, the general nature of such business, shall be given to the members in manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the Company in general meeting; but the accidental omission to give notice of any meeting to, or the non-receipt of any such notice by any person entitled thereto shall not invalidate the proceedings at that meeting. 52. All business shall be deemed to be special that is transacted at an extraordinary general meeting. All business that is transacted at an ordinary meeting shall also be deemed special, with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets and the ordinary report of the auditors and the election of Directors and Officers. 53. Subject to the provisions of the Act, when a majority of the shareholders in person or by proxy representing at least one-half of the issued capital of the Company sign the minutes of any ordinary or extraordinary general meeting the same shall be deemed to have been duly held notwithstanding that the members have not actually come together or that there may have been technical defects in the proceedings. And a resolution in writing signed by members holding the requisite majority in nominal value of the issued shares of the Company shall be as valid and effectual as if it had been passed at a meeting of the shareholders duly called and constituted. 54. The minutes of any ordinary or extraordinary general meeting if purporting to be signed by the Chairman thereof, or by the Chairman of the next succeeding meeting, shall be sufficient evidence without any further proof of the facts therein stated. PROCEEDINGS AT GENERAL MEETINGS 55. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, except to take measures to obtain a quorum. 56. A quorum shall consist of Two (2) members present in person or by proxy for all purposes. 57. The President or Vice-President if they have been elected or appointed shall preside as Chairman at every general meeting of the Company. In the event that no President or Vice-President has been elected or appointed or in their absence the Directors present shall choose some Director present to be Chairman, or if no Director be present, or if all the Directors present decline to take the chair the members present shall choose some one of their number to be Chairman. -8- 58. If within Thirty (30) minutes from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day Two (2) weeks thereafter and at the same time and place; and if at such adjourned meeting a quorum is not present within Thirty (30) minutes of the appointed time, those members who are present shall be a quorum and may transact the business for which the meeting was called but so that not less than Two (2) individuals shall constitute the quorum. 59. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 60. Every question submitted to a meeting shall be decided by a show of hands unless a poll is demanded (before or on the declaration of the result of the show of hands) and in the case of an equality of votes the Chairman shall have a casting vote in addition to the vote or votes to which he may be entitled as a member. 61. At any general meeting unless a poll is demanded by the Chairman or by at least Three (3) members present in person or by proxy, or by any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting a declaration by the Chairman that a resolution has been carried and an entry to that effect in the book of proceedings of the Company shall be sufficient evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 62. If a poll is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs, and either at once, or after an interval or adjournment, or otherwise, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the same, and such determination made in good faith shall be final and conclusive. VOTES OF MEMBERS 63. On a show of hands every member entitled to vote present in person or by proxy shall have one vote, and upon a poll being demanded, every member entitled to vote present in person or by proxy shall have one vote for every share held by him. Where two or more persons hold shares jointly, one of those holders present at a general meeting may, in the absence of the other or others, vote the shares; but if two or more joint holders are present in person or by proxy, they shall vote as one on the shares held jointly by them and for this purpose the joint holder entitled to tender a note, to the exclusion of the notes of the other joint holders, shall be determined by the order in which the names stand in the register of members. 64. Votes may be given either personally or by permanent or ad hoc written proxy. 65. The instrument appointing a proxy and the power of attorney if any under which it is signed or a notarially certified copy thereof shall be deposited with the Secretary before or at the meeting for which it is to be used, and if permanent may be recorded with the Secretary. 66. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy, or of the authority under which the instrument of proxy was executed, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer shall have been received at the office before the meeting or adjourned meeting at which the instrument of proxy is used. -9- 67. An instrument appointing a proxy may be in any form which the Directors think fit to approve. The proxy shall be deemed to include the right to demand, or join in demanding a poll, and shall (except and to the extent to which the proxy is specially directed to vote for or against any proposal) include power generally to act at the meeting for the person giving the proxy. A proxy shall unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates, and need not be witnessed. 68. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney, or, if the appointer is a corporation, either under seal, or under the hand of an officer or attorney duly authorized. A proxy need not be a member of the Company. Any corporation which is a member of the Company may by resolution of its Directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of the Company, or of any class of members of the Company, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company. DIRECTORS 69. The first Directors may be appointed in writing by the Subscribers to the Memorandum of Association, and such Directors shall hold office until the statutory meeting of the Company. The Company by resolution of the members, or a member or members holding a majority in nominal value of the issued shares for the time being conferring the rights to attend and vote at general meetings of the Company, shall have power, from time to time and at any time to appoint any person or persons as a Director or Directors (provided that the total number of Directors shall not exceed the maximum number prescribed by, or in accordance with these Articles) and to remove from office any Director, howsoever appointed. A Director or Directors so appointed (except the first Directors) shall hold office for a year (unless removed as aforesaid) or until his or their successors are duly elected or until the office is duly vacated as provided by Article 73. Any appointment or removal by a member or members as aforesaid, shall be effected by an instrument in writing signed by the member or members making the same, or in the case of a member being a Company, signed by one of its Directors on its behalf, and shall take effect upon lodgement at the Office. 70. Unless and until the Company in general meeting shall otherwise determine, the Directors shall be not less than Two (2) nor more than Nine (9) in number, and they need not be shareholders of the Company. 71. The remuneration of the Directors shall be determined by the Company in general meeting. 72. The office of director shall be ipso facto vacated if the Director:- (1) Becomes bankrupt, or makes any arrangement or composition with his creditors generally; or (2) Resigns his office by notice in writing under his hand sent to or left at the office; or (3) Becomes lunatic or of unsound mind; or (4) Is absent from meetings of the Directors for Six (6) successive months without leave and his alternate Director (if any) shall not, during such period, have attended in his stead, and the Directors resolve that his office be vacated; or (5) Is requested in writing by members holding or representing more than one-half in value of the issued shares of the Company to -10- vacate his office; or (6) Is or otherwise becomes disqualified or removed pursuant to Sections 87, 88, 90 or 92 of the Act. However, the continuing Directors may act notwithstanding any vacancy in their body, but, and if so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Director or Directors may act for the purpose of increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose. 73. Any casual vacancy occurring in the Board of Directors may at any time be filled by the Directors; but any person so chosen shall retain office so long only as the vacating Director would have retained the same if no vacancy had occurred. 74. No Director shall be disqualified by his office from contracting with the Company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested, be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. But it is declared that the nature and extent of his interest must be disclosed by him in writing to the Company or at the meeting of the directors at which the contract or arrangement is first considered, if his interest then exists, or in any other case at the first meeting of the directors after the acquisition of his interest, and after such declaration of interest he shall be entitled to vote either as director or as shareholder in respect of any contract or arrangement in which he is so interested as aforesaid. 75. Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a director. 76. A Director of this Company may be or become a Director of any Company promoted by this Company or in which it may be interested as a vendor, shareholder or otherwise, and no such Director shall be accountable for any benefits received as a Director or member of such Company. MANAGING DIRECTOR 77. The Directors may from time to time appoint one or more of their number to the office of Managing Director or Committee of Directors for such term as they think fit, and, subject to the terms of any agreement entered into in any particular case, may revoke such appointment, and a Director so appointed shall, subject to the provisions of any agreement between him and the Company, be subject to the same provisions as to resignation and removal as the other Directors of the Company, and if he ceases from any cause to be a Director he shall ipso facto and immediately cease to be a Managing Director. 78. A Managing Director shall receive such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) as the Directors may determine, and either in addition to or in lieu of his remuneration as a Director. 79. Subject to the limitations imposed by Section 103 of the Act, the Directors may entrust to and confer upon a Managing Director or Committee of Directors any of the powers exercisable by them upon such terms and conditions and with such restrictions, as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. -11- PROCEEDINGS OF DIRECTORS 80. The Directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings, as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined, Two (2) Directors shall be a quorum. 81. The President or Vice-President (if elected or appointed) or any Director may at any time convene a meeting of the Directors. 82. A meeting of the Directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the regulations of the Company for the time being vested in or exercisable by the Directors generally. 83. The President or Vice-President (if elected or appointed) shall preside at all meetings of the Directors. In the absence of the President and Vice-President the Director shall choose some one of their number to be chairman of the meeting. 84. Subject to the limitations imposed by Section 103 of the Act, the Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part and either as to persons or purposes; but every committee so formed, shall in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the Directors. 85. All acts done by any meeting of the Directors or of a Committee of Directors, or by any person acting as a Director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in office of any such Director or Committee of Directors or person acting as aforesaid, or that they or any of them were or was disqualified or had vacated office, or were not entitled to vote, or had not received notice of the meeting, be as valid as if every such person had been duly appointed or had duly continued in office and was qualified and had continued to be a Director and had been entitled to be a Director and had received such notice. 86. It shall not be necessary for the Directors to hold any formal meetings and participation in meetings of Directors shall be permitted in accordance with the provisions of Section 101 of the Act. 87. Any minutes of the meetings of Directors if purporting to be signed by the Chairman thereof, or by the Chairman of the next succeeding meeting, shall be sufficient evidence without any proof of the facts therein stated. 88. When all the Directors (including alternate Directors) sign the minutes of a meeting of the Directors the same shall be deemed to have been duly held notwithstanding that the Directors (including alternate Directors) have not actually come together or that any of the Directors (or alternate Directors) were not given notice of the meeting or that there may have been technical defects in the proceedings. And a resolution in writing, signed by all the Directors for the time being entitled to receive notice of a meeting including any alternate Director if entitled shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted, and may consist of several documents in a like form each signed by one or more of the Directors. 89. Questions arising at any meeting of or for the decision of the Directors shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote. Provided, however, that so long as the -12- quorum of Directors is only Two (2) Directors then at any meeting at which there are only Two (2) Directors present, the Chairman may not have a second or casting vote. 90. If any Director, being willing, shall be called upon to perform extra services, or to make any special exertions, in going or residing abroad or otherwise, for any of the purposes of the Company, the Company shall remunerate the Director so doing, either by a fixed sum or by a percentage of profits, or otherwise as may be determined by the Directors, and such remuneration may be either in addition to or in substitution for his or their share in the remuneration above provided. 91. A Director who is at any time absent from The Commonwealth of The Bahamas shall not during such absence be entitled to notice of any meeting of the Directors, but the views of a Director not present at a meeting of the Directors and transmitted by letter, telefax or cable shall be given effect to at any meeting of the Directors as if such Director had been personally present at such meeting and voted in accordance with such views. POWERS OF DIRECTORS 92. The business of the Company shall be managed by the Directors, who may pay all expenses incurred in promoting and registering the Company, and may exercise all such powers of the Company as are not by the Act or by these Articles required to be exercised by the Company in general meeting, subject nevertheless to any regulations of these Articles, to the provisions of the Act, and to such regulations, being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in general meeting but no regulation made by the Company in general meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made. 93. Without prejudice to general powers conferred by the last preceding clause, and the other powers conferred by these presents, it is hereby expressly declared that the Directors shall have the following powers, that is to say power: (1) To pay the costs, charges and expenses preliminary and incidental to the promotion, formation, establishment and registration of the Company. (2) To purchase or otherwise acquire for the Company any property, rights or privileges, which the company is authorized to acquire, at such price and generally on such terms and conditions as they think fit. (3) At their discretion to pay for any property, rights or privileges acquired by, or services rendered to, the Company, either wholly or partially in cash or in shares, bonds, debentures, or other securities of the Company, and any such shares may be issued either as fully paid up or with such amount credited as paid up thereon as may be agreed upon; and any such bonds, debentures, or other securities may be either specifically charged upon all or any part of the property of the Company and its uncalled capital, or not so charged. (4) To appoint, and at their discretion remove or suspend, such managers, secretaries, officers, clerks, agents, and servants for permanent, temporary, or special services, as they may from time to time think fit, and determine their powers and duties, and fix their salaries or emoluments, and to require security in such instances and to such amount as they think fit. (5) From time to time to provide for the management of affairs of -13- the Company abroad in such manner as they think fit, and in particular to appoint any persons to be the Attorneys or agents of the Company with such powers (including power to subdelegate) and upon such terms as may be thought fit. (6) To appoint any person or persons (whether incorporated or not) to accept and hold in trust for the Company any property belonging to the Company, or in which it is interested, or for any other purposes, and to execute and do all such deeds and things as may be requisite in relation to any such trust, and to provide for the remuneration of such trustee or trustees. (7) To refer any claims or demands by or against the Company to arbitration, and observe and perform the awards. (8) To enter into all such negotiations and contracts, and rescind and do all such acts, deeds, and things in the name and on behalf of the Company as they may consider expedient for or in relation to any of the matters aforesaid, or otherwise for the purposes of the Company. (9) To make and give receipts, releases and other discharges for money payable to the Company, and for the claims and demands of the Company. (10) To invest and deal with any of the moneys of the Company not immediately required for the purposes thereof, upon such securities (not being shares in the Company) and in such manner as they may think fit, and from time to time to vary or realize such investment. BORROWING POWERS 94. The Directors, or, if authorized by resolution of the directors, a director, a committee of directors or an officer of the Company, may raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. 95. The Directors may raise or secure the payment or re-payment of such moneys in such manner and upon such terms and conditions in all respects as they think fit, and in particular by the issue of bonds, debentures or debenture stock, notes or any mortgage, charge, security or other obligations of the Company, charged upon all or any part of the undertaking and property of the Company (both present and future), including its uncalled capital for the time being. 96. Debentures and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued. 97. Any debentures, bonds or other securities may be issued at a discount, premium, or otherwise, and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of Directors and otherwise. 98. When any uncalled capital of the Company is charged, all persons taking any subsequent charge thereon shall take the same subject to such prior charge, and shall not be entitled by notice to the members or otherwise to obtain priority over such prior charge. ALTERNATE DIRECTORS 99. A Director may appoint any person approved by the other Directors to be an alternate Director and may at any time remove any alternate Director so -14- appointed. An alternate Director shall (subject to his giving to the Company an address within The Commonwealth at which notices may be served on him) be entitled to notice of meetings of the Directors, and in the absence of the Director who appointed him, and provided the views of such Director shall not have been transmitted pursuant to Article 91, the alternate Director shall be entitled to attend and vote at any such meeting, and generally at such meeting to have and exercise all the powers, rights and duties of the Director appointing him. Every such alternate Director shall also be entitled in the absence from The Commonwealth of the Director appointing him to sign on his behalf a resolution in writing of the Directors. An alternate Director shall ipso facto vacate office if and when the appointer vacates office as a Director, and any appointment or removal under this Article shall be effected at any time by notice in writing or by telefax or cable. An alternate Director shall not be entitled to receive remuneration from the Company except by virtue of an agreement with the Director appointing him to share the remuneration which would otherwise be payable to such Director. LOCAL MANAGEMENT 100. (1) The Directors may, from time to time, provide for the management of the affairs of the Company abroad in such manner as they shall think fit, and the provisions contained in the Four (4) next following paragraphs shall be without prejudice to the general powers conferred by this paragraph. (2) The Directors, from time to time, and at any time, may establish any local boards or agencies for managing any of the affairs of the Company abroad, and may appoint any persons to be members of such local board, or any managers or agents, and may fix their remuneration. (3) The Directors, from time to time, and at any time, may delegate to any person so appointed any of the powers, authorities and discretions for the time being vested in the Directors and may authorize the members for the time being of any such local board, or any of them to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit, and the Directors may at any time remove any person so appointed, and may annul or vary any such delegation. (4) Any such delegates as aforesaid may be authorized by the Directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them. (5) The Directors may comply with the requirements of any local law with which in their opinion it shall in the interest of the Company be necessary or expedient to comply. POWERS OF ATTORNEY 101. The Directors may from time to time and at any time by power of attorney in writing under the Seal appoint any Company, firm or person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. -15- OFFICERS 102. The Company may elect or the Directors may appoint officers annually, and they may consist of a President, Vice-President, Secretary and Treasurer, and such other officers as the Company or the Directors may from time to time think necessary. If any office becomes vacant during the year the Directors may fill the same for the unexpired term. The officers shall hold office until their successors are elected or they resign, but any officer may be removed at any time by the Company or the Directors. 103. The officers shall perform such duties as may be prescribed by the Directors. 104. Any person may hold more than one of these offices and no officer need be a Director or a shareholder of the Company. THE SEAL 105. The Seal shall not be used without the sanction of the Directors. 106. Unless otherwise determined by a resolution of the Directors, a Director shall sign and seal all deeds, documents and other instruments and papers authorized by the Directors and requiring execution by the Company, and every instrument to which the Seal shall be affixed shall be countersigned by another Director or the Secretary or Treasurer of the Company. The Company is hereby authorized to adopt and use an official seal for use in any place outside The Commonwealth of the Bahamas in accordance with the provisions of Section 26 of the Act. 107. All deeds executed on behalf of the Company may be in such form, and contain such powers, provisos, conditions, covenants, clauses, and agreements as the Directors or the Company in general meeting, shall think fit. DIVIDENDS 108. The Company in general meeting may on the recommendation of the Directors declare a dividend to be paid to the members and may fix the time for payment, but no dividend shall exceed the amount recommended by the Directors. 109. The Directors may from time to time pay to the members such interim dividends as in their judgment the position of the Company justifies. 110. No dividend shall be payable except out of the profits of the Company although dividends may be paid either by the issuance of fully paid shares to the shareholders as provided by Section 60(1) of the Act or out of surplus as provided by Section 60(2) of the Act. 111. Subject to the rights of persons, if any, entitled to shares with special rights as to dividend, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividend as from a particular date such share shall rank for dividend accordingly. 112. Any general meeting declaring a dividend or bonus may direct payment of such dividend or bonus wholly or partly by the distribution of specific assets and in particular of paid-up shares debentures or debenture stock of any other Company or in any one or more of such ways, and the Directors shall give effect to such resolution, and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient, and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that -16- cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Directors. 113. The Directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the Company. 114. Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned. 115. No dividend shall bear interest as against the Company. RESERVES 116. The Directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves, which shall, at the discretion of the Directors, be applicable for any purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit. The Directors may also without also without placing the same to reserve carry forward any profits which they may think prudent not to divide. CAPITALIZATION OF PROFITS 117. The Company in general meeting may, upon the recommendation of the Directors, resolve that it is desirable to capitalize any part of the amount for the time being standing to the credit of any of the Company's reserve accounts or to the credit of the profit and loss account or otherwise available for distribution, and accordingly that such sums be set free for distribution amongst the members who would have been entitled thereto if distributed by way of dividend and in the same proportions on condition that the same be not paid in cash but be applied either in or towards paying up any amounts for the time being unpaid on any shares held by such members respectively or paying up in full unissued shares or debentures of the Company to be allotted and distributed credited as fully paid up to and amongst such members in the proportion aforesaid, or partly in the one way and partly in the other, and the Directors shall give effect to such resolution. 118. Whenever such a resolution as aforesaid shall have been passed the Directors shall make all appropriations and applications of the undivided profits resolved to be capitalized thereby, and all allotments and issues of fully-paid shares or debentures, if any, and generally shall do all acts and things required to give effect thereto, with full power to the Directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit for the case of shares or debentures becoming distributable in fractions. ACCOUNTS 119. The Directors shall cause true accounts to be kept; (1) Of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place; (2) Of the assets and liabilities of the Company; and (3) Of all other matters necessary for showing the true state and condition of the Company. 120. The books of account shall be kept at one of the offices of the Company, and, subject to any reasonable restrictions as to the time and manner of -17- inspecting the same that may be imposed by the Directors, shall be open to the inspection of the members during the hours of business. 121. Once at the least in every year the Directors shall, unless waived by resolution of the shareholders in general meeting lay before the Company in general meeting a statement of the income and expenditure for the past year, made up to a date not more than six months before such meeting. 122. Unless waived by a resolution of the shareholders in general meeting, a balance sheet shall be made out in every year and shall be laid before the Company in general meeting, and such balance sheet shall contain a summary of the property and liabilities of the Company. 123. Unless waived by a resolution of the shareholders in general meeting, the Directors shall make all necessary arrangement for an annual audit of the books and accounts of the Company. 124. Any auditor appointed need not be a shareholder of the Company. NOTICES 125. A notice may be served by the Company upon any member either personally or by sending it through the post in prepaid envelope or wrapper addressed to such member at his last known address. 126. The signature to any such notice to be given by the Company may be written, typewritten or printed. 127. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting at the expiration of Twenty-four (24) hours after the letter containing the same is posted, and in any other case at the time at which the letter would be delivered in the ordinary course of post. 128. A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder first named in the Register in respect of the share. 129. Any notice or document sent by post to, or left at the registered address of any member, in pursuance of these Articles, shall, notwithstanding such member be then deceased or bankrupt and whether or not the Company have notice of his death or bankruptcy, be deemed to have been duly served in respect of any shares, whether held solely or jointly with other persons by such member, until some other person be registered in his stead as the holder or joint holder thereof, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in any such share. 130. Notice of meetings of members shall be given by the Secretary at least Seven (7) days before the date of such meeting. 131. Notice of special business shall state the object for which the meeting is called. 132. A meeting of members whether ordinary or extraordinary or of Directors may be held without previous notice if all the members or Directors, as the case may be, are present in person or in the case of a meeting of members are present either in person or by proxy. -18- WINDING-UP 133. If the Company shall be wound up, and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding-up on the shares held by them respectively. And if on a winding-up the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding-up, the excess shall be distributed amongst the members in proportion to the capital at the commencement of the winding-up paid up on the shares held by them respectively. But this Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions. 134. If the Company shall be wound up, the Liquidator may, with the sanction of a Resolution of the members of the Company and any other sanction required by the Act, divide amongst the members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid, and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members or any of them as the Liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. INDEMNITY 135. Subject to the limitations (if any) on indemnities conferred by Sections 118 to 121 (inclusive) of the Act every Director, manager, secretary and other officer or servant of the Company shall be indemnified by the Company against, and it shall be the duty of the Directors out of the funds of the Company to pay all costs, losses and expenses which any such Director, manager, secretary, officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such Director, manager, secretary, officer or servant, or in any way in the discharge of his duties, including travelling expenses; and the amount for which such indemnity is provided shall immediately attach as a lien on the property of the Company, and have priority as between the members over all other claims. 136. No Director or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other Director or officer or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for or on behalf of the Company, or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency, or tortious act, of any person with whom any moneys, securities or effects shall be deposited, or for any loss occasioned by an error of judgment, omission, default or oversight on his part, or for any other loss, damage or misfortune whatsoever which shall happen in the execution of his office or in relation thereto, unless the same happen through his own dishonesty. -19- We the subscribers to the Memorandum of Association have hereunto subscribed our names: - -------------------------------------------------------------------------------- NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS - -------------------------------------------------------------------------------- 1. /s/ [illegible] P.O. Box N-624 Nassau, Bahamas Office Manager 2. /s/ Julie M. Alana P.O. Box N-624 Nassau, Bahamas Secretary - -------------------------------------------------------------------------------- DATED the 12th day of August, A.D. 1996. Witness to the above signatures: /s/ J. Cooper P.O. Box N-624 Nassau, Bahamas Secretary COMMONWEALTH OF THE BAHAMAS Registrar General's Department I certify the foregoing to be a true copy of the original document. /s/ [illegible] - ----------------------------------- 12th August 1996 Registrar General EX-3.9 8 MEMORANDUM OF ASSOC OF PARADISE ISLAND LTD Exhibit 3.9 BAHAMA ISLANDS The Companies Act. Company Limited by Shares. MEMORANDUM OF ASSOCIATION OF PARADISE ISLAND LIMITED 1. The name of the company is "Paradise Island Limited". 2. The registered office of the company will be situate in the Island of New Providence one of the Bahama Islands. 3. The objects for which the company is established are:- (1) To carry on the business of a real estate development company in all its branches. (2) To purchase, take on lease or in exchange, or otherwise acquire and to hold any lands and buildings either within or without the Bahama Islands, and any estate or interest in and any rights connected with, any such lands and buildings, and to pay for the same in money or in the shares or other securities of the company. (3) To develop and turn to account any land acquired by or in which the company is interested, and in particular by laying out and preparing the same as sub-divisions and for building purposes, constructing, altering. fitting up, and improving buildings, and by planting, paving, draining, farming, and cultivating the same, and by advancing money to, and entering into contracts and arrangements of all kinds with purchasers, tenants, builders, and others. (4) To plan, lay out, construct, execute, carry out, equip, furnish, install, improve, develop, maintain, administer, manage, supervise or control works and conveniences of all kinds, and without prejudice -2- to the generality of the foregoing words, in particular sub-divisions, villages, townships, roads, bridges, reservoirs, waterways, wharves, jetties, embankments, irrigations, dredgings, excavations, reclamations, improvements, sewage disposal systems, drainage systems, sanitary systems, water, gas, electric light, telephone, telegraph, wireless and power supply works and installations, hotels, apartment houses, flats, houses, clubs, restaurants, shops, theatres, cinemas, studia, baths, swimming pools, marinas, yacht basins and other facilities for the accomodation of yachts and private pleasure craft, hospitals, clinics, schools, places of worship, places of amusement, pleasure grounds, racetracks, golf courses and other facilities for sports, parks, gardens, plantings of all kinds, reading rooms, warehouses, and all other works and conveniences which the company may think directly or indirectly conducive to these objects, and to contribute or otherwise assist or take part in the planning, construction, laying out, equipping, furnishing, installation, maintenance, development, working, administration, management, supervision and control thereof. (5) To carry on the business of proprietors and operators of apartment buildings, flats, maisonettes, dwelling houses, and clubs in all branches, and for these purposes to improve land, prepare building sites, and to construct, reconstruct, pull down, alter, improve, decorate, finish and maintain apartments, flats, maisonettes, dwelling houses, clubs, buildings, works and conveniences of all kinds, and to lay out roads, pleasure gardens and recreation grounds. (6) To own, manage, lease (for any period), sell or otherwise dispose of lots, building sites, hotels, apartments, flats, maisonettes, dwelling houses, clubs, and buildings, at such rent and on such terms and conditions as the company shall think fit, to collect rents and income, and to supply or cause to be supplied to purchasers, tenants, occupiers, and others, utility services, air conditioning, -3- refreshments, attendances, messengers, sitting rooms, reading rooms, restaurants, dining and banqueting rooms, lavatories, bath houses, cabanas, servants' quarters and changing rooms, laundry conveniences, electric, gas, and other appliances and conveniences, garages, recreation facilities, and other advantages which the company may from time to time consider desirable, or to provide for such management, leasing, sale, and advantage as aforesaid by employing any person, firm or company to carry out or supply the same on such terms as the company may think fit. (7) To carry on the business of hotel, restaurant, night-club, cafe, tavern, beer-house, refreshment-room and lodging-house keepers, licensed victuallers, wine, beer, and spirit merchants, dealers in and importers of aerated, mineral, and artificial waters and other drinks, purveyors, caterers for amusements and diversions generally, proprietors of motor and other vehicles, garage proprietors, livery-stable keepers, jobmasters, farmers, dairymen, ice-merchants, importers and brokers of food, live and dead stock, and produce of all descriptions, hairdressers, perfumers, chemists, proprietors of clubs, golf clubs and golf courses, baths, dressing rooms, laundries, reading, writing and newspaper rooms, libraries, grounds, and places of amusements, recreation, sport, entertainment and instruction of all kinds, tobacco and cigar merchants, agents for railway, air and shipping companies and carriers, theatrical and opera box office proprietors, and entrepreneurs and general agents. (8) To carry on business as tourist agents and contractors, and to facilitate travelling and to provide for tourists and travellers, and promote the provision of conveniences of all kinds in the way of through tickets, circular tickets, sleeping cars or berths, reserved places, hotel and lodging -4- accomodation, guides, safe deposits, inquiry bureaus, baggage transport and otherwise. (9) To enter into agreements and arrangements with artists, actors, performers, entertainers, authors, writers, composers, lyricists, producers, directors, and technicians of every kind or description relating to performances and entertainments, public and private, of every kind and description, including without limiting the generality of the foregoing words, musical and dramatic performances, promenade and other concerts, ballets, operas, operettas, plays, pantomimes, revues, cabarets, vaudeville, burlesques, circuses, amusements and diversions of every kind and description provided or produced by natural, mechanical or electronic means or otherwise howsoever. (10) To carry on any kind of manufacture or trade, and to buy, sell and deal in goods, wares and merchandise of all kinds. (11) To purchase for investment or resale and to traffic in land and other property of any tenure and any interest therein, and to make advances upon the security of land or other property, or any interest therein, and to deal in, traffic by way of sale, lease, exchange, or otherwise with land and any other property whether real or personal, and generally to carry on the business of real estate agents and dealers in all its branches. (12) To carry on all or any of the following businesses, namely, builders and contractors, civil engineering contractors, excavators, dredgers, decorators, manufacturers and producers of and dealers in building materials and requisites of all kinds, machinery and general construction contractors, sub-contractors, and hauliers, and, without limiting the generality of the foregoing words, to undertake, manage, supervise, administer, -5- erection, construction, decoration, repairing, amending, cleansing, finishing, and furnishing of buildings, erections, structures, and works of all kinds. (13) To buy, lease, construct, build or otherwise acquire all plant, machinery and equipment necessary or convenient to carry the above objects or any of them into effect. (14) To carry on business as capitalists, financiers, promoters, concessionaires, and contractors, and to undertake, and carry on, and execute all kinds of financial, contracting, and other operations commonly carried on or undertaken by capitalists, financiers, promoters, concessionaires, and contractors, including the lending of money, either with or without security, to such persons and on such terms and conditions as the company may think fit. (15) To subscribe for, conditionally or unconditionally to underwrite, issue on commission or otherwise, to assume liability under, issue on commission or otherwise, to assume liability under, acquire by purchase or otherwise, and to hold, either as principals or agents, and absolutely as owners, or by way of collateral security, or otherwise, and to sell, mortgage, pledge, convert, exchange, or otherwise, dispose of or deal in the stock, shares, bonds, debentures, and other securities or obligations of any government, municipal or other authority, or any industrial, commercial, financial, or other company, and to issue paid up shares or other securities of the company in payment or part payment of the purchase price of any stock, shares, bonds, debentures, or other securities or obligations acquired by the company. (16) To purchase or otherwise acquire, and to hold, sell, exchange, lease, mortgage, pledge, charge, convert, turn to account, dispose of, and deal with property and rights of all kinds, and in particular mortgages, debentures, debenture stock, stock, shares, bonds, -6- patents, concessions, annuities, policies, options, contracts, produce, commodities, bullion, specie, gems and other minerals, goods, wares and merchandise of all kinds, book debts, business concerns and undertakings, and claims, privileges, and choses in action of all kinds. (17) To purchase, charter, hire, take in exchange, build, salvage, repair, reconstruct, or otherwise acquire and hold sailing, steam, motor, air, and other ships or vessels of all types with all equipment, accessories and furniture, or any shares or interest in ships or vessels, and also shares, stocks and securities of any companies possessed of or interested in, any ships or vessels, and to maintain, repair, improve, alter, sell, exchange, or let out to hire or charter, or otherwise deal with and dispose of any such ships, vessels or shares or securities as aforesaid. (18) To employ the said ships or vessels in the conveyance of passengers, mails, and cargo of all kinds between such ports and places in any part of the world as may seem expedient, and to tender for and acquire any postal or other subsidies. (19) To carry on all or any of the businesses of ship owners, airline operators, carriers by land, water and air, warehousemen, wharfingers, barge owners, lightermen, forwarding agents, cargo superintendents, stevedores, and carters. (20) To carry on business as brokers for the chartering, sale, and purchase of ships of every description, freight, contractors, forwarding agents, tourist and passenger agents, managers of ships of every description, and as insurance brokers and agents. (21) To employ as ships husband and managing agent any person, firm or company, whether limited or not, and that although he or they may not be entitled to any share or interest in the said ship or vessels or in the company. -7- (22) To carry on all kinds of insurance business, and all kinds of guarantee and indemnity business, and in particular, without prejudice to the generality of the foregoing words, to carry on life, fire, marine, accident, employers' liability, workmen's compensation, disease, sickness, survivorship, failure of issue, burglary and robbery, theft, fidelity and transit insurance; and to act as agents, underwriters and re-insurers with respect to any of the foregoing. (23) To carry on a guarantee business, and to give any guarantee for the payment of money or for the performance of any obligation or undertaking, whether on behalf of the company, or on behalf of any other person or corporation. (24) To carry on a general real estate brokerage business, and to act as agents and brokers for the purchase, sale, improvement, and management of any property. (25) To act as agents and brokers for any individual, company, firm, or court of law, for the investment, loan, payment, transmission, and collection of money, and to take, receive, hold, transfer, and convey all property, real or personal, which may be granted, conveyed, or committed to this company. (26) To act as agents or attorneys for the transaction of any business and the investment and collection of moneys, rents, interests, dividends, mortgages, bonds, bills, notes, and other securities. (27) To advance, deposit, or lend money, securities, and property, to or with such persons and on such terms as may seem expedient, and to discount, buy, sell and deal in bills, notes, warrants, coupons, and other negotiable or transferable securities or documents. (28) To promote, organize, manage, or develop, or to assist in the promotion, organization, management, or development of any company, syndicate, enterprise, or undertaking. -8- (29) To carry on any (illegible) the company capable of being conveniently carried on in connection with the above, or calculated directly or indirectly to enhance the value of or render profitable any of the company's property or rights. (30) To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which this company is authorized to carry on, or possessed of property suitable for the purposes of this company. (31) To take, or otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this company, or carrying on any business capable of being conducted so as directly or indirectly to benefit this company. (32) To promote any company or companies for the purpose of acquiring all or any of the property and liabilities of this company, or for any other purpose which may seem directly or indirectly calculated to benefit this company. (33) To sell or dispose of the undertaking of the company or any part thereof for such consideration as the company may think fit, and in particular for shares, debentures, bonds, mortgages, or other securities of any other company having objects altogether or in part similar to those of this company. (34) To enter into partnership or into any arrangement for sharing profits, union of interest, co-operations, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in, or about to carry on or engage in, any business or transaction which this company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit this company. (35) To amalgamate with any other company having objects altogether or in part similar to those of this company. -9- (36) To enter into any arrangements (illegible) authorities, supreme, municipal, local or otherwise, that may seem conducive to the company's interests, or any of them, and to obtain from any such government or authority any rights, privileges, and concessions which the company may think it desirable to obtain, and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions. (37) To obtain any provisional Order or Act of the Legislature and to do any other act or thing for enabling the company to carry any of its objects into effect, or for effecting any modification of the company's constitution, or for any other purpose which may seem expedient, and to oppose any proceedings or applications which may seem calculated directly or indirectly to prejudice the company's interests. (38) To draw, make, accept, indorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, warrants, debentures, and other negotiable or transferable instruments. (39) To invest and deal with the moneys of the company not immediately required upon such securities and in such manner as may from time to time be determined. (40) To lend money, either with or without security, generally to such persons and on such terms as the company may think fit, and in particular to customers and others having dealings with the company. (41) To borrow or raise money in such manner as the company shall think fit, and in particular by the issue of debentures, or debenture stock, perpetual or otherwise, and to secure the repayment of any money borrowed, raised or owing by the creation of any mortgages, charges or liens upon all or any of the property or assets of the company (both present and future), including its uncalled capital, and also by the issue of any debentures or debenture stock as aforesaid and by the creation of any mortgages, charges or liens as aforesaid to secure and guarantee the performance by the company or any other person or company of any obligation undertaken by the company of any other person or company as the case may be. -10- (42) (illegible)//mortgage, dispose of, turn to account or (illegible) deal with, all or any part of the property or rights of the company. (43) To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the company's capital, or any debentures or other securities of the company, or in or about the formation or promotion of the company or the conduct of its business. (44) To adopt such means of making known the business of the company as may seem expedient. (45) To grant pensions, allowances, gratuities and bonuses to directors, ex-directors, officers, ex-officers, employees or ex-employees of the company or the dependents or connections of such persons, and to establish and maintain or concur in establishing and maintaining trusts, funds, or schemes (whether contributory or non-contributory) with a view to providing pensions or other benefits for any such persons as aforesaid, their dependents or connections, and to support or subscribe to any charity, fund, or institution the support of which may in the opinion of the directors be calculated directly or indirectly to benefit the company or its employees, and to institute and maintain any club or other establishment or profit sharing scheme calculated to advance the interests of the company, its directors, officers or employees. (46) To pay for any rights or property acquired by the company, and to remunerate any person or persons or body or bodies corporate, either by cash payment, transfer of property, or by the allotment of shares, debentures or other securities of the company credited as paid up in full, in part or otherwise. (47) Generally to do all such other acts and things as the company may think incidental or conducive to the -11- attainment of the above objects or any of them. (48) To procure the company to be registered or recognized in any part of the world outside of the Bahama Islands. (49) To do all or any of the above things in any part of the world, and as principals, agents, contractors, trustees or otherwise, and by or through trustees, agents or otherwise, and either alone or in conjunction with others. (50) To distribute any of the property of the company "in specie" among the members. And it is hereby declared that the word "company" in this clause, except where used in reference to this company, shall be deemed to include any partnership or other body of persons whether corporate or unincorporate, and whether domiciled in the Bahama Islands or elsewhere, and that the objects, specified in the different paragraphs of this clause shall, except where otherwise expressed in such paragraphs, be in nowise limited by reference to any other paragraph or the name of the company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. 4. The liability of the members is limited. 5. The capital of the company is (pound) 10,000 divided into 10,000 shares of (pound) 1 each, with power to divide the shares in the capital for the time being into several classes, and to attach thereto respectively any preferential, deferred, qualified, or special rights, privileges, conditions or restrictions and to modify or deal with any rights for the time being attached to any class or classes of shares in the company. WE, the several persons whose names and addresses are subscribed, are desirous of being formed into a company, in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names. EX-3.10 9 ARTICLES OF ASSOC OF PARADISE ISLAND LTD Exhibit 3.10 BAHAMA ISLANDS. ---------- The Companies Act. ---------- ARTICLES OF ASSOCIATION OF PARADISE ISLAND LIMITED. ---------- Explanatory. 1. In these presents, unless there be something in the subject or context inconsistent therewith:- "the company" means the above-named company. "the office" means the registered office for the time being of the company. "the register" means the register of members to be kept pursuant to Section 22 of The Companies Act. "the seal" means the common seal of the company. "month" means calendar month. "in writing" and "written" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form. "the directors" means the directors for the time being of the company. "special resolution" and "extraordinary resolution" have the meanings assigned thereto respectively by The Companies Act. Words importing the singular number only include the plural number, and vice versa. Words importing the masculine gender only include the feminine gender. Words importing persons include corporations. 2. In addition to the registered office of the company in the Colony, the company may have an office for the transaction - 2 - of business at any other place or places. Shares. 3. None of the funds of the company shall be employed in the purchase of, or lent on, shares of the company. 4. The business of the company may be commenced as soon after the incorporation of the company as the directors shall think fit, and notwithstanding that part only of the shares may have been allotted. 5. The shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions, and at such times as the directors think fit Provided Always that any shares to be issued by the company for cash at any time after the incorporation of the company shall be offered to the members in proportion to the existing shares held by them, and such offer shall be made by notice specifying the number of shares to which the member is entitled and limiting a time within which the offer, if not accepted, will be deemed to be declined; and after the expiration of such time, or on receipt of a written intimation from the member to whom such notice is given, that he declines to accept the shares offered the directors may dispose of the same in such manner as they think most beneficial to the company. 6. Save as herein otherwise provided, the company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a court of competent jurisdiction, or as by Act required, be bound to recognise any equitable or other claim to or interest in such share on the part of any other person. Certificates. 7. The certificates of title to shares shall be issued under the seal of the company, and shall be signed by the President - 3 - or the Vice-President, and shall be countersigned by the Secretary or some other person appointed by the directors. 8. Every member shall be entitled to one certificate for the shares registered in his name, or to several certificates each for one or more of such shares, and every certificate of shares shall specify the number and the denoting numbers of the shares in respect of which it is issued, and the amount paid up thereon. 9. If any certificates be worn out or defaced, then upon production thereof to the directors, they may order the same to be canceled, and may issue a new certificate in lieu thereof; and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the directors and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. Company's Lien on Shares. 10. The company shall have a first and paramount lien upon all the shares registered in the name of each member, and upon the proceeds of sale thereof, for his debts, liabilities, and engagements, solely or jointly with any other person, to or with the company whether the period for the payment, fulfillment, or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the footing and condition that Article 6 hereof is to have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company's lien, if any, on such shares. 11. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think - 4 - fit, but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member or his personal representatives, and default shall have been made by him or them in the payment, fulfillment, or discharge of such debts, liabilities, or engagements for seven days after such notice. 12. The net proceeds of any such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements of such member and the residue (if any) paid to him, his personal representatives or assigns. 13. Upon any sale for enforcing a lien in purported exercise of the powers hereinbefore given, the directors may cause the purchaser's name to be entered in the register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after his name has been entered in the register in respect of such shares the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the company exclusively. Transfer and Transmission. 14. The instrument of transfer of any share shall be signed by both the transferor and transferee, and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the register in respect thereof. 15. Shares in the company may be transferred in any form which the directors may think fit to register. 16. The directors may decline to register a transfer of any share on which the company has a lien. - 5 - 17. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the directors may require to prove the title of the transferor or his right to transfer the shares. 18. The personal representatives of a deceased member (not being one of several joint holders) shall be the only persons recognised by the company as having any title to the shares registered in the name of such member, and in case of the death of any one or more of the joint registered holders of any registered share, the survivors shall be the only persons recognised by the company as having any title to or interest in such shares. 19. Any person becoming entitled to shares in consequence of the death or bankruptcy of any member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article, or of his title, as the directors think sufficient, may be registered as a member in respect of the shares, or may, subject to the regulations as to transfers hereinbefore contained, transfer such shares. Alteration of Capital. 20. The company may, from time to time, by special resolution, increase the capital by the creation of new shares of such amount as may be deemed expedient. 21. The new shares shall be issued in accordance with the provisions of Article 5 and upon such terms and conditions and with such rights and privileges annexed thereto as the special resolution creating the same shall direct, and if no direction be given, as the directors shall determine. 22. If any difficulty shall arise in the apportionment of such new shares, or any of them amongst the members, such - 6 - difficulty shall, in the absence of direction by the company, be determined by the directors. 23. Except so far as otherwise provided by the conditions of issue, or by these presents, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained with reference to transfer and transmission, forfeiture, lien, and otherwise. 24. The company may, from time to time, by special resolution, consolidate its shares or any of them. Borrowing Powers. 25. The directors may, from time to time, at their discretion, raise or borrow any sum or sums of money for the purposes of the company. 26. The directors may, whether outright or as security for any debenture, liability or obligation of the company or of any third party, and in such manner and upon such terms and conditions in all respects as they think fit, issue bonds, perpetual or redeemable debentures or debenture stock, or create any mortgage, charge or other security upon the undertaking or the whole or any part of the property of the company (both present and future), including its uncalled capital for the time being. General Meetings. 27. General meetings of the company may be held anywhere in the world. 28. The first general meeting shall be held at such time (not being more than four months after the registration of the company) as the directors may determine, and at the City of Nassau in the Island of New Providence, or at such other place either within or without the Colony as may be prescribed by the directors. - 7 - 29. Other general meetings shall be held once at least in every calendar year at such time, not being more than fifteen months after the holding of the last preceding general meeting, and at such place either within or without the Colony as may be determined by the directors. At these meetings the Annual Report of the directors shall be presented, the directors elected for the ensuing year and the general business of the company transacted. Such general meetings shall be called "ordinary meetings", and all other meetings of the company shall be called "extraordinary meetings". 30. The directors may, whenever they think fit, convene an extraordinary meeting, and they shall, on the requisition of the holders of a majority in value of the subscribed and issued shares of the company, forthwith proceed to convene an extraordinary meeting of the company. 31. Seven days' notice, specifying the place, day and hour of the meeting, and in case of special business, the general nature of such business shall be given to the members in manner hereinafter mentioned; or in such other manner, if any, as may be prescribed by the company in general meeting; but the non-receipt of such notice by any member shall not invalidate the proceedings at any meeting. 32. All business shall be deemed to be special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets, and the ordinary reports of the directors and auditors, and the election of directors, officers and auditors. 33. When all the members in person or by proxy sign the minutes of an ordinary or extraordinary meeting, the same shall be deemed to have been duly held, notwithstanding that the - 8 - members have not actually come together or that there may have been technical defects in the proceedings. And a resolution in writing in one or more parts, signed by all the members shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. Proceedings at General Meetings. 34. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business except to take measures to obtain a quorum. 35. A quorum shall consist of members present in person or by proxy holding or representing a majority in value of the subscribed and issued shares of the company. 36. The President or the Vice-President shall preside as Chairman at every general meeting of the company. In their absence the members present shall choose some one of their number to be Chairman. 37. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which adjournment took place. 38. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands, and in the case of an equality of votes the Chairman shall, both on a show of hands and on a poll have a casting vote, in addition to the vote or votes to which he may be entitled as a member. 39. At any general meeting, unless a poll is demanded by the Chairman or by members present in person or by proxy holding one-fourth in value of the subscribed and issued shares of the company, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or - 9 - not carried by a particular majority, and an entry to that effect in the books of proceedings of the company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 40. If a poll is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs and either at once, or after an interval or adjournment, or otherwise, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote the Chairman shall determine the same, and such determination made in good faith shall be final and conclusive. Votes of Members. 41. On a show of hands every member present in person or by proxy shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. 42. Votes may be given either personally or by proxy. 43. The instrument appointing a proxy shall be in writing, under the hand of the appointor or of his attorney. Any person appointed a proxy need not be a member of the company. 44. The instrument appointing a proxy shall be deposited with the Secretary before or at the meeting for which it is to be used, and may be permanent or ad hoc. If a proxy is permanent it may be recorded with the Secretary. 45. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal, or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no - 10 - intimation in writing of the death, revocation, or transfer shall have been received before the meeting. 46. An instrument appointing a proxy may be in any form which the directors think fit to approve. Directors. 47. The directors of the company shall be elected at the first ordinary meeting of the company after registration and in every subsequent year at the first ordinary meeting of the year. They shall be elected for a year but shall hold office until their successors are duly elected or until the office is vacated as provided by Article 49. The directors shall not be less than two, nor more than seven in number. A director shall not require any qualification by way of holding any shares or other securities of the company. 48. Until directors are elected, the persons hereinafter named shall be deemed to be directors, that is to say:- Lionel Levine, Barbara Marian Gamblin and Douglas Eugene Duncombe. 49. The office of a director shall ipso facto be vacated:- (a) if he becomes bankrupt, or suspends payment, or compounds with his creditors; (b) if he is found lunatic or becomes of unsound mind; (c) if by notice in writing to the company, he resigns his office; (d) if he is requested in writing by members holding or representing more than one-half in value of the subscribed and issued shares of the company to vacate his office. But the continuing directors or sole remaining director may act notwithstanding any vacancy in their body, but, if and so long - 11 - as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number, or of summoning a general meeting of the company, but for no other purpose. 50. Any casual vacancy occurring in their body may at any time be filled up by the directors or by the company in general meeting, but any person so chosen shall retain office so long only as the vacating director would have retained the same if no vacancy had occurred. 51. The directors or the company in general meeting shall have power at any time, and from time to time, to appoint any qualified person as a director as an addition to the board, but so that the total number of directors shall not at any time exceed the maximum number fixed as above. But any director so appointed shall hold office only until the next following ordinary general meeting of the company, and shall then be eligible for re-election. Director or Officer Contracting with Company. 52. No director or officer shall be disqualified by his office from contracting and/or dealing with the company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the company in which any director or officer shall be in any way interested, be avoided, nor shall any director or officer so contracting or being so interested be liable to account to the company for any profit realised by any such contract or arrangement by reason of such director or officer holding that office or the fiduciary relation thereby established, but it is declared that the nature of his interest must be disclosed by him at the meeting of the directors at which the contract or arrangement is - 12 - determined on, if his interest then exists, or in any other case at the first meeting of the directors after the acquisition of his interest, and having disclosed his interest as aforesaid such director shall be entitled to vote as a director in respect of any contract or arrangement in which he is so interested as aforesaid. Remuneration of Directors. 53. The directors shall be paid out of the funds of the company by way of remuneration for their services such sums as the company in general meeting may from time to time determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine, and in default of such determination within the year equally. Proceedings of Directors. 54. The directors may meet together at such place as they may determine for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined, two directors present in person shall be a quorum. 55. The President or any two directors may at any time convene a meeting of the directors. Every director shall be entitled to seventy-two hours' notice of every meeting of the directors, and every such notice shall be in writing or by cable, radiogram or telegram. Questions arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote. 56. A meeting of the directors for the time being at which a quorum is present shall be competent to exercise all or any of - 13 - the authorities, powers and discretions by or under the regulations of the company for the time being vested in or exercisable by the directors generally. 57. The President or the Vice-President shall preside at all meetings of the directors. In the absence of the President and the Vice-President the directors present shall choose some one of their number to be Chairman of the meeting. 58. The directors may with the approval of not less than the number of directors as may from time to time constitute a quorum delegate any of their powers to committees consisting of such member or members of their body as they think fit, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part and either as to persons or purposes; but every committee so formed, shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors. 59. Each such committee may elect a Chairman of its meetings. If no such Chairman is elected, or if at any meeting the Chairman is not present within ten minutes after the time appointed for holding the same, the members present may choose some one of their number to be Chairman of the meeting. 60. Each such committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present, and in the case of an equality of votes the Chairman shall have a second or casting vote. 61. All acts done at any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in - 14 - office of any such directors or person acting as aforesaid, or that they or any of them were disqualified or had vacated office or were not entitled to vote, be as valid as if every such person had been duly appointed or had duly continued in office and was qualified and had continued to be a director, and had been entitled to be a director. 62. When all the directors sign the minutes of a meeting of the directors the same shall be deemed to have been duly held notwithstanding that the directors have not actually come together or that there may have been technical defects in the proceedings. And a resolution in writing, in one or more parts, signed by all the directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted. Powers of Directors. 63. The management of the business of the company shall be vested in the directors, who, in addition to the powers and authorities by these presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to the provisions of any Act, and of these presents, and to any regulations from time to time made by the company in general meeting, provided that no regulation so made shall invalidate any prior act of the directors which would have been valid if such regulation had not been made. Local Management. 64. (1) The directors may, from time to time, provide for the management of the affairs of the company abroad in such manner as they shall think fit, and the provisions contained in the four next following paragraphs shall be without prejudice to - 15 - the general powers conferred by this paragraph. (2) The directors may, from time to time, and at any time, establish any local boards or agencies for managing any of the affairs of the company abroad, and may appoint any persons to be members of such local board, or any managers or agents, and may fix their remuneration. (3) The directors may, from time to time, and at any time delegate to any person so appointed any of the powers, authorities, and discretions for the time being vested in the directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and subject to such conditions as the directors may think fit, and the directors may at any time remove any person so appointed, and may annul or vary any such delegation. (4) The directors may, at any time and from time to time, by power of attorney under the seal, appoint any person or persons to be the attorney or attorneys of the company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these presents), and for such period and subject to such conditions as the directors may from time to time think fit; and any such appointment may (if the directors think fit) be made in favour of the members or any of the members of any local board established as aforesaid, or in favour of any company, or of the members, directors, nominees, or managers of any company or firm, or otherwise in favour of any fluctuating body of persons, whether nominated directly or indirectly by the directors; and any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney or attorneys as the directors think fit. - 16 - (5) Any such delegates or attorneys as aforesaid may be authorised by the directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested in them. 65. The company may exercise the powers conferred by the Companies Seals Act of the Colony. 66. The directors may comply with the requirements of any foreign law which in their opinion it shall in the interests of the company be necessary or expedient to comply with. Officers. 67. The officers of the company shall be elected annually by the company or appointed annually by the directors, and shall consist of a President, a Vice-President, a Secretary, a Treasurer, one or more Assistant Secretaries, and one or more Assistant Treasurers, and such other officers as the company or the directors may from time to time think necessary, and such other officers shall perform such duties as may be prescribed by the directors. They shall hold office until their successors are elected or appointed. But any officer may be removed at any time by the company in general meeting or by the directors. If any office becomes vacant during the year the company in general meeting or the directors may fill the same for the unexpired term. 68. Until officers are elected or appointed the persons hereinafter named shall be deemed to be the officers of the company, that is to say:- Lionel Levine, President, Barbara Marian Gamblin, Vice-President, and Douglas Eugene Duncombe, Secretary and Treasurer. 69. Any person may hold more than one of these offices, and no officer need be a member of the company. - 17 - President. 70. The President shall act as Chairman of all meetings of the members and of the directors. He shall also perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Vice-President. 71. The Vice-President in the absence or disability of the President, may perform the duties and exercise the powers of the President, and shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Treasurer. 72. The Treasurer shall perform such duties as may be prescribed by these Articles, the company in general meeting, or the directors, and if and when directed so to do by the company or the directors, shall keep full and accurate accounts of the receipts and disbursements of the company in books belonging to the company and shall render to the directors at regular meetings of the directors, or whenever they may require it, a statement of the financial condition of the company. Assistant Treasurers. 73. Any one of the Assistant Treasurers, in the absence or disability of the Treasurer, may perform the duties and exercise the powers of the Treasurer, and each Assistant Treasurer shall perform such other duties as may be prescribed by these Articles the company in general meeting, or the directors. Secretary. 74. The Secretary shall attend and keep the minutes of the meetings of the members and of the directors. He shall also summon meetings and keep such other books and records of the company and the directors as may be required by the company - 18 - in general meeting, or the directors, and perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Assistant Secretaries. 75. Any one of the Assistant Secretaries, in the absence or disability of the Secretary, may perform the duties and exercise the powers of the Secretary, and each Assistant Secretary shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. The Seal. 76. The directors shall provide for the safe custody of the seal, and the seal shall never be used except by the authority of a resolution of the directors or a general meeting. Authentication of Deeds and Documents. 77. All deeds executed on behalf of the company may be in such form and contain such powers, provisos, conditions, covenants, clauses, and agreements as the directors, or the company in general meeting, shall think fit, and, in addition to being sealed with the seal, shall be signed by the President or the Vice-President or such other person as the directors or the company in general meeting shall from time to time appoint, and countersigned by the Secretary or an Assistant Secretary or such other person as the directors or the company in general meeting shall from time to time appoint. Dividends. 78. The profits of the company shall be divisible among the members holding shares in proportion to the capital paid up on such shares held by them respectively. 79. The company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits, and may fix the time for payment. - 19 - 80. No dividend shall be payable except out of the profits of the company. 81. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the company justifies. 82. The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company. 83. Any one of several persons who are registered as the joint holders of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such shares. 84. Unless otherwise directed any dividend may be paid by cheque or warrant sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the register in respect of the joint holding; and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent. 85. Notice of any dividend that may have been declared whether interim or otherwise, shall be given to each member either by advertisement or by notice in manner hereinafter mentioned. 86. No dividend shall bear interest as against the company. 87. Any general meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specific assets, and in particular of paid-up shares, debentures or debenture stock of the company or paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and the directors shall give effect - 20 - to such resolutions; and, where any difficulty arises in regard to the distribution, they may settle the same as they think expedient. Reserves. 88. The directors may, before recommending any dividend, set aside, out of the profits of the company, such sums as they think proper as a reserve fund to meet contingencies, or for equalising dividends, or for special dividends or bonuses, or for repairing, improving, and maintaining any of the property of the company, and for such other purposes as the directors shall in their absolute discretion think conducive to the interests of the company; and may invest the several sums so set aside upon such investments (other than shares of the company) as they may think fit, and from time to time deal with and very such investments, and dispose of all or any part thereof for the benefit of the company, and may divide the reserve fund into such special funds as they think fit and employ the reserve fund or any part thereof in the business of the company, and that without being bound to keep the same separate from the other assets. Capitalisation of Profits and Reserves. 89. The company in general meeting may, upon the recommendation of the directors, resolve that it is desirable to capitalise any undivided profits of the company not required for paying the dividends on any shares carrying a fixed cumulative preferential dividend (including profits carried and standing to the credit of any reserve or reserves or other special account), and accordingly that the directors be authorised and directed to appropriate the profits resolved to be capitalised to the members in the proportions in which such profits would have been divisible amongst them had the same been applied in paying - 21 - dividends instead of being capitalised, and to apply such profits on their behalf, either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by such members respectively, or in paying up in full unissued shares, debentures, or securities of the company of a nominal amount equal to such profits, such shares, debentures, or securities to be alloted and distributed, credited as fully paid up, to and amongst such members in the proportion aforesaid or partly in one way and partly in the other. 90. Whenever such a resolution as aforesaid shall have been passed, the directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares, debentures or securities, if any, and generally shall do all acts and things required to give effect thereto, with full power to the directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit in the case of shares, debentures or securities becoming distributable in fractions, and also to authorise any person to enter on behalf of all the members interested into an agreement with the company providing for the allotment to them respectively, credited as fully paid up, of any further shares, debentures or securities to which they may be entitled upon such capitalisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares, and any agreement made under such authority shall be effective and binding on all such members. Accounts. 91. The directors shall cause true accounts to be kept of - 22 - the stock-in-trade of the company, of the sums of money received and expended by the company, and the matters in respect of which such receipt and expenditure take place; and of the assets, credits and liabilities of the company. 92. The books of account shall be kept at one of the offices of the company. 93. Once at the least in every year the directors shall, unless waived by a resolution of the members in general meeting, lay before the company in general meeting a statement of the income and expenditures for the past year, made up to a date not more than six months before such meeting. 94. Unless waived by a resolution of the members in general meeting, a balance sheet shall be made out in every year, and laid before the company in general meeting, and such balance sheet shall contain a summary of the property and liabilities of the company. 95. Unless waived by a resolution of the members in general meeting, the directors shall make all necessary arrangements for an annual audit of the books and accounts of the company. Notices. 96. A notice may be served by the company upon any member either personally or by sending it through the post in a prepaid envelope addressed to such member at his last known address. 97. The signature to any such notice to be given by the company may be written, typewritten, or printed. 98. Any notice, if served by post, shall be deemed to have been served at the time when the envelope containing the same would be delivered in the ordinary course of post; and in proving such service it shall be sufficient to prove that the envelope containing the notice was properly addressed, stamped and posted. - 23 - 99. Notice of meetings of members shall be given by the Secretary at least seven days before the date of such meeting. 100. Notice of special meetings shall state the objects for which the meeting is called. 101. Any member or director may waive the right to receive notices by an instrument in writing signed by him before, at or after any meeting. Indemnity. 102. Every director, manager, auditor, president, vice-president, secretary, treasurer, and other officer or servant of the company shall be indemnified by the company against, and it shall be the duty of the directors out of the funds of the company to pay all costs, losses and expenses which any such officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such director, manager, auditor, president, vice-president, secretary, treasurer, officer or servant as aforesaid, or in any way in the discharge of his duties, including travelling expenses. IN WITNESS WHEREOF We the Subscribers to the Memorandum of Association have hereunto subscribed our names this Twenty-third day of June, A.D., 1965. /s/Lionel Levine - ------------------------------- /s/B. M. Gamblin - ------------------------------- /s/W. S. Pearce - ------------------------------- /s/Irma F. Albury - ------------------------------- /s/D. E. Duncombe - ------------------------------- Signed by the Subscribers to the Memorandum of Association in the presence of:- /s/F. E. Weech EX-3.11 10 MEMORANDUM OF ASSOC OF PARADISE ENTERPRISES LTD Exhibit 3.11 BAHAMA ISLANDS. - - - The Companies Act. Company Limited by Shares. - - - MEMORANDUM OF ASSOCIATION OF PARADISE ENTERPRISES LIMITED 1. The name of the company is "Paradise Enterprises Limited". 2. The registered office of the company will be situate in the Island of New Providence one of the Bahama Islands. 3. The objects for which the company is established are: - (1) To establish, maintain, own, operate, conduct, control, manage, or assist in any manner in the management of any clubs, facilities and conveniences for the advantage, enjoyment, pleasure or entertainment of such persons as the company shall from time to time think fit; to provide club-houses and other facilities and conveniences, and generally to afford all the advantages, conveniences and accommodation of clubs and facilities of every kind. (2) To enter into agreements and arrangements with artists, actors, performers, entertainers, authors, writers, composers, lyricists, producers, directors, and technicians of every kind or description relating to performances and entertainments, public and private, or every kind and description, including, without limiting the generality of the foregoing words, musical and dramatic performances, promenade and other concerts, ballets, operas, operettas, plays, pantomimes, revues, cabarets, vaudeville, burlesques, circuses, amusements and diversions of every kind and description provided or produced by natural, mechanical or electronic means or otherwise howsoever. (3) To carry on the business of hotel, restaurant, night-club, cafe, tavern, beer-house, refreshment-room, and -2- lodging-house keepers, licensed victuallers, wine, beer, and spirit merchants, dealers in and importers of aerated, mineral, and artificial waters and other drinks, purveyors, caterers for amusements and diversions generally, proprietors of motor and other vehicles, garage proprietors, livery-stable keepers, jobmasters, farmers, dairymen, ice merchants, importers and brokers of food, live and dead stock, and colonial and foreign produce of all descriptions, hairdressers, perfumers, chemists, proprietors of clubs, baths, dressing rooms, laundries, reading, writing and newspaper rooms, libraries, grounds and places of amusements, recreation, sport, entertainment, and instruction of all kinds, tobacco and cigar merchants, agents for railway, air and shipping companies and carriers, theatrical and opera box office proprietors, and entrepreneurs and general agents. (4) To carry on business as tourist agents and contractors, and to facilitate travelling and to provide for tourists and travellers, and promote the provision of conveniences of all kinds in the way of through tickets, circular tickets, sleeping cars or berths, reserved places, hotel and lodging accommodation, guides, safe deposits, inquiry bureaus, baggage transport and otherwise. (5) To purchase, take on lease or in exchange, or otherwise acquire and to hold any lands and buildings in the Bahama Islands or elsewhere, and any estate or interest in, and any rights connected with, any such lands and buildings. (6) To develop and turn to account any land acquired by or in which the company is interested, and in particular by laying out and preparing the same for building purposes, constructing, altering, fitting up, and improving buildings and by planting, paving, draining, farming, and cultivating the -3- same, and by advancing money to, and entering into contracts and arrangements of all kinds with builders, tenants and others. (7) To purchase for investment or resale, and to traffic in land and other property of any tenure and any interest therein, and to make advances upon the security of land or other property, or any interest therein, and to deal in, traffic by way of sale, lease, exchange, or otherwise with land and any other property, whether real or personal, and generally to carry on the business of real estate agents and dealers in all its branches. (8) To purchase or otherwise acquire any interest in any patents, brevets d'invention, licences, concessions, and the like, conferring an exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem to the company capable of being profitably dealt with, and with a view thereto to enter into and carry into effect all such agreements as may seem expedient, and to use, exercise, develop, grant licences in respect of, or otherwise to turn to account any such patents, brevets d'invention, licences, concessions, and the like, and information aforesaid. (9) To carry on business as bankers, capitalists, financiers, promoters, concessionaires, contractors, manufacturers, and merchants, and to undertake, and carry on, and execute all kinds of banking, financial, contracting, manufacturing, trading, and other operations commonly carried on or undertaken by bankers, capitalists, financiers, promoters, concessionaires, contractors, manufacturers, and merchants. -4- (10) To subscribe for, conditionally or unconditionally, to underwrite, issue on commission or otherwise, to assume liability under, acquire by purchase or otherwise, and to hold, either as principals or agents, and absolutely as owners, or by way of collateral security, or otherwise, and to sell, mortgage, pledge, convert, exchange, or otherwise, dispose of or deal in the stock, shares, bonds, debentures, and other securities or obligations of any government, municipal or other authority, or any industrial, commercial, financial, or other company, and to issue paid up shares or other securities of the company in payment or part payment of the purchase price of any stock, shares, bonds, debentures, or other securities or obligations acquired by the company. (11) To purchase or otherwise acquire, and to hold, sell, exchange, lease, mortgage, pledge, charges, convert, turn to account, dispose of, and deal with property and rights of all kinds, and in particular mortgages, debentures, debenture stock, stock, shares, bonds, patents, concessions, annuities, policies, options, contracts, produce, commodities, bullion, specie, gems and other minerals, book debts, business concerns and undertakings, and claims, privileges, and choses in action of all kinds. (12) To grant annuities of all kinds, whether dependent on human life or otherwise, and whether perpetual or terminable, immediate or deferred, absolute, contingent or otherwise. (13) To carry on any kind of manufacture or trade, and to buy, sell and deal in goods, wares and merchandise of all kinds. (14) To carry on a general financial agency, investment and brokerage business, and to act as agents -5- and brokers for the purchase, sale, improvement, and management of any property, estate, business or undertaking. (15) To act as agents and brokers for any individual, company, firm, or court of law, for the investment, loan, payment, transmission, and collection of money, and to take, receive, hold, transfer, and convey all property, real or personal, which may be granted, conveyed, or committed to this company. (16) To act as agents or attorneys for the transaction of any business, and the investment and collection of moneys, rents, interests, dividends, mortgages, bonds, bills, notes and other securities. (17) To carry on a guarantee, trust and agency business, and to give any guarantee for the payments of money or for the performance of any obligation or undertaking, whether on behalf of the company or on behalf of any other person or corporation. (18) To advance, deposit, or lend money, securities, and property, to or with such persons and on such terms as may seem expedient, and to discount, buy, sell, and deal in bills, notes, warrants, coupons, and other negotiable or transferable securities or documents. (19) To promote, organise, manage, or develop, or to assist in the promotion, organisation, management, or development of any company, syndicate, enterprise, or undertaking. (20) To carry on any other business which may seem to the company capable of being conveniently carried on in connection with the above, or calculated directly or indirectly to enhance the value of or render profitable any of the company's property or rights. -6- (21) To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which this company is authorised to carry on, or possessed of property suitable for the purposes of this company. (22) To take, or otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this company, or carrying on any business capable of being conducted so as directly or indirectly to benefit this company. (23) Generally to purchase, take on lease or in exchange, hire, or otherwise acquire, any real and personal property, and any rights or privileges which the company may think necessary or convenient for the purposes of its business, and to construct, maintain and alter any buildings, or works, necessary or convenient for the purposes of the company. (24) To promote any company or companies for the purpose of acquiring all or any of the property and liabilities of this company, or for any other purpose which may seem directly or indirectly calculated to benefit this company. (25) To sell or dispose of the undertaking of the company or any part thereof for such consideration as the company may think fit, and in particular for shares, debentures, bonds, mortgages, or other securities of any other company having objects altogether or in part similar to those of this company. (26) To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in, or about to -7- carry on or engage in, any business or transaction which this company is authorised to carry on or engage in, or any business or transaction capable of being conducted so as to directly or indirectly benefit this company. (27) To amalgamate with any other company having objects altogether or in part similar to those of this company. (28) To enter into any arrangements with any governments or authorities, supreme, municipal, local or otherwise, that may seem conducive to the company's objects, or any of them, and to obtain from any such government or authority, any rights, privileges, and concessions which the company may think it desirable to obtain, and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions. (29) To obtain any provisional Order or Act of the Legislature and to do any other act or thing for enabling the company to carry any of its objects into effect, or for effecting any modification of the company's constitution, or for any other purpose which may seem expedient, and to oppose any proceedings or applications which may seem calculated, directly or indirectly to prejudice the company's interests. (30) To draw, make, accept, indorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, warrants, debentures, and other negotiable or transferable instruments. (31) To invest and deal with the moneys of the company not immediately required upon such securities and in such manner as may from time to time be determined. -8- (32) To lend money, either with or without security, generally to such persons and on such terms as the company may think fit, and in particular to customers and others having dealings with the company and to members, directors and officers of the company and to members, directors and officers of the company, and to guarantee to payment of money and/or the performance of contracts and obligations by any such persons. (33) To borrow or raise or secure the payment of money in such manner as the company shall think fit, and in particular by the issue of debentures, or debenture stock, perpetual or otherwise, charged upon all or any of the company's property (both present and future), including its uncalled capital, and to redeem or pay off such securities. (34) To sell, improve, manage, develop, exchange, lease, mortgage, dispose of, turn to account, or otherwise deal with, all or any part of the property or rights of the company. (35) To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the company's capital, or any debentures or other securities of the company, or in or about the formation or promotion of the company or the conduct of its business. (36) To adopt such means of making known the business of the company as may seem expedient. (37) To grant pensions, allowances, gratuities and bonuses to directors, ex-directors, officers, ex-officers, employees and ex-employees of the company and the dependents and connections of such persons, and to establish and maintain or concur in establishing and maintaining trusts, funds, or schemes (whether contributory -9- or non-contributory) with a view to providing pensions or other benefits for any such persons as aforesaid, their dependents or connections, and to support or subscribe to any charity, funds, or institutions the support of which may in the opinion of the directors be calculated directly or indirectly to benefit the company or its employees, and to institute and maintain any club or other establishment or profit sharing scheme calculated to advance the interests of the company, its officers or employees. (38) To pay for any rights or property acquired by the company, and to remunerate any person or persons or body or bodies corporate, either by cash payment, transfer of property, or by the allotment of shares, debentures or other securities of the company credited as paid up in full, in part or otherwise. (39) Generally, to do all such other acts and things as the company may think incidental or conducive to the attainment of the above objects or any of them. (40) To procure the company to be registered or recognised in any part of the world outside of the Bahama Islands. (41) To do all or any of the above things in any part of the world, and as principals, agents, contractors, trustees or otherwise, and by or through trustees, agents or otherwise, and either alone or in conjunction with others. (42) To distribute any of the property of the company "in specie" among the members. And it is hereby declared that the word "company" in this clause, except where used in reference to this company, shall -10- be deemed to include any partnership or other body of persons whether corporate or unincorporate, and whether domiciled in the Bahama Islands or elsewhere, and that the objects specified in the different paragraphs of this clause shall, except where otherwise expressed in such paragraphs, be in nowise limited by reference to any other paragraph or the name of the company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. 4. The liability of the members is limited. 5. The capital of the company is (pounds) 1,000 divided into 1,000 shares of (pounds) 1 each, with power to divide the shares in the capital for the time being into several classes, and to attach thereto respectively any preferential, deferred, qualified, or special rights, privileges, conditions or restrictions and to modify or deal with in the manner mentioned in Clause 25 of the accompanying Articles of Association but not otherwise, any rights for the time being attached to any class or classes of shares in the company so that Clause 25 of the said Articles shall be deemed to be incorporated herein and have effect accordingly. WE, the several persons whose names and addresses are subscribed, are desirous of being formed into a company, in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names. EX-3.12 11 ARTICLES OF ASSOC OF PARADISE ENTERPRISES LTD Exhibit 3.12 BAHAMA ISLANDS. ---------- The Companies Act. ---------- ARTICLES OF ASSOCIATION OF PARADISE ENTERPRISES LIMITED. ---------- Explanatory. 1. In these presents, unless there be something in the subject or context inconsistent therewith:- "The company" means the above-named company. "The office" means the registered office for the time being of the company. "The register" means the register of members to be kept pursuant to Section 22 of The Companies Act. "The seal" means the common seal of the company. "Month" means calendar month. "In writing" and "written" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form. "The directors" means the directors for the time being of the company. "Special resolution" and "extraordinary resolution" have the meanings assigned thereto respectively by The Companies Act. Words importing the singular number only include the plural number, and vice versa. Words importing the masculine gender only include the feminine gender. Words importing persons include corporations. 2. In addition to the registered office of the company in the Colony, the company may have an office for the transaction of business at any other place or places. Shares. 3. None of the funds of the company shall be employed in the purchase of, or lent on, shares of the company. -2- 4. The business of the company may be commenced as soon after the incorporation of the company as the directors shall think fit, and notwithstanding that part only of the shares may have been allotted. 5. The shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions, and at such times as the directors think fit. 6. Save as herein otherwise provided, the company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a court of competent jurisdiction, or as by Act required, be bound to recognise any equitable or other claim to or interest in such share on the part of any other person. Certificates. 7. The certificates of title to shares shall be issued under the seal of the company, and shall be signed by the President or the Vice-President, and shall be countersigned by the Secretary or some other person appointed by the directors. 8. Every member shall be entitled to one certificate for the shares registered in his name, or to several certificates each for one or more of such shares, and every certificate of shares shall specify the number and the denoting numbers of the shares in respect of which it is issued, and the amount paid up thereon. 9. If any certificate be worn out or defaced, then upon production thereof to the directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof; and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the directors, and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. -3- Company's Lien on Shares. 10. The company shall have a first and paramount lien upon all the shares registered in the name of each member, and upon the proceeds of sale thereof, for his debts, liabilities, and engagements, solely or jointly with any other person, to or with the company whether the period for the payment, fulfillment, or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the footing and condition that Article 6 hereof is to have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company's lien, if any, on such shares. 11. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think fit, but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member or his personal representatives, and default shall have been made by him or them in the payment, fulfillment, or discharge of such debts, liabilities, or engagements for seven days after such notice. 12. The net proceeds of any such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements of such member and the residue (if any) paid to him, his personal representatives or assigns. 13. Upon any sale for enforcing a lien in purported exercise of the powers hereinbefore given, the directors may cause the purchaser's name to be entered in the register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after his name has been entered in the register in respect of such shares the validity of the sale shall not be impeached by any person, -4- and the remedy of any person aggrieved by the sale shall be in damages only and against the company exclusively. Transfer and Transmission. 14. The instrument of transfer of any share shall be signed by both the transferor and the transferee, and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the register in respect thereof. 15. Shares in the company may be transferred in any form which the directors may think fit to register. 16. The directors may decline to register a transfer of any share on which the company has a lien. They may also decline to register a transfer of any share to any person of whom they do not approve. And they may also decline to register a transfer of any share without assigning any reason therefor. 17. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the directors may require to prove the title of the transferor or his right to transfer the shares. 18. The personal representatives of a deceased member (not being one of several joint holders) shall be the only persons recognised by the company as having any title to the shares registered in the name of such member, and in case of the death of any one or more of the joint registered holders of any registered share, the survivors shall be the only persons recognised by the company as having any title to or interest in such shares. 19. Any person becoming entitled to shares in consequence of the death or bankruptcy of any member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article, or of his title, as the directors think sufficient, may be registered as a member in respect of the shares, or may, subject to the regulations as to transfers hereinbefore contained, transfer -5- such shares. The directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in an ordinary transfer presented for registration. Alteration of Capital. 20. The company may, from time to time, by special resolution, increase the capital by the creation of new shares of such amount as may be deemed expedient. 21. The new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the special resolution creating the same shall direct, and if no direction be given, as the directors shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the company, and with a special or without any right of voting. 22. If any difficulty shall arise in the apportionment of such new shares, or any of them amongst the members, such difficulty shall, in the absence of direction by the company, be determined by the directors. 23. Except so far as otherwise provided by the conditions of issue, or by these presents, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained with reference to transfer and transmission, forfeiture, lien, and otherwise. 24. The company may, from time to time, by special resolution, consolidate its shares or any of them. Variation of Rights 25. Whenever the capital of the company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of any Act, be varied or abrogated by special resolution, either with the consent in writing of the holders of three-fourths of the issued shares of the class, or with the sanction of an extraordinary resolution [illegible] separate general meeting of such holders (but -6- not otherwise), and may be so varied or abrogated whilst the company is a going concern or in contemplation of a winding up. To every such separate general meeting all the provisions of these presents relating to general meetings of the company, or to the proceedings thereat, shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy one-half [illegible] nominal amount of the issued shares of the class, but to the [illegible] any adjourned meeting of such holders a quorum as above defined is not present, those members who are present shall be a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares in the class present in person or by proxy may demand a poll, and that such holders shall on a poll have one vote for every share of the class, held by them, respectively. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided by the terms of issue, be deemed to be modified by the creation or issue of further shares ranking pari passu therewith. Borrowing Powers. 26. The directors may, from time to time, at their discretion, raise or borrow, or secure the payment of, any sum or sums of money for the purposes of the company. 27. The directors may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as they think fit, and, in particular, by the issue of bonds, perpetual or redeemable debentures or debenture stock, or any mortgage, charge, or other security on the undertaking or the whole or any part of the property of the company (both present or future), inlcuding [illegible] capital for the time being. General Meetings. 28. General meetings of the company may be held only within the Colony. 29. The first general meeting shall be held at such time (not being more than four months after the registration of the -7- company) as the directors may determine, and at the City of Nassau in the Island of New Providence, or at such other place within the Colony as may be prescribed by the directors. 30. Other general meetings shall be held once at least in every calendar year at such time, not being more than fifteen months after the holding of the last preceding general meeting, and at such place within the Colony as may be determined by the directors. At these meetings the Annual Report of the directors shall be presented, the directors elected for the ensuing year and the general business of the company transacted. Such general meetings shall be called "ordinary meetings", and all other meetings of the company shall be called "extraordinary meetings". 31. The directors may, whenever they think fit, convene an extraordinary meeting, and they shall, on the requisition of the holders of a majority in value of the subscribed and issued shares of the company, forthwith proceed to convene an extraordinary meeting of the company. 32. Seven days' notice, specifying the place, day and hour of the meeting, and in case of special business, the general nature of such business shall be given to the members in manner hereinafter mentioned; or in such other manner, if any, as may be prescribed by the company in general meeting; but the non-receipt of such notice by any member shall not invalidate the proceedings at any meeting. 33. All business shall be deemed to be special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets, and the ordinary reports of the directors and auditors. 34. When all the members in person or by proxy sign the minutes of an ordinary or extraordinary meeting, the same shall be deemed to have been duly held, notwithstanding that the members have not actually come together or that there may have been technical defects in the proceedings. And a resolution -8- in writing in one or more parts, signed by all the members shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. Proceedings at General Meetings. 35. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business except to take measures to obtain a quorum. 36. A quorum shall consist of members present in person or by proxy holding or representing a majority in value of the subscribed and issued shares of the company. 37. The President or the Vice-President shall preside as Chairman at every general meeting of the company. In their absence the members present shall choose some one of their number to be Chairman. 38. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which adjournment took place. 39. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands, and in the case of an equality of votes the Chairman shall, both on a show of hands and on a poll have a casting vote, in addition to the vote or votes to which he may be entitled as a member. 40. At any general meeting, unless a poll is demanded by the Chairman or by members present in person or by proxy holding one-fourth in value of the subscribed and issued shares of the Company, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the books of proceedings of the company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 41. If a poll is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs and either at once, or after an interval or adjournment, or otherwise, and the results of the poll shall -9- be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote the Chairman shall determine the same, and such determination made in good faith shall be final and conclusive. Votes of Members. 42. On a show of hands every member present in person or by proxy shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. 43. Votes may be given either personally or by proxy. 44. The instrument appointing a proxy shall be in writing, under the hand of the appointor or of his attorney. Any person appointed a proxy need not be a member of the company. 45. The instrument appointing a proxy shall be deposited with the Secretary before or at the meeting for which it is to be used, and may be permanent or ad hoc. If a proxy is permanent it may be recorded with the Secretary. 46. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal, or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation, or transfer shall have been received before the meeting. 47. An instrument appointing a proxy may be in any form which the directors think fit to approve. Directors. 48. The directors of the company shall be elected at the first ordinary meeting of the company after registration, and in every subsequent year at the first ordinary meeting of the year. They shall be elected for a year but shall hold office until their successors are duly elected or until the office is vacated as provided by Article 50. The directors shall not be less than two, nor more than seven in number. A director shall -10- not require any qualification by way of holding any shares or other securities of the company. 49. Until directors are elected, the persons hereinafter named shall be deemed to be directors, that is to say:- Georgette Groves, Robert Stuart Keith Gonsalves and Ronald George Gowlding. 50. The office of a director shall ipso facto be vacated:- (a) if he becomes bankrupt, or suspends payment, or compounds with his creditors; (b) if he is found lunatic or becomes of unsound mind; (c) if by notice in writing to the company, he resigns his office; (d) if he is requested in writing by members holding or representing more than one-half in value or the subscribed and issued shares of the company to vacate his office. But the continuing directors or sole remaining director may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number, or of summoning a general meeting of the company, but for no other purpose. 51. Any casual vacancy occurring in their body may at any time be filled up by the directors or by the company in general meeting, but any person so chosen shall retain office so long only as the vacating director would have retained the same if no vacancy had occurred. 52. The directors or the company in general meeting shall have power at any time, and from time to time, to appoint any qualified person as a director as an addition to the board, but so that the total number of directors shall not at any time exceed the maximum number fixed as above. But any director so appointed shall hold office only until the next following ordinary general meeting of the company, and shall then be eligible for re-election. -11- Alternate Directors 53. Any director may at any time appoint any person approved by the directors to be an alternate director of the company, and may at any time remove any alternate director so appointed by him. An alternate director so appointed shall not be entitled to receive any remuneration from the company, nor be required to hold any qualification but shall otherwise be subject to the provisions of these presents with regard to directors. An alternate director shall (subject to his giving to the company an address at which notices may be served upon him) be entitled to receive notices of all meetings of the board, and to attend and vote as a director at any such meeting at which the director appointing him is not personally present, and generally to perform all the functions of his appointor as a director in the absence of such appointor. An alternate director shall ipso facto cease to be an alternate director if his appointor ceases for any reason to be a director, provided that if any director retires but is re-elected by the meeting at which such retirement took effect any appointment made by him pursuant to this Article which was in force immediately prior to his retirement shall continue to operate after his re-election as if he had not so retired. All appointments and removals of alternate directors shall be effected by writing under the hand of the director making or revoking such appointment left at the office. Director or Officer Contracting with Company. 54. No director or officer shall be disqualified by his office from contracting and/or dealing with the company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the company in which any director or officer shall be in any way interested, be avoided, nor shall any director or officer so contracting or being so interested be liable to account to the company for any profit realised by any such contract or arrangement by reason of such director or officer holding that office or the fiduciary relation thereby established, but it is declared that the nature of his interest must be disclosed by him at the meeting of the directors, at which the contract or -12- arrangement is determined on, if his interest then exists, or in any other case at the first meeting of the directors after the acquisition of his interest, and having disclosed his interest as aforesaid such director shall be entitled to vote as a director in respect of any contract or arrangement in which he is so interested as aforesaid. Remuneration of Directors. 55. The directors shall be paid out of the funds of the company by way of remuneration for their services such sums as the company in general meeting may from time to time determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine, and in default of such determination within the year equally. The directors shall also be paid their travelling expenses (if any) of attending and returning from board and committee meetings. Proceedings of Directors. 56. Meetings of the directors shall be held only within the Colony. No director or alternate director shall perform or be entitled to perform any of the duties of or to act as a director except during such time as he shall actually be in the Bahama Islands. Subject thereto the directors may meet together at such place as they may determine for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined, two directors present in person shall be a quorum. 57. The President or any director may at any time convene a meeting of the directors. Any director or alternate who is absent from the Island of New Providence shall not during such absence be entitled to notice of any such meeting. Questions arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote. 58. A meeting of the directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the regulations of the company for the time being vested in or exercisable by the directors generally. 59. The President or the Vice-President shall preside at all -13- meetings of the directors. In the absence of the President and the Vice-President the directors present shall choose some one of their number to be Chairman of the meeting. 60. The directors may with the approval of not less than the number of directors as may from time to time constitute a quorum delegate any of their powers to committees consisting of such member or members of their body as they think fit, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part and either as to persons or purposes; but every committee so formed, shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors. 61. Each such committee may elect a Chairman of its meetings. If no such Chairman is elected, or if at any meeting the Chairman is not present within ten minutes after the time appointed for holding the same, the members present may choose some one of their number to be Chairman of the meeting. 62. Each such committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present, and in the case of an equality of votes the Chairman shall have a second or casting vote. 63. All acts done at any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in office of any such directors or person acting as aforesaid, or that they or any of them were disqualified or had vacated office or were not entitled to vote, be as valid as if every such person had been duly appointed or had duly continued in office and was qualified and had continued to be a director, and had been entitled to be a director. 64. When all the directors (in person or by their alternates) sign the minutes of a meeting of the directors the same shall be deemed to have been duly held notwithstanding that the directors have not actually come together or that there may have been technical defects in the proceedings. And a resolution in -14- writing, in one or more parts, signed by all the directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted. Powers of Directors. 65. The management of the business of the company shall be vested in the directors, who, in addition to the powers and authorities by these presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to the provisions of any Act, and of these presents, and to any regulations from time to time made by the company in general meeting, provided that no regulation so made shall invalidate any prior act of the directors which would have been valid if such regulation had not been made. Local Management. 66. (1) The directors may, from time to time, provide for the management of the affairs of the company abroad in such manner as they shall think fit, and the provisions contained in the four next following paragraphs shall be without prejudice to the general powers conferred by this paragraph. (2) The directors may, from time to time, and at any time, establish any local boards or agencies for managing any of the affairs of the company abroad, and may appoint any persons to be members of such local board, or any managers or agents, and may fix their remuneration. (3) The directors may, from time to time, and at any time delegate to any person so appointed any of the powers, authorities, and discretions for the time being vested in the directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and subject to such conditions as the directors may think fit, and the directors may at any time remove any person so appointed, and -15- may annul or vary any such delegation. (4) The directors may, at any time and from time to time, by power of attorney under the seal, appoint any person or persons to be the attorney or attorneys of the company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these presents), and for such period and subject to such conditions as the directors may from time to time think fit; and any such appointment may (if the directors think fit) be made in favour of the members or any of the members of any local board established as aforesaid, or in favour of any company, or of the members, directors, nominees, or managers of any company or firm, or otherwise in favour of any fluctuating body of persons, whether nominated directly or indirectly by the directors; and any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney or attorneys as the directors think fit. (5) Any such delegates or attorneys as aforesaid may be authorised by the directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested in them. 67. The company may exercise the powers conferred by the Companies Seals Act of the Colony. 68. The directors may comply with the requirements of any foreign law which in their opinion it shall in the interests of the company be necessary or expedient to comply with. Officers. 69. The officers of the company shall be elected annually by the company or appointed annually by the directors, and shall consist of a President, a Vice-President, a Secretary, a Treasurer, one or more Assistant Secretaries, and one or more Assistant Treasurers, and such other officers as the company or the directors may from time to time think necessary, and such other officers shall perform such duties as may be prescribed by the directors. They shall hold office until their successors are elected or appointed. But any officer may be removed at any time by the company in general meeting or by the directors. If any office becomes vacant during the year the company in general meeting or the directors may fill the same for the unexpired term. -16- 70. Until officers are elected or appointed the persons hereinafter named shall be deemed to be the officers of the company, that is to say:- Robert Stuart Keith Gonsalves, President and Ronald George Gowlding, Vice President, Secretary and Treasurer. 71. Any person may hold more than one of these offices, and no officer need be a member of the company. President. 72. The President shall act as Chairman of all meetings of the members and of the directors. He shall also perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Vice-President. 73. The Vice-President in the absence or disability of the President, may perform the duties and exercise the powers of the President, and shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Treasurer. 74. The Treasurer shall perform such duties as may be prescribed by these Articles, the company in general meeting, or the directors, and if and when directed so to do by the company or the directors, shall keep full and accurate accounts of the receipts and disbursements of the company in books belonging to the company and shall render to the directors at regular meetings of the directors, or whenever they may require it, a statement of the financial condition of the company. Assistant Treasurers. 75. Any one of the Assistant Treasurers, in the absence or disability of the Treasurer, may perform the duties and exercise the powers of the Treasurer, and each Assistant Treasurer shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. -17- Secretary. 76. The Secretary shall attend and keep the minutes of the meetings of the members and of the directors. He shall also summon meetings and keep such other books and records of the company and the directors as may be required by the company in general meeting, or the directors, and perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Assistant Secretaries. 77. Any one of the Assistant Secretaries, in the absence or disability of the Secretary, may perform the duties and exercise the powers of the Secretary, and each Assistant Secretary shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. The Seal. 78. The directors shall provide for the safe custody of the seal, and the seal shall never be used except by the authority of a resolution of the directors or a general meeting. Authentication of Deeds and Documents. 79. All deeds executed on behalf of the company may be in such form and contain such powers, provisos, conditions, covenants, clauses, and agreements as the directors, or the company in general meeting, shall think fit, and, in addition to being sealed with the seal, shall be signed by the President or the Vice-President or such other person as the directors or the company in general meeting shall from time to time appoint, and countersigned by the Secretary or an Assistant Secretary or such other person as the directors or the company in general meeting shall from time to time appoint. Dividends. 80. The profits of the company shall be divisible among the members holding shares in proportion to the capital paid up on such shares held by them respectively. -18- 81. The company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits, and may fix the time for payment. 82. No dividend shall be payable except out of the profits of the company. 83. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the company justifies. 84. The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company. 85. Any one of several persons who are registered as the joint holders of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such shares. 86. Unless otherwise directed any dividend may be paid by cheque or warrant sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the register in respect of the joint holding; and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent. 87. Notice of any dividend that may have been declared, whether interim or otherwise, shall be given to each member either by advertisement or by notice in manner hereinafter mentioned. 88. No dividend shall bear interest as against the company. 89. Any general meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specific assets, and in particular of paid-up shares, debentures or debenture stock of the company or paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and the directors shall give effect to such resolutions; and, where any difficulty arises in regard to the distribution, they may settle the same as they think expedient. -19- Reserves. 90. The directors may, before recommending any dividend, set aside, out of the profits of the company, such sums as they think proper as a reserve fund to meet contingencies, or for equalising dividends, or for special dividends or bonuses, or for repairing, improving, and maintaining any of the property of the company, and for such other purposes as the directors shall in their absolute discretion think conducive to the interests of the company; and may invest the several sums so set aside upon such investments (other than shares of the company) as they may think fit, and from time to time deal with and vary such investments, and dispose of all or any part thereof for the benefit of the company, and may divide the reserve fund into such special funds as they think fit and employ the reserve fund or any part thereof in the business of the company, and that without being bound to keep the same separate from the other assets. Capitalisation of Profits and Reserves. 91. The company in general meeting may, upon the recommendation of the directors, resolve that it is desirable to capitalise any undivided profits of the company not required for paying the dividends on any shares carrying a fixed cumulative preferential dividend (including profits carried and standing to the credit of any reserve or reserves or other special account), and accordingly that the directors be authorised and directed to appropriate the profits resolved to be capitalised to the members in the proportions in which such profits would have been divisible amongst them had the same been applied in paying dividends instead of being capitalised, and to apply such profits on their behalf, either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by such members respectively, or in paying up in full unissued shares, debentures, or securities of the company of a nominal amount equal to such profits, such shares, debentures, or securities to -20- be allotted and distributed, credited as fully paid up, to and amongst such members in the proportion aforesaid or partly in one way and partly in the other. 92. Whenever such a resolution as aforesaid shall have been passed, the directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares, debentures or securities, if any, and generally shall do all acts and things required to give effect thereto, with full power to the directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit in the case of shares, debentures or securities becoming distributable in fractions, and also to authorise any person to enter on behalf of all the members interested into an agreement with the company providing for the allotment to them respectively, credited as fully paid up, of any further shares, debentures or securities to which they may be entitled upon such capitalisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares, and any agreement made under such authority shall be effective and binding on all such members. Accounts. 93. The directors shall cause true accounts to be kept of the stock-in-trade of the company, of the sums of money received and expended by the company, and the matters in respect of which such receipt and expenditures take place; and of the assets, credits and liabilities of the company. 94. The books of account shall be kept at one of the offices of the company, and subject to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the directors, shall be open to the inspection of the members during hours of business. -21- 95. Once at the least in every year the directors shall, unless waived by a resolution of the members in general meeting, lay before the company in general meeting a statement of the income and expenditure for the past year, made up to a date not more than six months before such meeting. 96. Unless waived by a resolution of the members in general meeting, a balance sheet shall be made out in every year, and laid before the company in general meeting, and such balance sheet shall contain a summary of the property and liabilities of the company. 97. Unless waived by a resolution of the members in general meeting, the directors shall make all necessary arrangements for an annual audit of the books and accounts of the company. Notices. 98. A notice may be served by the company upon any member either personally or by sending it through the post in a prepaid envelope addressed to such member at his last known address. 99. The signature to any such notice to be given by the company may be written, typewritten, or printed. 100. Any notice, if served by post, shall be deemed to have been served at the time when the envelope containing the same would be delivered in the ordinary course of post; and in proving such service it shall be sufficient to prove that the envelope containing the notice was property addressed, stamped and posted. 101. Notice of meetings of members shall be given by the Secretary at least seven days before the date of such meeting. 102. Notice of special meetings shall state the objects for which the meeting is called. 103. Any member or director may waive the right to receive notices by an instrument in writing signed by him before, at or after any meeting. -22- Indemnity. 104. Every director, manager, auditor, president, vice-president, secretary, treasurer, and other officer or servant of the company shall be indemnified by the company against, and it shall be the duty of the directors out of the funds of the company to pay all costs, losses and expenses which any such officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such director, manager, auditor, president, vice-president, secretary, treasurer, officer or servant as aforesaid, or in any way in the discharge of his duties, including travelling expenses. IN WITNESS WHEREOF We the Subscribers to the Memorandum of Association have hereunto subscribed our names this Twenty-third day of June, A.D., 1965. /s/Lionel Levine - ------------------------------- /s/B. M. Gamblin - ------------------------------- /s/W. S. Pearce - ------------------------------- /s/Irma F. Albury - ------------------------------- /s/D. E. Duncombe - ------------------------------- Signed by the Subscribers to the Memorandum of Association in the presence of:- /s/F. E. Weech EX-3.13 12 MEMORANDUM OF ASSOC ISLAND HOTEL COMPANY LTD Exhibit 3.13 ISLAND HOTEL COMPANY LIMITED At an Extraordinary General Meeting of the above-named Company held at the Registered Office of the Company, One Millars Court, Nassau, Bahamas on the 15th day of June, A.D., 1987 the sub-joined Special Resolutions were duly passed, and at a subsequent Extraordinary General Meeting of the said Company held on the 29th day of June, A.D., 1987 the sub-joined Special Resolutions were duly approved, ratified and confirmed. RESOLVED that the capital of the Company expressed in (pounds) Sterling being the lawful currency of the Commonwealth of the Bahamas at the date of Incorporation of the Company by virtue of the laws in that behalf enacted henceforth be expressed in the lawful currency of the Commonwealth of the Bahamas as B$2,860 divided into 1,000 shares of B$2.86 par value, such shares to be designated as Class "A" Shares. RESOLVED FURTHER that the capital of the Company be increased to B$8,860 divided into 1,000 Class "A" Shares of B$2.86 each and 6,000 Class "B" Shares of B$1.00 each by the creation of 6,000 shares of B$1.00 to be designated as Class "B" Shares ranking in all respects pari passu with the existing shares in the capital of the Company. I, J. Barrie Farrington, Assistant Secretary of Island Hotel Company Limited, hereby certify that the foregoing is a true copy of the Special Resolutions which were duly passed as Special Resolutions at a meeting of the above-named Company held at the Registered Office of the Company, One Millars Court, Nassau, Bahamas on the 15th day of June, A.D., 1987 at which meeting all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present by proxy, and that the said Special Resolutions were duly confirmed at a meeting of the above-named Company held at the same place on the 29th day of June, A.D., 1987 at which said meeting, all of the members of the Company for the time being entitled, according to the regulations of the Company, to vote were present by proxy. IN WITNESS THEREOF I have hereunto set my hand and the Common Seal of the Company this 29th day of June, A.D., 1987. (Sgd.) J.B. Farrington Assistant Secretary SEAL - ------------------- REGISTRAR GENERAL'S DEPARTMENT DEC 17 1987 NASSAU, BAHAMAS - ------------------- - ---------------- ---------------- [ILLEGIBLE SEAL] [ILLEGIBLE SEAL] - ---------------- ---------------- [illegible] The Companies Act Company Limited by Shares - - - MEMORANDUM OF ASSOCIATION OF ISLAND HOTEL COMPANY LIMITED - - - 1. The name of the company is "Island Hotel Company Limited". 2. The registered office of the company will be situate in the Island of New Providence one of the Bahama Islands. 3. The objects for which the company is established are:- (1) To carry on the business of hotel, restaurant, cafe, tavern, beer-house, refreshment-room, and lodging-house keepers, licensed victuallers, wine, beer, and spirit merchants, dealers in and importers of aerated, mineral, and artificial waters and other drinks, purveyors, caterers for public and private amusements generally, proprietors of motor and other vehicles, garage proprietors, livery-stable keepers, jobmasters, farmers, dairymen, ice merchants, importers and brokers of food, live and dead stock, and produce of all descriptions, hairdressers, perfumers, chemists, proprietors of clubs, baths, dressing rooms, laundries, reading, writing and newspaper rooms, libraries, grounds, and places of amusement, recreation, sport, entertainment, and instruction of all kinds and tobacco and cigar merchants. (2) To purchase, take on lease or in exchange, or otherwise acquire and to hold any lands and buildings either within or without the Bahama Islands, and any estate or interest in and any rights connected with, any such lands and buildings, and to pay for the same in money or in the shares or other securities of the company. (3) To develop and turn to account any land acquired by or in which the company is interested, and in (4) To plan, lay out, construct, execute, carry out, equip, furnish, install, improve, develop, maintain, administer, manage, supervise or control works and conveniences of all kinds, and without prejudice to the generality of the foregoing words. In particular hotels, apartment houses, flats, houses, clubs, restaurants, shops, theatres, cinemas, stadia, baths, swimming pools, marinas, yacht basins and other facilities for the accommodation of yachts and private pleasure craft, hospitals, clinics, schools, places of worship, places of amusement, pleasure grounds, race-tracks, golf courses and other facilities for sports, parks, gardens, plantings of all kinds, reading rooms, warehouses, sub-divisions, villages, townships, roads, bridges, reservoirs, waterways, wharves, (illegible), embankments, irrigations, dredgings, excavations, reclamations, improvements, sewage disposal systems, drainage systems, sanitary systems, water, gas, electric light, telephone, telegraph, wireless and power supply works and installations, and all other works and conveniences which the company may think directly or indirectly conducive to those objects, and to contribute or otherwise (illegible) or take part in the planning, construction, laying out, equipping, furnishing, installation, maintenance, development, working, administration, management, supervision and control thereof. (5) To cater for public and private amusements of every description and in particular, and without limiting (6) To carry on business as tourist and travel agents and contractors, and to facilitate travelling, and to provide for tourists and travellers, and to promote the provision of conveniences of all kinds in the way of tickets, reservations and arrangements for land, sea and air travel, hotel and lodging accommodation, guides, the hiring of means of personal and baggage transportation, safe deposits, inquiry bureaus and otherwise. (7) To undertake, manage, administer, control, give advice or provide consulting services in connection with the erection, construction, decoration, repair, cleansing and finishing of buildings, erections, constructions and works of all kinds. (8) To carry on the business of proprietors and operators of apartment buildings, flats, maisonettes, dwelling houses, and clubs in all branches, and for these purposes to improve land, prepare building sites, and to construct, reconstruct, pull down, alter, improve, decorate, finish and maintain apartments, flats, maisonettes, dwelling houses, clubs, buildings, works and conveniences of all kinds, and to lay out roads, pleasure gardens and recreation grounds. (9) To manage, lease (for any period), sell or otherwise, dispose of lots, building sites, hotels, apartments, flats, maisonettes, dwelling houses, clubs, and buildings, at such rent and on such terms and conditions as the company shall think fit, to collect rents and income, and to supply or cause to be supplied to purchasers, tenants, occupiers, and others, utility services, air-conditioning, (10) To purchase for investment or resale and to traffic in land and other property of any tenure and any interest therein, and to make advances upon the security of land or other property, or any interest therein, and to deal in, traffic by way of sale, lease, exchange, or otherwise with land and any other property whether real or personal, and generally to carry on the business of real estate agents and dealers in all its branches. (11) To carry on all or any of the following businesses, namely, builders and contractors, civil engineering contractors, excavators, dredgers, decorators, manufacturers and producers of and dealers in building materials and requisites of all kinds, machinery and general construction contractors, sub-contractors, and hauliers, and without limiting the generality of the foregoing words, to undertake, manage, supervise, administer, control or give advice in connection with the erection, construction,(??????) and furnishing of buildings, erections, structures, and works of all kinds. (12) To buy, lease, construct, build or otherwise acquire all plant, machinery and equipment necessary or convenient to carry the above objects or any of them (? ?) (13) To carry on business (ILLEGIBLE) financial, contracting and other operations commonly carried on or undertaken by capitalism, financiers, promoters, concessionaires, and contractors, including the lending of money, either with or without security, to such persons and on such terms and conditions as the company may think fit. (14) To subscribe for, conditionally or unconditionally to underwrite, issue on commission or otherwise, to assume liability under, acquire by purchase or otherwise and to hold, either as principals or agents, and absolutely as owners, or by way of collateral security, or otherwise, and to sell, mortgage, pledge, convert, exchange, or otherwise, dispose of or deal in the stock, shares, bonds, debentures, and other securities or obligations of any government, municipal or other authority, or any industrial, commercial, financial, or other company, and to issue paid up shares or other securities of the company in payment or part payment of the purchase price of any stock, shares, bonds, debentures, or other securities or obligations acquired by the company. (15) To purchase or otherwise acquire, and to hold, sell, exchange, lease, mortgage, pledge, charge, convert, turn to account, dispose of, and deal with property and rights of all kinds, and in particular mortgages, debentures, debenture stock, stock, shares, bonds, patents, concessions, annuities, policies, options, (illegible) gems and other minerals, goods, wares and merchandise of all kinds, book debts, business concerns and undertakings, and claims, privileges, and chases in action of all kinds. (16) To purchase, charter, hire, take in exchange, build, salvage, repair, reconstruct, or otherwise acquire and [illegible] and furniture, or any shares or interact in ships or vessels, and also shares, stocks and securities of any companies possessed of or interested in, any ships or vessels, and to maintain, repair, improve, alter, sell, exchange, or let out to hire or charter, or otherwise deal with and dispose of any such ships, vessels or shares or securities as aforesaid. (17) To employ the said ships or vessels in the conveyance of passengers, mails, and cargo of all kinds between such ports and places in any part of the world as may seem expedient, and to tender for and acquire any postal or other subsidies. (18) To carry on all or any of the businesses of ship owners, airline operators, carriers by land, water and air, warehousemen, wharfingers, barge owners, lightermen, forwarding agents, cargo superintendents, stevedores, and carters. (19) To carry on business as brokers for the chartering, sale, and purchase of ships of every description, freight contractors, forwarding agents, tourist and passenger agents, managers of ships of every description, and as insurance brokers and agents. (20) To adopt and carry into effect any Agreement whether made before or after the incorporation of the company providing for the management of ships owned or to be owned in order to comply with the provisions of The Merchant Shipping Act 1894, or any statutory modification thereof, or for the appointment of chartering, insurance, or other agents. (21) To employ as ships [illegible] and managing agent any person, firm or company, whether limited or not, and that although he or they may not be entitled to any share or interest in the said ships or vessels or in the company. (22) To carry on a guarantee business, and to give any guarantee for the payment of money or for the performance of any obligation whether on behalf of the company, or other person or corporation. (23) To carry on a general real estate brokerage business, and to act as agents and brokers for the purchase, sale, improvement, and management of any property. (24) To act as agents and brokers for any individual, company, firm, or court of law, for the investment, loan, payment, transmission, and collection of money, and to take, receive, hold, transfer, and convey all property, real or personal, which may be granted, conveyed, or committed to this company. (25) To act as agents or attorneys for the transaction of any business and the investment and collection of moneys, rents, interests, dividends, mortgages, bonds, bills, notes, and other securities. (26) To advance, deposit, or lend money, securities, and property, to or with such persons and on such terms as may seem expedient, and to discount, buy, sell and deal in bills, notes, warrants, coupons, and other negotiable or transferable securities or documents. (27) To promote, organize, manage, or develop, or to assist in the promotion, organization, management, or development of any company, syndicate, enterprise, or undertaking. (28) To carry on any other business which may seem to the company capable of being conveniently carried on in connection with the above, or calculated directly or indirectly to enhance the value of or render profitable any of the company's property or rights. (29) To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which this company is authorized to carry on, or possessed of property suitable for the purposes of this company. (30) To take, or otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this company, or carrying on any business capable of being [illegible] directly or indirectly to [illegible]. (31) To promote any company or companies for the purpose of acquiring all or any of the property and liabilities of this company, or for any other purpose which may seem directly or indirectly calculated to benefit this company. (32) To sell or dispose of the undertaking of the company or any part thereof for such consideration as the company may think fit, and in particular for shares, debentures, bonds, mortgages, or other securities of any other company having objects altogether or in part similar to those of this company. (33) To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in, or about to carry on or engage in, or any business or transaction which this company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit this company. (34) To amalgamate with any other company having objects altogether or in part similar to those of this company. (35) To enter into any arrangements with any governments or authorities, supreme, municipal, local, or otherwise, that may seem conducive to the company's interests, or any of them, and to obtain from any such government or authority any rights, privileges, and concessions in which the company may think it desirable to obtain, and to carry out, exercise, and to comply with any such management, agents, privileges, and concessions. (36) To obtain any provisional Order or Act of the Legislature and to do any other act or thing for enabling the company to carry any of its objects into effect, or for effecting any modification of the company's constitution, or for [illegible] purpose which may seem expedient, and to expose any proceedings or applications which may seem calculated directly or indirectly to protect the company's interests. (37) To draw, make, accept, indorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, warrants, debentures, and other negotiable or transferable instruments. (38) To invest and deal with the moneys of the company not immediately required upon such securities and in such manner as may from time to time be determined. (39) To lend money, either with or without security, generally to such persons and on such terms as the company may think fit, and in particular to customers and others having dealings with the company. (40) To borrow or raise or secure the payment of money in such manner as the company shall think fit, and in particular by the issue of debentures, or debenture stock, perpetual or otherwise, charged upon all or any of the company's property (both present and future), including its uncalled capital, and to redeem or pay off such securities. (41) To sell, improve, manage, develop, exchange, lease, mortgage, dispose of, turn to account, or otherwise deal with, all or any part of the property or rights of the company. (42) To renumerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the company's capital, or any debentures or other securities of the company, or in or about the formation or promotion of the company or the conduct of its business. (43) To adopt such means of making known the business of the company as may seem expedient. (44) To grant pensions, allowances, gratuities and bonuses to directors, ex-directors, officers, ex-officers, employees or [illegible] dependents or connections of such [illegible] and to establish and maintain or [illegible] establishing and maintaining trusts, funds, [illegible] (whether contributory or non-contributory) with a view to providing pensions or other benefits for any such persons as aforesaid, their dependents or connections, and to support or subscribe to any charity, fund, or institution the support of which may in the opinion of the directors be calculated directly or indirectly to benefit the company or its employees, and to institute and maintain any club or other establishment or profit sharing scheme calculated to advance the interests of the company, its directors, officers or employees. (45) To pay for any rights or property acquired by the company, and to remunerate any person or persons or body or bodies corporate, either by cash payment, transfer of property, or by the allotment of shares, debentures or other securities of the company credited as paid up in full, in part or otherwise. (46) Generally to do all such other acts and things as the company may think incidental or conducive to the attainment of the above objects or any of them. (47) To procure the company to be registered or recognized in any part of the world outside of the Bahama Islands. (48) To do all or any of the above things in any part of the world, and as principals, agents, contractors, trustees, agents or otherwise, and either alone or in conjunction with others. (49) To distribute any of the property of the company "in specie" among the members. And it is hereby declared that the word "company" in this clause, except where used in reference to this company, shall be deemed to include any partnership or other body of persons whether corporate or unincorporate, and whether domiciled in the Bahama Islands or elsewhere, and that the objects specified in the different paragraphs of this clause shall, except where otherwise expressed in such paragraphs, be in [illegible] limited by reference to any other paragraph or the [illegible] of the company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. 4. The liability of the members is limited. 5. The capital of the company is (pounds) 1,000 divided into 1,000 shares of (pounds) 1 each with power to divide the shares in the capital for the time being into different classes, and to attach thereto respectively any preferential, deferred, qualified, or special rights, privileges, conditions or restrictions and to modify or deal with in the manner mentioned in Clause 25 of the accompanying Articles of Association but not otherwise, any rights for the time being attached to any class or classes of shares in the company so that Clause 25 of the said Articles shall be deemed to be incorporated herein and have effect accordingly. WE, the several persons whose names and addresses are subscribed, are desirous of being formed into a company, in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names. EX-3.14 13 ARTICLES OF ASSOC OF ISLAND HOTEL COMPANY LTD Exhibit 3.14 BAHAMA ISLANDS. ---------- The Companies Act. ---------- ARTICLES OF ASSOCIATION OF ISLAND HOTEL COMPANY LIMITED. ---------- Explanatory. 1. In these presents, unless there be something in the subject or context inconsistent therewith:- "The company" means the above-named company. "The office" means the registered office for the time being of the company. "The register" means the register of members to be kept pursuant to Section 22 of The Companies Act. "The seal" means the common seal of the company. "Month" means calendar month. "In writing" and "written" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form. "The directors" means the directors for the time being of the company. "Special resolution" and "extraordinary resolution" have the meanings assigned thereto respectively by The Companies Act. Words importing the singular number only include the plural number, and vice versa. Words importing the masculine gender only include the feminine gender. Words importing persons include corporations. 2. In addition to the registered office of the company in the Colony, the company may have an office for the transaction of business at any other place or places. Shares. 3. None of the funds of the company shall be employed in the purchase of, or lent on, shares of the company. -2- 4. The business of the company may be commenced as soon after the incorporation of the company as the directors shall think fit, and notwithstanding that part only of the shares may have been allotted. 5. The shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions, and at such times as the directors think fit. 6. Save as herein otherwise provided, the company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a court of competent jurisdiction, or as by Act required, be bound to recognise any equitable or other claim to or interest in such share on the part of any other person. Certificates. 7. The certificates of title to shares shall be issued under the seal of the company, and shall be signed by the President or the Vice-President, and shall be countersigned by the Secretary or some other person appointed by the directors. 8. Every member shall be entitled to one certificate for the shares registered in his name, or to several certificates each for one or more of such shares, and every certificate of shares shall specify the number and the denoting numbers of the shares in respect of which it is issued, and the amount paid up thereon. 9. If any certificate be worn out or defaced, then upon production thereof to the directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof; and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the directors, and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. -3- Company's Lien on Shares. 10. The company shall have a first and paramount lien upon all the shares registered in the name of each member, and upon the proceeds of sale thereof, for his debts, liabilities, and engagements, solely or jointly with any other person, to or with the company whether the period for the payment, fulfilment, or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the footing and condition that Article 6 hereof is to have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company's lien, if any, on such shares. 11. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think fit, but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member or his personal representatives, and default shall have been made by him or them in the payment, fulfilment, or discharge of such debts, liabilities, or engagements for seven days after such notice. 12. The net proceeds of any such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements of such member and the residue (if any) paid to him, his personal representatives or assigns. 13. Upon any sale for enforcing a lien in purported exercise of the powers hereinbefore given, the directors may cause the purchaser's name to be entered in the register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after his name has been entered in the register in respect of such shares the validity of the sale shall not be impeached by any person, -4- and the remedy of any person aggrieved by the sale shall be in damages only and against the company exclusively. Transfer and Transmission. 14. The instrument of transfer of any share shall be signed by both the transferor and the transferee, and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the register in respect thereof. 15. Shares in the company may be transferred in any form which the directors may think fit to register. 16. The directors may decline to register a transfer of any share on which the company has a lien. They may also decline to register a transfer of any share to any person of whom they do not approve. And they may also decline to register a transfer of any share without assigning any reason therefor. 17. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the directors may require to prove the title of the transferor or his right to transfer the shares. 18. The personal representatives of a deceased member (not being one of several joint holders) shall be the only persons recognised by the company as having any title to the shares registered in the name of such member, and in case of the death of any one or more of the joint registered holders of any registered share, the survivors shall be the only persons recognised by the company as having any title to or interest in such shares. 19. Any person becoming entitled to shares in consequence of the death or bankruptcy of any member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article, or of his title, as the directors think sufficient, may be registered as a member in respect of the shares, or may, subject to the regulations as to transfers hereinbefore contained, transfer -5- such shares. The directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in an ordinary transfer presented for registration. Alteration of Capital. 20. The company may, from time to time, by special resolution, increase the capital by the creation of new shares of such amount as may be deemed expedient. 21. The new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the special resolution creating the same shall direct, and if no direction be given, as the directors shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the company, and with a special or without any right of voitng. 22. If any difficulty shall arise in the apportionment of such new shares, or any of them amongst the members, such difficulty shall, in the absence of direction by the company, be determined by the directors. 23. Except so far as otherwise provided by the conditions of issue, or by these presents, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained with reference to transfer and transmission, forfeiture, lien, and otherwise. 24. The company may, from time to time, by special resolution, consolidate its shares or any of them. Variation of Rights. 25. Whenever the capital of the company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of any Act, be varied or abrogated by special resolution, either with the consent in writing of the holders of three-fourths of the issued shares of the class, or with the sanction of an extraordinary resolution passed at a separate general meeting of such holders (but -6- not otherwise), and may be so varied or abrogated whilst the company is a going concern or in contemplation of a winding up. To every such separate general meeting all the provisions of these presents relating to general meetings of the company, or to the proceedings thereat, shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy one-half in nominal amount of the issued shares of the class, but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares in the class present in person or by proxy may demand a poll, and that such holders shall on a poll have one vote for every share of the class held by them respectively. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided by the terms of issue be deemed to be modified by the creation or issue of further shares ranking pari passu therewith. Borrowing Powers. 26. The directors may, from time to time, at their discretion, raise or borrow, or secure the payment of, any sum or sums of money for the purposes of the company. 27. The directors may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as they think fit, and, in particular, by the issue of bonds, perpetual or redeemable debentures or debenture stock, or any mortgage, charge, or other security on the undertaking or the whole or any part of the property of the company (both present or future), including its uncalled capital for the time being. General Meetings. 28. General meetings of the company may be held anywhere in the world. 29. The first general meeting shall be held at such time (not being more than four months after the registration of the -7- company) as the directors may determine, and at the City of Nassau in the Island of New Providence, or at such other place within the Colony as may be prescribed by the directors. 30. Other general meetings shall be held once at least in every calendar year at such time, not being more than fifteen months after the holding of the last preceding general meeting, and at such place within or without the Colony as may be determined by the directors. At these meetings the Annual Report of the directors shall be presented, the directors elected for the ensuing year and the general business of the company transacted. Such general meetings shall be called "ordinary meetings", and all other meetings of the company shall be called "extraordinary meetings". 31. The directors may, whenever they think fit, convene an extraordinary meeting, and they shall, on the requisition of the holders of a majority in value of the subscribed and issued shares of the company, forthwith proceed to convene an extraordinary meeting of the company. 32. Seven days' notice, specifying the place, day and hour of the meeting, and in case of special business, the general nature of such business shall be given to the members in manner hereinafter mentioned; or in such other manner, if any, as may be prescribed by the company in general meeting; but the non-receipt of such notice by any member shall not invalidate the proceedings at any meeting. 33. All business shall be deemed to be special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of sanctioning a dividend and the consideration of the accounts, balance sheet, and the ordinary reports of the directors and auditors. 34. When all the members in person or by proxy sign the minutes of an ordinary or extraordinary meeting, the same shall be deemed to have been duly held, notwithstanding that the members have not actually come together or that there may have been technical defects in the proceedings. And a resolution -8- in writing in one or more parts, signed by all the members shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. Proceedings at General Meetings. 35. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business except to take measures to obtain a quorum. 36. A quorum shall consist of members present in person or by proxy holding or representing a majority in value of the subscribed and issued shares of the company. 37. The President or the Vice-President shall preside as Chairman at every general meeting of the company. In their absence the members present shall choose some one of their number to be Chairman. 38. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which adjournment took place. 39. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands, and in the case of an equality of votes the Chairman shall, both on a show of hands and on a poll, have a casting vote, in addition to the vote or votes to which he may be entitled as a member. 40. At any general meeting, unless a poll is demanded by the Chairman or by members present in person or by proxy holding one-fourth in value of the subscribed and issued shares of the company, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the books of proceedings of the company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 41. If a poll is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs and either at once, or after an interval or adjournment, or otherwise, and the results of the poll shall -9- be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the same, and such determination made in good faith shall be final and conclusive. Votes of Members. 42. On a show of hands every member present in person or by proxy shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. 43. Votes may be given either personally or by proxy. 44. The instrument appointing a proxy shall be in writing, under the hand of the appointor or of his attorney. Any person appointed a proxy need not be a member of the company. 45. The instrument appointing a proxy shall be deposited with the Secretary before or at the meeting for which it is to be used, and may be permanent or ad hoc. If a proxy is permanent it may be recorded with the Secretary. 46. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation, or transfer shall have been received before the meeting. 47. An instrument appointing a proxy may be in any form which the directors think fit to approve. Directors. 48. The directors of the company shall be elected at the first ordinary meeting of the company after registration, and in every subsequent year at the first ordinary meeting of the year. They shall be elected for a year but shall hold office until their successors are duly elected or until the office is vacated as provided by Article 50. The directors shall not be less than two, nor more than seven in number. A director shall -10- not require any qualification by way of holding any shares or other securities of the company. 49. Until directors are elected, the persons hereinafter named shall be deemed to be directors, that is to say:- Noel Sawyer Roberts, Barbara Marian Gamblin and Douglas Eugene Duncombe. 50. The office of a director shall ipso facto be vacated:- (a) if he becomes bankrupt, or suspends payment, or compounds with his creditors; (b) if he is found lunatic or becomes of unsound mind; (c) if by notice in writing to the company, he resigns his office; (d) if he is requested in writing by members holding or representing more than one-half in value or the subscribed and issued shares of the company to vacate his office. But the continuing directors or sole remaining director may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number, or of summoning a general meeting of the company, but for no other purpose. 51. Any casual vacancy occurring in their body may at any time be filled up by the directors or by the company in general meeting, but any person so chosen shall retain office so long only as the vacating director would have retained the same if no vacancy had occurred. 52. The directors or the company in general meeting shall have power at any time, and from time to time, to appoint any qualified person as a director as an addition to the board, but so that the total number of directors shall not at any time exceed the maximum number fixed as above. But any director so appointed shall hold office only until the next following ordinary general meeting of the company, and shall then be eligible for re-election. -11- Alternate Directors. 53. Any director may at any time appoint any person approved by the directors to be an alternate director of the company, and may at any time remove any alternate director so appointed by him. An alternate director so appointed shall not be entitled to receive any remuneration from the company, nor be required to hold any qualification but shall otherwise be subject to the provisions of these presents with regard to directors. An alternate director shall (subject to his giving to the company an address at which notices may be served upon him) be entitled to receive notices of all meetings of the board, and to attend and vote as a director at any such meeting at which the director appointing him is not personally present, and generally to perform all the functions of his appointor as a director in the absence of such appointor. An alternate director shall ipso facto cease to be an alternate director if his appointor ceases for any reason to be a director, provided that if any director retires but is re-elected by the meeting at which such retirement took effect any appointment made by him pursuant to this Article which was in force immediately prior to his retirement shall continue to operate after his re-election as if he had not so retired. All appointments and removals of alternate directors shall be effected by writing under the hand of the director making or revoking such appointment left at the office. Director or Officer Contracting with Company. 54. No director or officer shall be disqualified by his office from contracting and/or dealing with the company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the company in which any director or officer shall be in any way interested, be avoided, nor shall any director or officer so contracting or being so interested be liable to account to the company for any profit realised by any such contract or arrangement by reason of such director or officer holding that office or the fiduciary relation thereby established, but it is declared that the nature of his interest must be disclosed by him at the meeting of the directors at which the contract or arrangement is determined on, if his interest then exists, or -12- in any other case at the first meeting of the directors after the acquisition of his interest, and having disclosed his interest as aforesaid such director shall be entitled to vote as a director in respect of any contract or arrangement in which he is so interested as aforesaid. Remuneration of Directors. 55. The directors shall be paid out of the funds of the company by way of remuneration for their services such sums as the company in general meeting may from time to time determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine, and in default of such determination within the year equally. The directors shall also be paid their travelling expenses (if any) of attending and returning from board and committee meetings. Proceedings of Directors. 56. The directors may meet together at such place as they may determine for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined, two directors present in person or by their alternates shall be a quorum. 57. The President or any director may at any time convene a meeting of the directors. Every director or alternate who is absent from the Island of New Providence shall not during such absence be entitled to notice of any such meeting. Questions arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote. 58. A meeting of the directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the regulations of the company for the time being vested in or exercisable by the directors generally. 59. The President or the Vice-President shall preside at all -13- meetings of the directors. In the absence of the President and the Vice-President the directors present shall choose some one of their number to be Chairman of the meeting. 60. The directors may with the approval of not less than the number of directors as may from time to time constitute a quorum delegate any of their powers to committees consisting of such member or members of their body as they think fit, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part and either as to persons or purposes; but every committee so formed, shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors. 61. Each such committee may elect a Chairman of its meetings. If no such Chairman is elected, or if at any meeting the Chairman is not present within ten minutes after the time appointed for holding the same, the members present may choose some one of their number to be Chairman of the meeting. 62. Each such committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present, and in the case of an equality of votes the Chairman shall have a second or casting vote. 63. All acts done at any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in office of any such directors or person acting as aforesaid, or that they or any of them were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed or had duly continued in office and was qualified and had continued to be a director, and had been entitled to be a director. 64. When all the directors (in person or by their alternates) sign the minutes of a meeting of the directors the same shall be deemed to have been duly held notwithstanding that the directors have not actually come together or that there may have been technical defects in the proceedings. And a resolution in -14- writing, in one or more parts, signed by all the directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted. Powers of Directors. 65. The management of the business of the company shall be vested in the directors, who, in addition to the powers and authorities by these presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to the provisions of any Act, and of these presents, and to any regulations from time to time made by the company in general meeting, provided that no regulation so made shall invalidate any prior act of the directors which would have been valid if such regulation had not been made. Local Management. 66. (1) The directors may, from time to time, provide for the management of the affairs of the company abroad in such manner as they shall think fit, and the provisions contained in the four next following paragraphs shall be without prejudice to the general powers conferred by this paragraph. (2) The directors may, from time to time, and at any time, establish any local boards or agencies for managing any of the affairs of the company abroad, and may appoint any persons to be members of such local board, or any managers or agents, and may fix their remuneration. (3) The directors may, from time to time, and at any time delegate to any person so appointed any of the powers, authorities, and discretions for the time being vested in the directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and subject to such conditions as the directors may think fit, and the directors may at any time remove any person so appointed, and -15- may annul or vary any such delegation. (4) The directors may, at any time and from time to time, by power of attorney under the seal, appoint any person or persons to be the attorney or attorneys of the company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these presents), and for such period and subject to such conditions as the directors may from time to time think fit; and any such appointment may (if the directors think fit) be made in favour of the members or any of the members of any local board established as aforesaid, or in favour of any company, or of the members, directors, nominees, or managers of any company or firm, or otherwise in favour of any fluctuating body of persons, whether nominated directly or indirectly by the directors; and any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney or attorneys as the directors think fit. (5) Any such delegates or attorneys as aforesaid may be authorised by the directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested in them. 67. The company may exercise the powers conferred by the Companies Seals Act of the Colony. 68. The directors may comply with the requirements of any foreign law which in their opinion it shall in the interests of the company be necessary or expedient to comply with. Officers. 69. The officers of the company shall be elected annually by the company or appointed annually by the directors, and shall consist of a President, a Vice-President, a Secretary, a Treasurer, one or more Assistant Secretaries, and one or more Assistant Treasurers, and such other officers as the company or the directors may from time to time think necessary, and such other officers shall perform such duties as may be prescribed by the directors. They shall hold office until their successors are elected or appointed. But any officer may be removed at any time by the company in general meeting or by the directors. If any office becomes vacant during the year the company in general meeting or the directors may fill the same for the unexpired term. -16- 70. Until officers are elected or appointed the persons hereinafter named shall be deemed to be the officers of the company, that is to say:- Noel Sawyer Roberts, President, Barbara Marian Gamblin, Vice-President, and Douglas Eugene Duncombe, Secretary and Treasurer. 71. Any person may hold more than one of these offices, and no officer need be a member of the company. President. 72. The President shall act as Chairman of all meetings of the members and of the directors. He shall also perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Vice-President. 73. The Vice-President in the absence or disability of the President, may perform the duties and exercise the powers of the President, and shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Treasurer. 74. The Treasurer shall perform such duties as may be prescribed by these Articles, the company in general meeting, or the directors, and if and when directed so to do by the company or the directors, shall keep full and accurate accounts of the receipts and disbursements of the company in books belonging to the company and shall render to the directors at regular meetings of the directors, or whenever they may require it, a statement of the financial condition of the company. Assistant Treasurers. 75. Any one of the Assistant Treasurers, in the absence or disability of the Treasurer, may perform the duties and exercise the powers of the Treasurer, and each Assistant Treasurer shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. -17- Secretary. 76. The Secretary shall attend and keep the minutes of the meetings of the members and of the directors. He shall also summon meetings and keep such other books and records of the company and the directors as may be required by the company in general meeting, or the directors, and perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. Assistant Secretaries. 77. Any one of the Assistant Secretaries, in the absence or disability of the Secretary, may perform the duties and exercise the powers of the Secretary, and each Assistant Secretary shall perform such other duties as may be prescribed by these Articles, the company in general meeting, or the directors. The Seal. 78. The directors shall provide for the safe custody of the seal, and the seal shall never be used except by the authority of a resolution of the directors or a general meeting. Authentication of Deeds and Documents. 79. All deeds executed on behalf of the company may be in such form and contain such powers, provisos, conditions, covenants, clauses, and agreements as the directors, or the company in general meeting, shall think fit, and, in addition to being sealed with the seal, shall be signed by the President or the Vice-President or such other person as the directors or the company in general meeting shall from time to time appoint, and countersigned by the Secretary or an Assistant Secretary or such other person as the directors or the company in general meeting shall from time to time appoint. Dividends. 80. The profits of the company shall be divisible among the members holding shares in proportion to the capital paid up on such shares held by them respectively. -18- 81. The company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits, and may fix the time for payment. 82. No dividend shall be payable except out of the profits of the company. 83. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the company justifies. 84. The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company. 85. Any one of several persons who are registered as the joint holders of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such shares. 86. Unless otherwise directed any dividend may be paid by cheque or warrant sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the register in respect of the joint holding; and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent. 87. Notice of any dividend that may have been declared whether interim or otherwise, shall be given to each member either by advertisement or by notice in manner hereinafter mentioned. 88. No dividend shall bear interest as against the company. 89. Any general meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specific assets, and in particular of paid-up shares, debentures or debenture stock of the company or paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and the directors shall give effect to such resolutions; and, where any difficulty arises in regard to the distribution, they may settle the same as they think expedient. -19- Reserves. 90. The directors may, before recommending any dividend, set aside, out of the profits of the company, such sums as they think proper as a reserve fund to meet contingencies, or for equalising dividends, or for special dividends or bonuses, or for repairing, improving, and maintaining any of the property of the company, and for such other purposes as the directors shall in their absolute discretion think conducive to the interests of the company; and may invest the several sums so set aside upon such investments (other than shares of the company) as they may think fit, and from time to time deal with and vary such investments, and dispose of all or any part thereof for the benefit of the company, and may divide the reserve fund into such special funds as they think fit and employ the reserve fund or any part thereof in the business of the company, and that without being bound to keep the same separate from the other assets. Capitalisation of Profits and Reserves. 91. The company in general meeting may, upon the recommendation of the directors, resolve that it is desirable to capitalise any undivided profits of the company not required for paying the dividends on any shares carrying a fixed cumulative preferential dividend (including profits carried and standing to the credit of any reserve or reserves or other special account), and accordingly that the directors be authorised and directed to appropriate the profits resolved to be capitalised to the members in the proportions in which such profits would have been divisible amongst them had the same been applied in paying dividends instead of being capitalised, and to apply such profits on their behalf, either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by such members respectively, or in paying up in full unissued shares, debentures, or securities of the company of a nominal amount equal to such profits, such shares, debentures, or securities to -20- be alloted and distributed, credited as fully paid up, to and amongst such members in the proportion aforesaid or partly in one way and partly in the other. 92. Whenever such a resolution as aforesaid shall have been passed, the directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares, debentures or securities, if any, and generally shall do all acts and things required to give effect thereto, with full power to the directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit in the case of shares, debentures or securities becoming distributable in fractions, and also to authorise any person to enter on behalf of all the members interested into an agreement with the company providing for the allotment to them respectively, credited as fully paid up, of any further shares, debentures or securities to which they may be entitled upon such capitalisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares, and any agreement made under such authority shall be effective and binding on all such members. Accounts. 93. The directors shall cause true accounts to be kept of the stock-in-trade of the company, of the sums of money received and expended by the company, and the matters in respect of which such receipt and expenditure take place; and of the assets, credits and liabilities of the company. 94. The books of account shall be kept at one of the offices of the company, and subject to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the directors, shall be open to the inspection of the members during hours of business. -21- 95. Once at the least in every year the directors shall, unless waived by a resolution of the members in general meeting, lay before the company in general meeting a statement of the income and expenditure for the past year, made up to a date not more than six months before such meeting. 96. Unless waived by a resolution of the members in general meeting, a balance sheet shall be made out in every year, and laid before the company in general meeting, and such balance sheet shall contain a summary of the property and liabilities of the company. 97. Unless waived by a resolution of the members in general meeting, the directors shall make all necessary arrangements for an annual audit of the books and accounts of the company. Notices. 98. A notice may be served by the company upon any member either personally or by sending it through the post in a prepaid envelope addressed to such member at his last known address. 99. The signature to any such notice to be given by the company may be written, typewritten, or printed. 100. Any notice, if served by post, shall be deemed to have been served at the time when the envelope containing the same would be delivered in the ordinary course of post; and in proving such service it shall be sufficient to prove that the envelope containing the notice was properly addressed, stamped and posted. 101. Notice of meetings of members shall be given by the Secretary at least seven days before the date of such meeting. 102. Notice of special meetings shall state the objects for which the meeting is called. 103. Any member or director may waive the right to receive notices by an instrument in writing signed by him before, at or after any meeting. -22- Indemnity. 104. Every director, manager, auditor, president, vice-president, secretary, treasurer, and other officer or servant of the company shall be indemnified by the company against, and it shall be the duty of the directors out of the funds of the company to pay all costs, losses and expenses which any such officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such director, manager, auditor, president, vice-president, secretary, treasurer, officer or servant as aforesaid, or in any way in the discharge of his duties, including travelling expenses. IN WITNESS WHEREOF We the Subscribers to the Memorandum of Association have hereunto subscribed our names this Sixth day of November, A.D., 1965. /s/ N. S. Roberts - ------------------------------- /s/ B. M. Gamblin - ------------------------------- /s/ W. S. Pearce - ------------------------------- /s/ Irma F. Albury - ------------------------------- /s/ D. E. Duncombe - ------------------------------- Signed by the Subscribers to the Memorandum of Association in the presence of:- /s/F. E. Weech EX-3.15 14 MEMORANDUM OF ASSOC OF PARADISE BEACH INN LTD Exhibit 3.15 THE COMPANIES ACT ============================ Company Limited By Shares ============================ MEMORANDUM OF ASSOCIATION OF PARADISE BEACH INN LIMITED ============================ The name of the Company is: "PARADISE BEACH INN LIMITED". The Registered Office of the Company will be situate in the Island of New Providence within the Commonwealth of The Bahamas. The Objects for which the Company is established are:- (l) To carry on the business of hotel, restaurant, cafe, roadhouse, motel, holiday camp, caravan site and apartment-house keepers. (2) To fit up and furnish any property for the purpose of letting the same to visitors or guests whether in single rooms, suites, chalets, caravans, movable structures, cottages or otherwise. (3) To buy, sell (both to persons residing on the company's premises and to non-residents), import, produce, manufacture or otherwise deal in food and food products, meat, groceries, fruits, confectionery wine, spirit, beer and alcoholic beverages, tobacco, druggist supplies, beverages, linen, furniture and furnishings and other articles required in the said businesses. (4) To appropriate any part or parts of the property -2- of the company for the purpose of and to build or let shops, offices, and other places of business and to use or lease any part of the property of the company not required for the purposes aforesaid for any purpose for which it may be conveniently used or let. (5) To carry on the business of theatre ticket agents in all its branches. (6) To carry on business as proprietors of restaurants, hotels, refreshment and tea rooms, cafes and milk and snack bars, tavern, beer-house, and lodging-house keepers, licensed victuallers, wine, beer, and spirit merchants, brewers, maltsters, distillers, importers and manufacturers of aerated, mineral and artificial waters and other drinks, and as caterers and contractors in all their respective branches. (7) To carry on business as bakers, confectioners, tobacconists, butchers, fishmongers, dairymen, grocers, poulterers, greengrocers, farmers, ice merchants and ice-cream manufacturers, and to manufacture, buy, sell, refine, prepare, grow, import and deal in provisions of all kinds, both wholesale and retail and whether solid or liquid. (8) To establish and provide all kinds of facilities and attractions for customers and others; and in particular, reading, writing and smoke rooms, lockers and safe deposits, telephones, telegraphs, clubs, stores, shops and lavatories. (9) To carry on all or any of the businesses of dry cleaners, launderers, dyers, tinters, bleachers, and laundry sundriesmen and the business of repairing tailors and a valeting service; to dye, -3- colour, bleach, size, wash, clean, dry, iron, press, disinfect, renovate, waterproof, and prepare for use, all manner of fibrous substances, articles of wearing apparel, household, domestic, or other linen, silk, cotton, woollen and fibrous goods, clothing and fabrics of every description, upholstery, carpets, furniture, and all other kinds of articles, domestic or otherwise. (10) To carry on all or any of the businesses of manufacturers and merchants of, agents for, and dealers in chemicals, dyestuff, acids, soaps, scouring powders, disinfectants, and dyeing, bleaching, cleaning, dressing, finishing and other plant, machinery, and apparatus; and to manufacture, buy, sell and deal in all materials, articles, and things capable of being used for the purposes of the above-mentioned businesses or any of them, or likely to be required by any of the customers of or persons dealing with the company. (11) To carry on all or any of the business of entertainment promoters, sports promoters, artistes, managers and artistes' personal representatives in all or any spheres of entertainment and sport. (12) To provide on such terms as the company may deem expedient all or any of the management, secretarial, advertising, publicity, accountancy, personal and social facilities and services required or used in connection with their professional engagements by artistes and others engaged in theatrical, film, radio, television entertainment or sporting activities. (13) To acquire copyrights, rights of production or presentation, licences and privileges of any sort likely to be conducive to the objects of the -4- (14) To employ persons to write, compose, or adapt plays, films, radio and television productions, sketches, songs, music and dances. (15) To print, publish, or cause to be printed or published any play, film, song music or words of which the company has a copyright or right to publish and to sell and distribute and deal with any matter so printed as the company may think fit and to grant licences or rights in respect of any property of the company or any other person or persons firm or company. (16) To enter into agreements with authors or other persons for the presentation of films, radio and television productions, musical compositions, plays, and other dramatic and musical entertainments in the Commonwealth of The Bahamas and elsewhere as well as for the foreign and commonwealth rights. (17) To carry on the business or businesses of music printers, copyists, engravers, lithographers, publishers, arrangers, booksellers, bookbinders, publishers' remaindermen, scenic artists, art decorators, contractors for the supply of scenery and the erection and fitting up of temporary or permanent stages, theatres or halls. (18) To carry on the business or businesses of literary, theatrical, advertising, publicity, press and employment agents and to undertake and execute any agency or agencies, and in particular for authors, dramatists, composers, actors, musicians, singers, entertainers, theatre proprietors and managers, film and television producers or others, as may be thought desirable. (19) To carry on the business or businesses of producers and presenters of and dealers in plays, revues, -5- opera, ballet, pantomimes, pageants, musical and dramatic works, and amusements and entertainments of all kinds in connection with the theatre, cinema, ice rinks, variety stage, music halls, radio, television, and other means of transmitting sound or pictorial effects, and to enter into any arrangements for the management, conduct, control and carrying on of any such business or businesses, and for the supply of plays, opera and ballet works, arrangements, dances, ensembles, scripts, librettos, music, artistes, performers, musicians, materials and all other things connected therewith. (20) To carry on the business or businesses of proprietors, lessees, licensees and managers of theatres, cinemas, ice rinks, studios and other buildings and property, and to let and sub-let accommodation therein and to provide for the tenants, hirers and users thereof, upon such terms as may seem to the company expedient, all or any of the machinery, equipment, power, light heat, gas, chattels, effects, raw and other materials, facilities and conveniences necessary or desirable for the purpose to which any such buildings or property or any part thereof may for the time being and from time to time be used by such tenants, hirers and users thereof. (21) To acquire and deal with the property following: (a) The business property and liabilities of any company, firm, or persons carrying on any business within the objects of this company; (b) Lands, buildings, easements, and other interests in real estate; (c) Plant, machinery, personal estate and effects; -6- (d) Patents, patent rights or inventions, copyrights, designs, trademarks or secret processes; (e) Shares or stock or securities in or of any company or undertaking the acquisition of which may promote or advance the interest of this company; (22) To perform or do all or any of the following operations acts or things: (a) To pay all the costs charges and expenses of the promotion and establishment of the company; (b) To sell, let, dispose of or grant rights over all or any property of the company; (c) To erect buildings, plant and machinery for the purposes of the company; (d) To make experiments in connection with any business of the company and to protect any inventions of the company by letters patent or otherwise; (e) To grant licences to use patents, patent rights or inventions, copyrights, designs, trademarks, or secret processes of the company; (f) To manufacture plant, machinery, tools, goods and things for any of the purposes of the business of the company; (g) To draw accept and negotiate bills of exchange, promissory notes, and other negotiable instruments; (h) To underwrite the shares, stocks or securities of any other company and to pay underwriting commissions and brokerage -7- on any shares, stock or securities issued by this company; (i) To borrow money or to receive money on deposit either without security or secured by debentures, debenture stock (perpetual or terminable), mortgage, or other security charged on the undertaking or on all or any of the assets of the company, including uncalled capital; (j) To lend money, with or without security, and to invest money of the company in such manner (other than in the shares of this company) as the directors think fit; (k) To enter into arrangements for joint working in business or for sharing profits, or for amalgamation with any other company, firm or person carrying on business within the objects of this company; (l) To promote companies; (m) To sell the undertaking and all or any of the property of the company for cash, or stock, shares, or securities of any other company, or for other consideration; (n) To provide for the welfare of persons employed or formerly employed by the company, or any predecessors in business of the company, and the wives, widows, and families of such persons by grants of money pensions or other aid or otherwise as the company shall think fit; (o) To subscribe to, or otherwise aid, benevolent, charitable, national or other institutions, or objects of a public character, or which have any moral or other claims to support or aid the company by reason of the nature or the locality of its operations or otherwise; -8- (p) To distribute in specie assets of the company properly distributable amongst its members; (23) To do all or any of the things hereinbefore authorised either alone, or in conjunction with, or by or through factors, trustees, or agents; (24) To do all such other things as are incidental or which the company may think conducive to the attainment of the above objects or any of them. 4. The liability of the members is limited. 5. The Share Capital of the Company is $5,000.00 divided into 5,000 shares of $1.00 each, with power to increase or reduce the said capital, and to divide the shares in the capital for the time being, whether original or increased, into several classes, and attach thereto respectively any preferential, deferred, qualified, or special rights, privileges or conditions whether as to voting or otherwise, and to modify or deal with in the manner mentioned in Clause 28a of the accompanying Articles of Association but not otherwise, any rights for the time being attached to any class or classes of shares in the Company so that Clause 28a of the said Articles of Association shall be deemed to be incorporated herein and have effect accordingly. WE, the several persons whose names and addresses are subscribed, are desirous of being formed into a company, in pursuance of this Memorandum of Association, and we respectively agree to take the Number of Shares in the capital of the company set opposite our respective names:- EX-3.16 15 ARTICLES OF ASSOC OF PARADISE BEACH INN LTD Exhibit 3.16 Bahama Islands ----------------- Articles of Association of ----------------- PARADISE BEACH INN LIMITED ************************** The Companies Act Company limited by Shares ----------------- 1. In the interpretation of these presents, unless there be something in the subject or context inconsistent therewith: "the Act" means The Companies Act of the Bahamas as amended from time to time; "Special Resolution" and "Extraordinary Resolution" have the meanings assigned thereto respectively by The Companies Act; "the Directors" means the Directors for the time being; "the Office" means the registered office for the time being of the Company; "the Register" means the register of members to be kept pursuant to Section Twenty-two of The Companies Act; "month" means calendar month; "in writing" and "written" include printing, lithography and other modes of representing or reproducing words in a visible form. Words importing the singular number only include the plural number and vice versa; Words importing persons include corporations. 2. None of the funds of the Company shall be lent on or employed in the purchase shares of the Company. 3. The business of the Company may be commenced as soon after the incorporation of the Company as the Directors or the subscribers to the Memorandum of Association shall think fit. REGISTERED SHARES 4. The whole of the unissued shares of the Company for the time being shall be under the control of the Directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the Directors think fit. Subject to the provisions of Section 30F of the Act, any preference shares may be issued on the terms that they are, or at the option of the Company are liable, to be redeemed on such terms and in such manner as the Company before the issue of the shares may by Special Resolution determine. 5. Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not, except as ordered by a Court of competent jurisdiction or as by Act required, be bound to recognise any equitable or other claim to or interest in such share on the part of any other person. 6. All the shares in the Company shall be numbered in regular series; and every surrendered share shall continue to bear the number by which the same was originally distinguished. 7. If several persons are registered as joint holders of any shares they shall be severally as well as jointly liable for any liability in respect of such shares, but the first named upon the Register shall, as regards service of notices, be deemed the sole owner thereof. Any of such persons may give effectual receipt for dividend. 8. For the purposes of the quorum, joint holders of any voting shares shall be considered as one number. 9. The certificate of title to shares shall be issued under the seal of the Company and signed by a Director or, if appointed, the President or a Vice-President and counter-signed by the Secretary or some other person appointed by the Directors. 10. Every member shall be entitled to one certificate for all the shares registered in his name or to several certificates, each for one or more of such shares. Every certificate of shares shall specify the number and denoting numbers of the shares in respect of which it is issued and the amount paid up thereon. 11. If any certificate be worn out or defaced then, upon production thereof to the Directors, they may order the same to be cancelled and may issue a new certificate in lieu thereof; and if any certificate be lost or destroyed then, upon proof thereof to the satisfaction of the Directors and on such Indemnity as the Directors may deem adequate being given, a new certificate in lieu thereof shall be given to the parties entitled to such lost or destroyed certificate. 2 12. The certificate of shares registered in the names of two or more persons shall be delivered to the person first named on the Register. TRANSFER OF REGISTERED SHARES 13. The instrument of transfer (which need not be under Seal) of any share in the Company shall be executed by both the transferor and the transferee and the transferor shall be deemed to remain a holder of such share until the name of the transferee is entered in the Register in respect thereof. 14. Subject to such restrictions contained in these regulations as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the Directors may approve. 15. The Directors may decline to register any transfer of shares without assigning any reason therefor. 16. No transfer shall be made to an infant or to a person of unsound mind. 17. The transfer books and the Register may be closed at such times and for such periods as the Directors may from time to time determine. 18. Every instrument of transfer shall be left at the Office of the Company for registration, accompanied by the certificate or certificates covering the shares to be transferred and such other evidence as the Directors may require to prove the title of the transferor or his right to transfer the shares. TRANSMISSION OF REGISTERED SHARES 19. The legal representatives of a deceased member (not being one of several joint holders) shall be the only persons recognised by the Company as having any title to his shares and, in case of the death of any one or more of the joint holders of any registered shares, the survivor or survivors shall be the only person or persons recognised by the Company as having any title to or interest in such shares. 20. Any person becoming entitled to any shares in consequence of the death of any member or in any other way than by transfer may, with the consent of the Directors and upon the production of such evidence as may from time to time be required by the Directors, be registered as a member or, subject to the provisions as to transfers hereinbefore contained, may transfer such shares to some other person by executing to the latter an instrument of transfer. SHARE WARRANTS 21. The Company, with respect to fully paid-up shares or stock, may issue warrants (hereinafter called share warrants), stating that the bearer is entitled to the shares or stock therein specified, and may provide by coupons or otherwise for the payment of future dividends on the shares or stock included in such warrants. 22. A share warrant shall entitle the bearer of such warrant to the shares or stock specified in it and such shares or stock may be transferred by the delivery of such share warrant. 23. The Directors may determine and from time to time vary the conditions upon which share warrants shall be issued and, in particular, upon which a new share warrant or coupon will be issued in the place of one worn out, defaced, lost, or destroyed; upon which the bearer of a share warrant shall be entitled to attend and vote at general meetings; and upon which a share warrant may be surrendered and the name of the holder entered in the Register in respect of the shares or stock therein specified. Subject to such conditions, and to these presents, the bearer of a share warrant shall be a member to the full extent. The holder of a share warrant shall be subject to the conditions for the time being in force, whether made before or after the issue of such warrant. INCREASE OF CAPITAL 24. The members may from time to time by Ordinary Resolution increase the capital of the Company by the creation and issue of new shares of such amount as may be deemed expedient. 25. The new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as by the Ordinary Resolution creating the same shall be directed and, if no direction be given, as the Directors may determine and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company and with a special or without any right of voting. 26. Subject to any direction to the contrary that may be given by the meeting sanctioning the increase of capital, all new shares of whatever kind shall be offered to the members in proportion to the existing shares held by them and such offer shall be made by notice specifying the number of shares to which the member is entitled and limiting a time within which the offer, if not accepted, will be deemed to be declined and, after the expiration of such time or on the receipt of an intimation from the member to whom such notice is given that he declined to accept the shares so offered, the Directors may dispose of the same in such manner as they think most beneficial to the Company. 27. Except so far as is otherwise provided by the conditions of issue or by these presents, any capital raised by the creation and issue of new shares shall be considered part of the original capital and shall be subject to the provisions of these Articles herein contained. 3 28. If, owing to an inequality in the number of new shares to be issued and the number of shares held by members entitled to have the offer of such new shares, any difficulty shall arise in the apportionment of such new shares, or any of them, amongst the members, such difficulty shall, in the absence of direction by the meeting sanctioning the increase of capital, be determined by the Directors. MODIFICATION OF RIGHTS 28(a) Whenever the capital, by reason of the issue of Preference shares or otherwise, is divided into different classes of shares, all or any of the rights and privileges attached to each class may be modified, commuted, affected, abrogated or dealt with either with the consent in writing of the holders of a majority in nominal value of the issued shares of the class, or the sanction of an extraordinary resolution passed at a separate general meeting of the holders of shares of that class. All the provisions hereinafter contained as to general meetings, shall, mutatis mutandis, apply to every such meeting but so that the Quorum thereof shall be members holding or representing by proxy one-tenth in nominal value of the issued shares of the class, (provided that if any adjourned meeting of such holders a quorum as above defined is not present those members who are present in person or by proxy shall be a quorum) and that the holders of shares of the class shall, on a poll, have one vote for every share of the class held by them respectively. This Article is not to derogate from any power the Company would have had if this Article were omitted. ALTERATIONS OF CAPITAL 29. The members may by Ordinary Resolution (a) consolidate and divide all or any of the share capital into shares of larger amount than its existing shares; (b) convert all or any of the paid-up shares into stock and re-convert that stock into paid-up shares of any denomination; (c) subdivide the shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association, so however that in the subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; or (d) cancel shares which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled and may by Special Resolution (e) subject to confirmation by the Court reduce its share capital and any capital redemption reserve fund in any manner and with and subject to any incident authorised and consent required by Law. BORROWING POWERS 30. The Directors may from time to time, at their discretion, raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. 31. The Directors may raise or secure the payment or repayment of such money in such manner and upon such terms and conditions in all respects as they think fit and in particular by the issue of bonds, mortgages, debentures or debenture stock perpetual or otherwise, notes or other obligations of the Company charged upon all or any part of the property of the Company (both present and future). 32. Debentures, debenture stock and other securities may be made assignable, free from any equities, between the Company and the person to whom the same may be issued. GENERAL MEETINGS OF MEMBERS 33. The first annual general meeting of the members shall be held at such time (not being more than four months after the registration of the Company) as the subscribers to the Memorandum of Association may determine in the City of Nassau in the Island of New Providence or at such other place as may be prescribed by the subscribers to the Company's Memorandum of Association. 34. Subsequent annual general meetings of the members shall be held in each and every year at the Office of the Company or at such other place as may be prescribed by the Directors. At these meetings inter alia the election of Directors and the ordinary business of the Company shall be transacted. 35. All other meetings of the members of the Company shall be extraordinary general meetings. 36. The Directors may, whenever they think fit, and they shall, upon requisition made in writing by members owning not less than one-fifth of the number of issued shares of the Company, convene an extraordinary general meeting. 37. Any such requisition shall express the object of the meeting required and shall be signed by the members making the same and shall be sent by post to or delivered at the Office of the Company. 38. Upon the receipt of such requisition, the Directors shall forthwith proceed to convene an extraordinary general meeting. If they do not proceed to convene the same within twenty-one days from the date of the receipt of the requisition, the requisitionists, or any other members being the owners of not less than one-fifth in number of the issued shares of the Company, may themselves convene a meeting at the Office of the Company or at such other place as they may determine. 39. Seven days notice at the least of all meetings specifying the place, the day and the hour of meeting and in case of special business the general nature of such business shall be given to the members in manner hereinafter mentioned or in such manner, if any, as may be prescribed by the members in general meeting; but the non-receipt of such notice by any member shall not invalidate the proceedings at any meeting. 40. General meetings of members, both annual and extraordinary, may be held without previous notice if all members entitled to be present are present in person or by proxy or waive notice of such meeting in writing. 41. All business that is transacted at an extraordinary general meeting and all that is transacted at an annual general meeting, with the exception of the sanctioning of a dividend, the consideration of the accounts, balance sheet, the Annual Report of the Directors, the Auditors' Report, the election of Directors and the fixing of their remuneration, the appointment of, and the fixing of the remuneration of, the Auditors, shall be deemed to be special. 4 42. When all members entitled to be present and vote sign either personally or by proxy the minutes of an annual general or an extraordinary general meeting, the same shall be deemed to have been duly held notwithstanding that the members have not actually come together or that there may have been technical defects in the proceedings and a resolution in writing signed by all the members aforesaid shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. PROCEEDINGS AT GENERAL MEETINGS OF MEMBERS 43. No business shall be transacted at any general meeting of the members unless a quorum is present. A quorum shall consist of two members, present in person or by proxy, together holding or representing sixty per centum or more of the issued voting capital of the Company. 44. If, within one hour from the time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week at the same time and place; and if at such adjourned meeting a quorum is not present, those members who are present shall be a quorum and may transact the business for which the meeting was called. 45. The Chairman of the Board of Directors, if any, shall preside as Chairman at every meeting of the members or, if there is no such Chairman, the Directors present shall elect one of their number to be Chairman of the meeting. 46. In the absence of the Chairman of the Board of Directors, if any, or if no Director is present or no Director is willing to act as Chairman, the members present shall choose one of their number to be Chairman. 47. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 48. Every question submitted to a meeting shall be decided in the first instance by a show of hands and in the case of an equality of votes the Chairman shall, both on a show of hands and at the poll, have a casting vote in addition to the vote or votes to which he may be entitled as a member. 49. At any general meeting of the members unless a poll is demanded by a member present in person or by proxy, a declaration by the Chairman that a resolution has been carried and an entry to that effect in the book of proceedings of the members shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution. 50. If a poll is demanded it shall be taken in such manner as the Chairman directs and the result of such poll shall be deemed to be the resolution of the members. VOTES OF MEMBERS 51. Every member holding voting shares shall either in person or by proxy have one vote on a show of hands and on a poll shall have one vote for every voting share held. Where a corporation, being a member, wishes to be present, it must be represented by a proxy; such proxy shall be entitled to vote for such corporation on a show of hands and also on a poll. 52. If any member is a lunatic or idiot, he may vote by any person appointed by a Court of competent jurisdiction as his legal curator. 53. Votes may be given either personally or by permanent or ad hoc proxy. 54. If there be joint registered holders of any shares, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding. 55. No member shall be entitled to be present or to vote on any question, either personally or by proxy or as a proxy for another member, at any meeting or upon a poll or be reckoned in a quorum, whilst any sum shall be due and payable to the Company in respect of any of the shares of such member. 56. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney or, if such appointor is a corporation with a Common Seal, under such Common Seal or, if such corporation has not by its regulations any such Seal, then in such manner as may be acceptable to the Directors. A proxy need not be a member of the Company. 57. The instrument appointing a proxy shall be deposited with the Secretary before or at the meeting for which it is to be used and, if permanent, may be recorded with the Secretary. 58. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of the proxy or transfer of the shares in respect of which the vote is given, provided no intimation in writing of the death, revocation or transfer shall have been received before the meeting. 5 59. An instrument appointing a proxy shall be in the following form or as near thereto as circumstances admit:__ I, _____________________ of __________________ being a member of __________________ hereby appoint __________________ of __________________ as my proxy to vote for me and on my behalf at the (annual general or extraordinary general as the case may be) meeting of the members to be held on the _______ day of __________ and at any adjournment thereof. As witness my hand this ___________ day of ___________ Signed by the said OFFICERS 60. The Officers of the Company shall be appointed by the members in general meeting or by the Directors and may consist of a President, one or more Vice-Presidents, a Secretary and a Treasurer and such other officers as the members or the Directors may, from time to time think necessary, and such other officers shall perform such duties as may be prescribed by the Directors. They shall hold office until their successors are appointed, but any officer may be removed at any time by the members in general meeting or by the Directors. If any office becomes vacant the members in general meeting or the Directors may fill the same. 61. Any person may hold more than one of these offices and no officer need be a member of the Company. PRESIDENT 62. The President shall perform such duties as may be prescribed by these Articles, the members in general meeting or the Directors. VICE-PRESIDENT 63. A Vice-President, in the absence or disability of the President, may perform the duties and exercise the powers of the President and shall perform such other duties as may be prescribed by these Articles, the members in general meeting or the Directors. TREASURER 64. The Treasurer shall perform such duties as may be prescribed by these Articles, the members in general meeting or the Directors and, if and when directed so to do by the members in general meeting or the Directors, shall keep full and accurate accounts of the receipts and disbursements of the Company and shall render to the Directors at regular meetings of the Directors, or whenever they may require it, a statement of the financial condition of the Company. SECRETARY 65. The Secretary shall attend and keep the minutes of the meetings of the members and of the Directors. He shall also summon meetings and keep such other books and records of the Company and the Directors as may be required by the members in general meeting or the Directors and perform such other duties as may be prescribed by these Articles, the members in general meeting or the Directors. THE SEAL 66. The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of the Directors or of a Committee of the Directors authorised by the Directors for that purpose. Every instrument to which the Seal is to be affixed shall be executed on behalf of the Company by the President or a Vice President or a Director signing the same and affixing thereto the Seal of the Company in the presence of the Secretary or another Director or another Officer who shall sign the instrument as witness: provided that in the case of certificates of title to shares the provisions of Article 9 shall apply. DIRECTORS 67. The first Directors shall be elected by the subscribers to the Memorandum of Association, or by a majority of them, at the first general meeting of the members of the Company after registration. At the annual general meeting of the members to be held in each subsequent year, the Directors holding office shall retire and the members shall elect Directors who shall hold office until the next annual general meeting. The Directors shall be not less than three nor more than seven in number. 68. A retiring Director shall be eligible for re-election. 69. A Director need not be a member of the Company and no shareholding qualification shall be necessary to qualify a person as a Director. 70. The remuneration, if any, of the Directors shall from time to time be determined by the members in general meeting and such remuneration shall be deemed to accrue from day to day. The Directors may also be paid all travelling, hotel and other expenses properly incurred in attending and travelling to and returning from meetings of the Directors or of any committee of the Directors or general meetings of the members or in connection with the business of the Company. 6 71. The office of a Director shall ipso facto be vacated: (a) If he becomes bankrupt or suspends payment to or compounds with his creditors; (b) If he becomes lunatic or of unsound mind or all the other Directors shall have unanimously resolved that he is physically or mentally incapable of performing the functions of a Director. (c) if by notice in writing to the Company he resigns his office; (d) If he fails to make proper disclosure under the provisions of Article 76; (e) if he is removed by Ordinary Resolution of the members. 72. The continuing Directors may act notwithstanding any vacancy in their body. However, so long as their number is reduced below the number fixed by or established pursuant to these Articles as the necessary quorum of Directors, the continuing Director or Directors may act for the purposes of increasing the number of Directors to the number necessary to constitute a quorum or to the minimum number fixed by Article 67 or of summoning a general meeting of the shareholders, but for no other purpose. 73. Any casual vacancy in the Board of Directors may at any time be filled by the Directors but every person so chosen shall retain office so long only as the vacating Director would have retained the same if no vacancy had occurred. 74. The Directors or the members in general meeting shall have power at any time, and from time to time, to elect any person as a Director as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed as above. ALTERNATE DIRECTORS 75. Any Director may at any time appoint any person approved by the Directors to be an alternate Director of the Company and may at any time remove any alternate Director so appointed by him. An alternate Director so appointed shall not be entitled to receive any remuneration from the Company but shall otherwise be subject to the provisions of these presents with regard to Directors. An alternate Director shall (subject to his giving to the Company an address at which notices may be served upon him) be entitled to receive notices of all meetings of the Board and to attend and vote as a Director at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as a Director in the absence of such appointor. An alternate Director shall ipso facto cease to be an alternate Director if his appointor ceases for any reason to be a Director, provided that if any Director retires but is re-elected by the meeting at which such retirement took effect any appointment made by him pursuant to this Article which was in force immediately prior to this retirement shall continue to operate after his re-election as if he had not so retired. All appointments and removals of alternate Directors shall be effected by writing under the hand of the Director making or revoking such appointment and lodged with the Secretary at the Company's office. DIRECTOR OR OFFICER CONTRACTING WITH COMPANY 76. No Director or Officer shall be disqualified by his office from contracting and/or dealing with the Company as vendor, purchaser or otherwise; nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company in which any Director or Officer shall be in any way interested, be avoided; nor shall any Director or Officer so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director or Officer holding that office or the fiduciary relationship thereby established, but it is declared that the nature of his interest must be disclosed by him at the meeting of the Directors at which the contract or arrangement is determined on, if his interest then exists, or in any other case at the first meeting of the Directors after the acquisition of his interest. A Director, having disclosed his interest as aforesaid, shall be entitled to vote as a Director in respect of any contract or arrangement in which he is so interested as aforesaid. Failure to make such disclosure shall entail vacation of office under the provisions of Article 71. MANAGING DIRECTOR 77. The members in general meeting or the Directors may from time to time appoint one or more of the Directors to be a Managing Director or Managing Directors of the Company either for a fixed term or without any limitation as to the period for which he or they is or are to hold such office and may from time to time remove or dismiss him or them from office and appoint another or others in his or their place or places. 78. The remuneration of a Managing Director shall from time to time be fixed by the Directors and may be by way of salary or commission or participation in profits or by any or all of those modes. 79. The Directors may from time to time entrust to and confer upon a Managing Director for the time being such of the powers exercisable under these presents by the Directors as they think fit and may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as they think expedient; and they may confer such powers either collaterally with, or to the exclusion of, and in substitution for all or any of the powers of the Directors in that behalf; and may from time to time revoke, withdraw or vary all or any of such powers. 7 PROCEEDINGS OF DIRECTORS 80. The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings and proceedings as they think fit and may determine the quorum necessary for the transaction of business. Until otherwise determined, two Directors shall be a quorum. It shall not be necessary to give notice of a meeting of Directors to a Director who is not within the Bahama Islands. 81. The Chairman of the Board of Directors, if any, shall preside at all meetings of the Directors or, if there is no such Chairman, the Directors present shall choose some one of their number to be the Chairman of the meeting. In the absence of the Chairman of the Board of Directors, the Directors present shall choose some one of their number to be Chairman of the meeting. 82. A meeting of the Directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities. powers and discretions by or under the regulations of the Company for the time being vested in or exercisable by the Directors generally. 83. A Director may at any time convene a meeting of the Directors. Questions arising at any meeting shall be decided by a majority of votes and in case of an equality of votes the Chairman shall have a second or casting vote. 84. The Directors may delegate any of their powers to committees each consisting of two or more members of their body as they think fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be made or imposed upon it by the Directors. 85. The meetings and proceedings of any such committee shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Directors, so far as the same are applicable thereto, and not superseded by any regulations made by the Directors under the last preceding clause. 86. All acts done by any meeting of the Directors, or of a committee of Directors or by any person acting as a Director, shall, notwithstanding that it afterwards be discovered that there was some defect in the election of any such Director or persons acting as aforesaid or that they or any of them were or was disqualified, be as valid as though every such person had been duly elected and was qualified to be a Director. 87. A resolution in writing signed by all the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted. 88. If any Director, being willing, shall be called upon to perform extra services or to make any special exertions in going or residing abroad or otherwise for any of the purposes of the Company, the Company shall remunerate the Director for so doing by a fixed sum or by percentage of profits or otherwise as may be determined by the Directors, and such remuneration may be either in addition to or in substitution for his share in the remuneration above provided. POWERS OF DIRECTORS 89. The management of the business of the Company shall be vested in the Directors who, in addition to the powers and authorities by these presents or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by Act expressly directed or required to be exercised or done by the members in general meeting but subject nevertheless to the provisions of any Act and of these presents and to any regulations from time to time made by the members in general meeting, provided that no regulations so made shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. 90. Without prejudice to the general powers conferred by the last preceding clause and the other powers conferred by these presents, it is hereby expressly declared that the Directors shall have the following powers, that is to say:__ (1) To pay the costs, charges and expenses preliminary and incidental to the promotion, formation, establishment and registration of the Company; (2) To purchase or otherwise acquire for the Company any property (real or personal), rights or privileges which the Company is authorised to acquire at such price and generally on such terms and conditions as they think fit. (3) To sell, exchange or otherwise for valuable consideration to dispose of all or any of the property (real or personal) of the Company and to sign, seal, execute and deliver conveyances, transfers and assignments of any property so sold, exchanged or otherwise disposed of; (4) At their discretion to pay for any property, rights or privileges acquired by or services rendered to the Company either wholly or partially in cash or in shares, bonds, debentures or other securities of the Company; and any such shares shall be issued as fully paid up: and any such bonds, debentures or other securities may be either specifically charged upon all or any part of the property of the Company or not so charged; (5) To secure fulfilment of any contracts or engagements entered into by the Company by mortgage or charge of all or any of the property of the Company for the time being or in such other manner as they think fit; (6) To institute, conduct, defend, compound or abandon any legal proceedings by and against the Company or its officers or otherwise concerning the affairs of the Company: and also to compound and allow time for payment or satisfaction of any debts due and of any claims or demands by or against the Company; 8 (7) From time to time to provide for the management of the affairs of the Company abroad in such manner as they think fit and in particular by power of attorney under seal to appoint any persons to be attorneys or agents of the Company with such powers (including power to subdelegate) and upon such terms as may be thought fit. (8) To invest and deal with any of the moneys of the Company not immediately required for the purposes of the Company and upon such securities and in such manner as they may think fit and from time to time to vary or realise such investments; (9) To enter into all such negotiations and contracts and rescind and vary all such contracts and execute and do all such acts, deeds and things in the name of and on behalf of the Company as they may consider expedient for or in relation to any of the matters aforesaid or otherwise for the purposes of the Company. DIVIDENDS 91. Subject to the rights and interests of any other class of shareholder that may be created, the profits of the Company shall be divisible among the ordinary share holders in proportion to the capital paid up on the shares held by them respectively. 92. The Directors may from time to time declare and pay the members entitled thereto such interim dividends as appear to the Directors to be justified by the profits of the Company. 93. The Directors may recommend, and with the sanction of and declaration by the members in general meeting, pay a final dividend to the members entitled thereto. 94. No dividend shall be payable except out of the profits of the Company. 95. No dividend shall bear interest as against the Company. 96. Unless otherwise directed, any dividend may be paid by cheque or warrant or bank transfer order and in the case of a cheque or warrant may be sent through the post to the registered address of the member entitled thereto or, in the case of joint holders, to the registered address of that holder, whose name stands first on the Register in respect of the joint holding, and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent. RESERVES 97. The Directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve fund to meet contingencies or for equalising dividends or for special dividends or bonuses or the redemption of preference shares or for repairing, improving and maintaining any of the property of the Company and for such other purposes as the Directors shall in their absolute discretion think conducive to the interests of the Company and may invest the several sums so set aside upon such investments as they may think fit and from time to time deal with and vary such investments and dispose of all or any part thereof for the benefit of the Company and may divide the reserve fund into such special funds as they think fit and employ the reserve fund or any part thereof in the business of the Company and that without being bound to keep the same separate from the other assets. CAPITALISATION OF PROFITS AND RESERVES 98. The members in general meeting may, upon the recommendation of the Directors, resolve by Ordinary Resolution that it is desirable to capitalise any undivided profits of the Company not required for paying the dividends on any shares carrying a fixed cumulative preferential dividend (including profits carried and standing to the credit of any reserve or reserves or other special account) and accordingly that the Directors be authorised and directed to appropriate the profits resolved to be capitalised to the members in the proportions in which such profits would have been divisible amongst them had the same been applied in paying dividends instead of being capitalised and to apply such profits on their behalf in paying up in full unissued shares, debentures or securities of the Company of a nominal amount equal to such profits, such shares, debentures or securities to be allotted and distributed, credited as fully paid up, to and amongst such members in the proportion aforesaid or partly in one way and partly in the other. Provided that the capital redemption reserve fund may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to members as fully paid. 99. Whenever such a resolution as aforesaid shall have been passed, the Directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby and all allotments and issues of fully paid shares, debentures or securities, if any, and generally shall do all acts and things required to give effect thereto with full power to the Directors to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit in the case of shares, debentures or securities becoming distributable in fractions and also to authorise any person to enter, on behalf of all the members interested, into an agreement with the Company providing for the allotment to them respectively, credited as fully paid up, at any further shares, debentures or securities to which they may be entitled upon such capitalisation; and any agreement made under such authority shall be effective and binding on all such members. 9 ACCOUNTS 100. (1) The Directors shall cause true accounts of the receipts and disbursements of cash and of the assets and liabilities of the Company to be kept at the Office of the Company or at such other place as the Directors may from time to time appoint and, subject to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the Directors, such accounts shall be open to the inspection of the members during the hours of business. (2) Unless waived by an Ordinary Resolution of the members in general meeting the Directors shall lay before the members in general meeting once in every calendar year:__ (a) a Statement of Income and Expenditure for the past year, and (b) a Balance Sheet containing a summary of the assets and liabilities of the Company both such Statement and Balance Sheet being made up to a date not more than six months before such meeting; provided that no such Statement or Balance Sheet need be so laid before the members until the annual general meeting of the members following the first general meeting held by the subscribers to the Memorandum of Association and such statement when so laid shall cover the total period from the date of incorporation of the Company. AUDIT 101. The Directors shall make all necessary arrangements for the audit from time to time as they see fit of the books and accounts of the Company. NOTICES 102. A notice may be served by the Company upon any member either personally or by sending it through the post in a prepaid letter addressed to such member at his registered address. 103. All notices directed to be given to the members shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first on the Register; and the notice so given shall be sufficient notice to all the holders of such shares. 104. The signature to any such notice to be given by the Company may be written, typewritten or printed. 105. Any notice, if served by post, shall be deemed to have been served at the time when in the ordinary course of post the letter containing the same would be delivered; and in proving such notice it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the post office. 106. Any member or Director may waive the right to receive notices by an instrument in writing signed by him before, at or after any meeting. INDEMNITY 107. Save and except so far as the provision of this Article shall be avoided by any provision of the Act, the Directors, Secretary and other Officers for the time being of the Company and the Trustees (if any) for the time being acting in relation to any of the affairs of the Company and every one of them and every one of their heirs, executors and administrators shall be indemnified and secured harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their or any of their heirs, executors or administrators shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty or supposed duty in their respective offices or trusts except such (if any) as they shall incur or sustain through or by their own wilful neglect or default respectively and none of them shall be answerable for the acts, receipts or defaults of the other or others of them or for joining in any receipt for the sake of conformity or for any bankers or other person with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody or for the insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out or invested or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts or in relation thereto except the same shall happen by or through their own wilful neglect or default respectively. EX-3.17 16 MEMORANDUM OF ASSOC OF SUN INTL MAMAGEMENT LTD Exhibit 3.17 MEMORANDUM OF ASSOCIATION OF INTERFUND MANAGEMENT LIMITED INDEX CLAUSE PAGES 1 Name 1 2 Registered Office 1 3 Registered Agent 1 4 General Objects and Powers 1 5 Exclusions 1-2 6 Share Capital 2-3 7 Amendments 3 8 Definitions 4 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (NO 8 of 1984) MEMORANDUM OF ASSOCIATION OF INTERFUND MANAGEMENT LIMITED 1. NAME The name of the company is Interfund Management Limited. 2. REGISTERED OFFICE The Registered Office of the Company will be the offices of Trident Trust Company (B.V.I.) Limited, P.O. Box 146, Road Town, Tortola, British Virgin Islands or such other place within the British Virgin Islands as the Company from time to time may determine by a resolution of directors. 3. REGISTERED AGENT The Registered Agent of the Company will be Trident Trust Company (B.V.I.) Limited or such other qualified person in the British Virgin Islands as the Company from time to time may determine by a resolution of directors. 4. GENERAL OBJECTS AND POWERS The object of the Company is to engage in any act or activity that is not prohibited under any law for the time being in force in the British Virgin Islands including, but not limited to the provision of Management Services. The Company shall have all such powers as are permitted by law for the time being in force in the British Virgin Islands which are necessary or conducive to the conduct, promotion or attainment of the object of the Company. 5. EXCLUSIONS 5.1 The Company has no power to: 5.1.1 carry on business with persons resident in the British Virgin Islands, 1 5.1.2 own an interest in real property situate in the British Virgin Islands, other than a lease referred to in paragraph 5.2.5 of sub clause 5.2, 5.1.3 carry on banking business unless it is licenced to do so under the Banking Act; 5.1.4 carry on business as an insurance or reinsurance company; or 5.1.5 carry on the business of providing the registered office for companies. 5.2 For purposes of paragraph 5.1.1 of sub clause 5.1, the Company shall not be treated as carrying on business with persons resident in the British Virgin Islands if, 5.2.1 it makes or maintains deposits with a person carrying on business within the British Virgin Islands, 5.2.2 it makes or maintains professional contact with solicitors, barristers, accountants, bookkeepers, trust companies, administration companies, investment advisers or other similar persons carrying on business within the British Virgin Islands, 5.2.3 it prepares or maintains books and records within the British Virgin Islands, 5.2.4 it holds, within the British Virgin Islands, meetings of its directors or members, 5.2.5 it holds a lease of property for use as an office from which to communicate with members or where books and records of the Company are prepared or maintained, 5.2.6 it holds shares, debt obligations or other securities in a company incorporated under the International Business Companies Ordinance or under the Companies Act, or 5.2.7 shares, debt obligations or other securities in the Company are owned by any person resident in the British Virgin Islands or by any company incorporated under the International Business Companies Ordinance or under the Companies Act. 6. SHARE CAPITAL 6.1 CURRENCY Shares in the Company shall be issued in the currency of The United States of America. 6.2 AUTHORISED CAPITAL The authorised capital of the Company is US$50,000.00 divided into 50,000 shares of one dollar (US$1.00) par value each. 6.3 CLASSES OF SHARES The shares shall be divided into such number of classes and series as the directors shall by resolution from time to time determine and until so divided shall comprise one class and series. 6.4 RIGHTS, QUALIFICATIONS OF SHARES The directors shall by resolution have the power to issue any class or series of shares that the company is authorised to issue in its capital, original or increased, with or subject to any designations, powers, preferences, rights, qualifications, limitations and restrictions. 6.5 REGISTERED OR BEARER SHARES 6.5.1 The directors are authorised at their discretion to determine by resolution whether shares are to be issued as registered shares or as shares to bearer. 6.5.2 Shares issued as registered shares may be exchanged for shares issued to bearer. Shares issued to bearer may be exchanged for registered shares. 6.5.3 Notice to the holders of shares issued to bearer shall be sent by prepaid registered post addressed to the addressee to which the original bearer shares were despatched and notice to such address shall constitute proper service upon the bearer of such shares. 6.6 TRANSFER OF SHARES Registered shares in the Company may be transferred subject to the prior or subsequent approval of the Company as evidenced by a resolution of directors or by a resolution of members. 7. AMENDMENTS The Company may amend its Memorandum of Association and Articles of Association in any way permitted by the Ordinance by a resolution of members or a resolution of directors. 8. DEFINITIONS The meanings of words in this Memorandum of Association are as defined in the Articles of Association annexed hereto. We, the undersigned of the address stated below for the purpose of incorporating an International Business Company under the laws of the British Virgin Islands hereby subscribe our name to this Memorandum of Association the 27th day of July, 1989 in the presence of the undersigned witness: NAME AND ADDRESS SUBSCRIBER OF WITNESS /s/ Joyce Simon /s/ B. R. Goodman Joyce Simon B.V.I. Company Formations Limited c/o P.O. Box 146, P.O. Box 146, Road Town, Tortola, Wickham's Cay 1, British Virgin Islands. Road Town, Tortola, British Virgin Islands. EX-3.18 17 ARTICLES OF ASSOC OF SUN INTL MANAGEMENT LTD Exhibit 3.18 ARTICLES OF ASSOCIATION OF INTERFUND MANAGEMENT LIMITED CLAUSE INDEX PAGES 1 Interpretation 1-3 2 Registered Shares 3-4 3 Bearer Shares 4-6 4 Shares, Authorised Capital and Capital 7-8 5 Transfer of Shares 8 6 Transmission of Shares 8-9 7 Reduction or Increase in Authorised 9-10 Capital or Capital 8 Meetings and Consents of Members 10-13 9 Directors 13-14 10 Powers of Directors 14-15 11 Proceedings of Directors 15-16 12 Officers 16-17 13 Conflict of Interest 17 14 Indemnification 17-18 15 Seal 18 16 Dividends 19-20 17 Accounts 20 18 Audit 20-21 19 Notices 21 20 Pension and Superannuation Funds 21 21 Arbitration 21-22 22 Voluntary Winding Up and Dissolution 22 23 Continuation 22 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (NO 8 OF 1984) ARTICLES OF ASSOCIATION OF INTERFUND MANAGEMENT LIMITED 1. INTERPRETATION In these Articles, if not inconsistent with the context, the words and expressions standing in the first column of the following table shall bear the meanings set opposite them respectively in the second column thereof. Expressions: Meanings: 1.1 capital The sum of the aggregate par value of all outstanding shares with par value of the Company and shares with par value held by the Company as treasury shares plus 1.1.1 the aggregate of the amounts designated as capital of all outstanding shares without par value of the Company and shares without par value held by the Company as treasury shares, and 1.1.2 the amounts as are from time to time transferred from surplus to capital by a resolution of directors. 1.2 member A person who holds shares in the Company. 1.3 person An individual, a corporation, a trust, the estate of a deceased individual, a partnership or an unincorporated association of persons. 1.4 resolution of 1.4.1 A resolution approved at a duly constituted directors meeting of directors or of a committee of directors of the company, by affirmative vote of a simple majority or such larger majority as may be specified in the Articles, of the directors present at the meeting who voted and did not abstain; or 1.4.2 a resolution consented to in writing by an absolute majority, or such larger majority as may be specified in the Articles, of all the directors or of all the members of the committee, as the case may be; 1 1.4.3 where a director is given more than one vote in any circumstances, he shall in the circumstances be counted for the purposes of establishing majorities by the number of votes he casts. 1.5 resolution of 1.5.1 A resolution approved at a duly constituted members meeting of the members of the company by the affirmative vote of 1.5.1.1 a simple majority, or such larger majority as may be specified in the Articles, of the votes of the shares that were present at the meeting and entitled to vote thereon and were voted and did not abstain, or 1.5.1.2 a simple majority, or such larger majority as may be specified in the Articles, of the votes of each class or series of shares which were present at the meeting and entitled to vote thereon as a class or series and were voted and not abstained and of a simple majority, or such larger majority as may be specified in the Articles, of the votes of the remaining shares entitled to vote thereon that were present at the meeting and were voted and not abstained; or 1.5.2 a resolution consented to in writing by 1.5.2.1 an absolute majority, or such larger majority as may be specified in the Articles, of the votes of shares entitled to vote thereon, or 1.5.2.2 an absolute majority or such larger majority as may be specified in the Articles, of the votes of series of shares entitled to vote thereon as a class or series and of an absolute majority, or such larger majority as may be specified in the Articles, of the votes of the remaining shares entitled to vote thereon. 1.6 securities Shares and debt obligations of every kind, and options, warrants and rights to acquire shares, or debt obligations. 1.7 surplus The excess, if any, at the time of the determination of the total assets of the Company over the aggregate of its total liabilities, as shown in its books of accounts, plus the Company's capital. 1.8 the Memorandum The Memorandum of Association of the Company as originally framed or as from time to time amended. 1.9 the Ordinance The International Business Companies Ordinance (No. 8 of 1984), as amended. 1.10 the Seal The Common Seal of the Company. 1.11 these Articles These Articles of Association as originally framed or as from time to time amended. 1.12 treasury shares Shares in the Company that were previously issued but were repurchased, redeemed or otherwise acquired by the Company and not cancelled. 1.13 "Written" or any term of like import includes words typewritten, printed, painted, engraved, lithographed, photographed or represented or reproduced by any mode of representing or re-producing words in a visible form, including telex, telegram, cable or other form of writing produced by electronic communication. 1.14 Save as aforesaid any words or expressions defined in the Ordinance shall bear the same meaning in these Articles. 1.15 Whenever the singular or plural number, or the masculine, feminine or neuter gender is used in these Articles, it shall equally, where the context admits, include the others. 1.16 A reference in these Articles to voting in relation to shares shall be construed as a reference to voting by members holding the shares except that it is the votes allocated to the shares that shall be counted and not the number of members who actually voted and a reference to shares being present at a meeting shall be given a corresponding construction. 1.17 A reference to money in these Articles is a reference to the currency of The United States of America unless otherwise stated. 2. REGISTERED SHARES 2.1 The Company shall issue to every member holding registered shares in the Company a certificate signed by a director or officer of the Company and under the Seal specifying the share or shares held by him 3 and the signature of the director or officer and the Seal may be a facsimile. 2.2 Any member receiving a share certificate for registered shares shall indemnify and hold the Company and its directors and officers harmless from any loss or liability which it or they may incur by reason of the wrongful or fraudulent use or representation made by any person by virtue of the possession thereof. If a share certificate for registered shares is worn out or lost it may be renewed on production of the worn out certificate or on satisfactory proof of its loss together with such indemnity as may be required by a resolution of directors. 2.3 If several persons are registered as joint holders of any shares, any one of such persons may be given receipt for any dividend payable in respect of such shares. 3. BEARER SHARES 3.1 Subject to a request for the issue of bearer shares and to the payment of the appropriate consideration for the shares to be issued, the Company may, to the extent authorized by the Memorandum, issue bearer shares to, and at the expense of, such person as shall be specified in the request. The Company may also upon receiving a request in writing accompanied by the share certificate for the shares in question, exchange registered shares for bearer shares or may exchange bearer shares for registered shares. Such request served on the Company by the holder of bearer shares shall specify the name and address of the person to be registered and unless the request is delivered in person by the bearer shall be authenticated as hereinafter provided. Such request served on the Company by the holder of bearer shares shall also be accompanied by any coupons or talons which at the date of such delivery have not become due for payment of dividends or any other distribution by the Company to the holders of such shares. Following such exchange the share certificate relating to the exchanged shares shall be delivered as directed by the member requesting the exchange. 3.2 Bearer share certificates shall be under the Seal and shall carry an identifying number and state that the bearer is entitled to the shares therein specified, and may provide by coupons, talons, or otherwise for the payment of dividends or other monies on the shares included therein to the address to which the bearer shares were originally sent. 3.3 Subject to the provisions of he Ordinance and of these Articles the bearer of a bearer share certificate shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. 3.4 Subject to any specific provisions in these Articles, in order to exercise his rights as a member of the Company, the bearer of a bearer share certificate shall produce the bearer share certificate as evidence of his membership of the Company. Without prejudice to the generality of the foregoing, the following rights may be exercised in the following manner: 3.4.1 for the purpose of exercising his voting rights at a meeting, the bearer of a bearer share certificate shall produce such certificate to the chairman of the meeting; 3.4.2 for the purpose of exercising his vote on a resolution in writing, the bearer of a bearer share certificate shall cause his signature to any such resolution to be authenticated as hereinafter set forth; 3.4.3 for the purpose of requisitioning a meeting of members, the bearer of a bearer share certificate shall address his requisition to the directors and his signature thereon shall be duly authenticated as hereinafter provided; and 3.4.4 for the purpose of receiving dividends, the bearer of the bearer share certificate shall present at such places as may be designated by the directors any coupons or talons issued for such purpose, or shall present the bearer share certificate to any paying agent authorised to pay dividends. 3.5 The signature of the bearer of a bearer share certificate shall be deemed to be duly authenticated if the bearer of the bearer share certificate shall produce such certificate to a notary public or a bank manager or a director or officer of the Company (herein referred to as an "authorised person") and if the authorised person shall endorse the document bearing such signature with a statement 3.5.1 identifying the bearer share certificate produced to him by number and date and specifying the number of shares and the class of shares (if appropriate) comprised therein; 3.5.2 confirming that the signature of the bearer of the bearer share certificate was subscribed in his presence and that if the bearer is representing a body corporate he has so acknowledged and has produced satisfactory evidence thereof; and 3.5.3 specifying the capacity in which he is qualified as an authorised person and, if a notary public, affixing his seal thereto or, if a bank manager, attaching an identifying stamp of the bank of which he is a manager. 3.6 Notwithstanding any other provisions of these Articles, at any time, the bearer of a bearer share certificate may deliver the certificate for such shares into the custody of the Company at its registered office, whereupon the Company shall issue a receipt therefor under the Seal signed by a director or officer identifying by name and address the person delivering such certificate and specifying the date and number of bearer share certificates so deposited and the number of shares comprised therein. Any such receipt may be used by the person named therein for the purpose of exercising the rights 5 vested in the shares represented by the bearer share certificate so deposited including the right to appoint a proxy. Any bearer share certificate so deposited shall be returned to the person named in the receipt or his personal representative if such person be dead and thereupon the receipt issued therefor shall be of no further effect whatsoever and shall be returned to the company for cancellation or, if it has been lost or mislaid, such indemnity as may be required by resolution of directors shall be given to the Company. 3.7 The bearer of a bearer share certificate shall for all purposes be deemed to be the owner of the shares comprised in such certificate and in no circumstances shall the Company or the Chairman of any meeting of members or the Company's registrars or any director or officer of the Company or any authorised person be obliged to inquire into the circumstances whereby a bearer share certificate came into the hands of the bearer thereof, or to question the validity or authenticity of any action taken by the bearer of a bearer share certificate whose signature has been authenticated as provided herein. 3.8 If the bearer of a bearer share certificate shall be a corporation, then all the rights exercisable by virtue of such shareholding may be exercised by an individual duly authorised to represent the corporation but unless such individual shall acknowledge that he is representing a corporation and shall produce upon request satisfactory evidence that he is duly authorised to represent the corporation, the individual shall for all purposes hereof be regarded as the holder of the shares in any bearer share certificate held by him. 3.9 The directors may provide for payment of dividends to the holders of bearer shares by coupons or talons and in such event the coupons or talons shall be in such form and payable at such time and in such place or places as the directors shall resolve. The Company shall be entitled to recognise the absolute right of the bearer of any coupon or talon issued as aforesaid to payment of the dividend to which it relates and delivery of the coupon or talon to the Company or its agents shall constitute in all respects a good discharge of the Company in respect of such dividend. 3.10 If any bearer share certificate, coupon or talon be worn out or defaced, the directors may, upon the surrender hereof for cancellation, issue a new one in its stead, and if any bearer share certificate, coupon or talon be lost or destroyed, the directors may upon the loss or destruction being established to their satisfaction, and upon such indemnity being given to the Company as it shall by resolution of directors determine, issue a new bearer share certificate in its stead, and in either case on payment of such sum as the Company may from time to time by resolution of directors require. In case of loss or destruction the person to whom such new bearer share certificate, coupon or talon is issued shall also bear and pay to the Company all expenses incidental to the investigation by the Company of the evidence of such loss or destruction and to such indemnity. 4. SHARES, AUTHORISED CAPITAL AND CAPITAL 4.1 Subject to the provisions of these Articles and any resolution of members the unissued shares of the Company shall be at the disposal of the directors who may without prejudice to any rights previously conferred on the holders of any existing shares or class or series of shares, offer, allot, grant options over or otherwise dispose of the shares to such persons, at such times and upon such terms and conditions as the Company may by resolution of directors determine. 4.2 Shares in the Company shall be issued for money, services rendered, personal property, an estate in real property, a promissory note or other binding obligation to contribute money or property or any combination of the aforegoing as shall be determined by a resolution of directors. 4.3 Shares in the Company may be issued for such amount of consideration as the directors may from time to time by resolution of directors determine, except that in the case of shares with par value, the amount shall not be less than the par value, and in the absence of fraud the decision of the directors as to the value of the consideration received by the Company in respect of the issue is conclusive unless a question of law is involved. The consideration in respect of the shares constitutes capital to the extent of the par value and the excess constitutes surplus. 4.4 A share issued by the Company upon conversion of, or in exchange for, another share or a debt obligation or other security in the Company, shall be treated for all purposes as having been issued for money equal to the consideration received or deemed to have been received by the Company in respect of the other share, debt obligation or security. 4.5 Treasury shares may be disposed of by the Company on such terms and conditions (not otherwise inconsistent with these Articles) as the Company may by resolution of directors determine. 4.6 The Company may issue fractions of a share and a fractional share shall have the same corresponding fractional liabilities, limitations, preferences, privileges, qualifications, restrictions, rights and other attributes of a whole share of the same class or series of shares. 4.7 Upon the issue by the Company of a share without par value, the consideration in respect of the share constitutes capital to the extent designated by the directors and the excess constitutes surplus, except that the directors must designate as capital an amount of the consideration that is at least equal to the amount that the share is entitled to as a preference, if any, in the assets of the Company upon liquidation of the Company. 4.8 The Company may, subject to any limitations imposed by the Ordinance, purchase, redeem or otherwise acquire and hold its own shares but no purchase, redemption or other acquisition which shall constitute a 7 reduction in capital shall be made except in compliance with Regulations 7.4 and 7.5. 4.9 Shares that the Company purchases, redeems or otherwise acquires pursuant to Regulation 4.8 may be cancelled or held as treasury shares. Upon the cancellation of a share, the amount included as capital of the Company with respect to that share shall be deducted from the capital of the Company. 4.10 Where shares in the Company are held by the Company as treasury shares or are held by another company of which the Company holds, directly or indirectly, shares having more than 50 percent of the votes in the election of directors of the other company, such shares of the Company are not entitled to vote or to have dividends paid thereon and shall not be treated as outstanding for any purpose except for purposes of determining the capital of the Company. 5. TRANSFER OF SHARES 5.1 Subject to any limitations in the Memorandum, registered shares in the Company may be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee, but in the absence of such written instrument of transfer the directors may accept such evidence of a transfcr of shares as they consider appropriate. 5.2 The Company shall not be required to treat a transferee of a registered share in the Company as a member until the transferee's name has been entered in the share register. 5.3 Subject to any limitations in the Memorandum, the Company must, on the application of the transferor or transferee of a registered share in the Company, enter in the share register the name of the transferee of the share save that the registration of transfers may be suspended and the share register closed at such times and for such periods as the Company may from time to time by resolution of directors determine provided always that such registration shall not be suspended and the share register closed for more than 60 days in any period of 12 months. 6. TRANSMISSION OF SHARES 6.1 The executor or administrator of a deceased member, the guardian of an incompetent member or the trustee of a bankrupt member shall be the only person recognised by the Company as having any title to his share but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the next following two regulations. 6.2 Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member shall be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such. 6.3 Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such share or shares and such request shall likewise be treated as if it were a transfer. 6.4 What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case. 7. REDUCTION OR INCREASE IN AUTHORISED CAPITAL OR CAPITAL 7.1 The Company may by a resolution of members or a resolution of directors amend the Memorandum to increase or reduce its authorised capital and in connection therewith the Company may in respect of any unissued shares increase or reduce the number of shares, increase or reduce the par value of any shares or effect any combination of the foregoing. 7.2 The Company may amend the Memorandum to 7.2.1 divide the shares, including issued shares, of a class or series into a larger number of shares of the same class or series; or 7.2.2 combine the shares, including issued shares, of a class or series into a smaller number of shares of the same class or series; provided however, that where shares are divided or combined under 7.2.1. and 7.2.2. of these Regulations, the aggregate par value of the new shares must be equal to the aggregate par value of the original shares. 7.3 The capital of the Company may by a resolution of directors be increased by transferring an amount of the surplus of the Company to capital, and, subject to the provisions of Regulations 7.4 and 7.5 the capital of the Company may be reduced by transferring an amount of the capital of the Company to surplus. 7.4 No reduction of capital shall be effected that reduces the capital of the Company to an amount that immediately after the reduction is less than the aggregate par value of all outstanding shares with par value and all shares with par value held by the Company as treasury shares and the aggregate of the amounts designated as capital of all outstanding shares without par value and all shares without par value held by the Company as treasury shares that are entitled to a preference, if any, in the assets of the Company upon liquidation of the Company. 9 7.5 No reduction of capital shall be effected unless the directors determine that immediately after the reduction the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and that the realisable assets of the Company will not be less than its total liabilities, other than deferred taxes, as shown in the books of the Company and its remaining capital, and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the Company is conclusive, unless a question of law is involved. 7.6 Where the Company reduces its capital the Company may 7.6.1 return to its members any amount received by the Company upon the issue of any of its shares; 7.6.2 purchase, redeem or otherwise acquire its shares out of capital; or 7.6.3 cancel any capital that is lost or not represented by assets having a realisable value. 8. MEETINGS AND CONSENTS OF MEMBERS 8.1 The directors of the Company may convene meetings of the members of the Company at such times and in such manner and places within or outside the British Virgin Islands as the directors consider necessary or desirable. 8.2 Upon the written request of members holding 10 percent or more of the outstanding voting shares in the Company the directors shall convene a meeting of members. 8.3 The directors shall give not less than 7 days notice of meetings of members to those persons whose names on the date the notice is given appear as members in the share register of the Company and are entitled to vote at the meeting. 8.4 A meeting of members held in contravention of the requirement in Regulation 8.3 is valid. 8.4.1 if members holding not less than 90 percent of the total number of shares entitled to vote on all matters to be considered at the meeting, or 90 percent of the vote of each class or series of shares where members are entitled to vote thereon as a class or series together with not less than a 90 percent majority of the remaining votes, have agreed to shorter notice of the meeting, or 8.4.2 if all members holding shares entitled to vote on all or any matters to be considered at the meeting have waived notice of the meeting and for this purpose presence at the meeting shall be deemed to constitute waiver. 8.5 The inadvertent failure of the directors to give notice of a meeting to a member, or the fact that a member has not received notice, does not invalidate the meeting. 8.6 A member may be represented at a meeting of members by a proxy who may speak and vote on behalf of the member. 8.7 The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. 8.8 An instrument appointing a proxy shall be in substantially the following form or such other form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy. (Name of Company) I/We______________________________________________________________________ being a member of the above Company with _________________________________ shares HEREBY APPOINT ____________________________________________________ of _______________________________________________________________________ _____________________________________________________ of _________________ to be my/our proxy to vote for me/us at the meeting of members to be held on the __________ day ___________________________, 19 ____ and at adjournment thereof. (Any restrictions on voting to be inserted here) Signed this day of _______________________, _______. ____________________________________________________ Member 8.9 The following shall apply in respect of joint ownership of shares: 8.9.1 if two or more persons hold shares jointly each of them may be present in person or by proxy at a meeting of members and may speak as a member; 8.9.2 if only one of the joint owners is present in person or by proxy he may vote on behalf of all joint owners, and; 8.9.3 if two or more of the joint owners are present in person or by proxy they must vote as one. 8.10 A member shall be deemed to be present at a meeting of members if 11 he participates by telephone or other electronic means and all members participating in the meeting are able to hear each other. 8.11 A meeting of members is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50 percent of the votes of the shares or class or series of shares entitled to vote on resolutions of members to be considered at the meeting. If a quorum be present, notwithstanding the fact that such quorum may be represented by only one person, then such person may resolve any matter and a certificate signed by such person accompanied where such person be a proxy by a copy of the proxy form shall constitute a valid resolution of members. 8.12 If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the next business day at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the shares or each class or series of shares entitled to vote on the resolutions to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved. 8.13 At every meeting of members, the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or if the Chairman of the Board of Directors is not present at the meeting, the members present shall choose someone of their number to be the chairman. If the members are unable to choose a chairman for any reason, then the person representing the greatest number of voting shares present in person or by prescribed form of proxy at the meeting shall preside as chairman failing which the oldest individual member or representative of a member present shall take the chair. 8.14 The chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 8.15 At any meeting of the members the chairman shall be responsible for deciding in such manner as he shall consider appropriate whether any resolution has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes thereof. If the chairman shall have any doubt as to the outcome of any resolution put to the vote, he shall cause a poll to be taken of all votes cast upon such resolution, but if the chairman shall fail to take a poll then any member present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall thereupon cause a poll to be taken. If a poll is taken at any meeting, the result thereof shall be duly recorded in the minutes of that meeting by the chairman. 8.16 Any person other than an individual shall be regarded as one member and subject to Regulation 8.17 the right of any individual to speak for or represent such member shall be determined by the law of the jurisdiction where, and by the documents by which, the person is constituted or derives its existence. In case of doubt, the directors may in good faith seek legal advice from any qualified person and unless and until a court of competent jurisdiction shall otherwise rule, the directors may rely and act upon such advice without incurring any liability to any member. 8.17 Any person other than an individual which is a member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the person which he represents as that person could exercise if it were an individual member of the Company. 8.18 The chairman of any meeting at which a vote is cast by proxy or on behalf of any person other than an individual may call for a notarially certified copy of such proxy or authority which shall be produced within 7 days of being so requested or the votes cast by such proxy or on behalf of such person shall be disregarded. 8.19 Directors of the Company may attend and speak at any meeting of members of the Company arid at any separate meeting of the holders of any class or series of shares in the Company. 9. DIRECTORS 9.1 The first directors of the Company shall be elected by the subscribers to the Memorandum; and thereafter, the directors shall be elected 9.1.1 by the members for such terms as the members determine, or 9.1.2 by the directors for such terms as the directors may determine. 9.2 Until directors are appointed the subscribers to the Memorandum of Association shall have the power to act as directors. 9.3 The minimum number of directors shall be one and the maximum number shall be six. 9.4 Each director shall hold office for the term, if any, fixed by resolution of members or directors, as the case may be. In the case of a director who is an individual the term of office of a director shall terminate on the director's death, resignation or removal. The bankruptcy of a corporate director shall terminate the term of office of such director. 9.5 A director may be removed from office, with or without cause, by a resolution of members or directors, as the case may be. 13 9.6 A director may resign his office by giving written notice of his resignation to the Company and the resignation shall have effect from the date the notice is received by the Company or from such later date as may be specified in the notice. 9.7 A vacancy in the Board of Directors may be filled by a resolution of members or by a resolution of a majority of the remaining directors. 9.8 With the prior or subsequent approval by a resolution of members, the directors may, by a resolution of directors, fix the emoluments of directors with respect to services to be rendered in any capacity to the Company. 9.9 A director shall not require a share qualification, and may be an individual or a company. 10. POWERS OF DIRECTORS 10.1 The business and affairs of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company and may exercise all such powers of the Company as are not by the Ordinance or by the Memorandum or these Articles required to be exercised by the members of the Company, subject to any delegation of such powers as may be authorised by these Articles and to such requirements as may be prescribed by a resolution of members; but no requirement made by a resolution of members shall prevail if it be inconsistent with these Articles nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made. 10.2 The directors may, by a resolution of directors, appoint any person, including a person who is a director, to be an officer or agent of the Company. 10.3 Every officer or agent of the Company has such powers and authority of the directors, including the power and authority to affix the Seal, as are set forth in these Articles or in the resolution of directors appointing the officer or agent; except that no officer or agent has any power or authority with respect to fixing the emoluments of directors. 10.4 Any director which is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at meetings of the Board of Directors or with respect to unanimous consents. 10.5 The continuing directors may act notwithstanding any vacancy in their body, save that if their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum for a meeting of directors, the continuing directors or director may appoint directors to fill any vacancy that has arisen or summoning a meeting of members. 10.6 All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by resolution of directors. 11. PROCEEDINGS OF DIRECTORS 11.1 The directors of the Company or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the directors may determine to be necessary or desirable. 11.2 A director shall be deemed to be present at a meeting of directors if he participates by telephone or other electronic means and all directors participating in the meeting are able to hear each other. 11.3 A director shall be given not less than 3 days notice of meetings of directors, but a meeting of directors held without 3 days notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend, waive notice of the meeting; and for this purpose, the presence of a director at the meeting shall be deemed to constitute waiver on his part. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting. 11.4 A director may by a written instrument appoint an alternate who need not be a director and an alternate is entitled to attend meetings in the absence of the director who appointed him and to vote or consent in place of the director. 11.5 A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one half of the total number of directors, unless there are only two directors in which case the quorum shall be two. 11.6 If the Company shall have only one director the provisions herein contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters as are not by the Ordinance or the Memorandum or these Articles required to be exercised by the members of the Company and in lieu of minutes of a meeting shall record in writing and sign a note or memorandum of all matters requiring a resolution of directors. Such a note or memorandum shall constitute sufficient evidence of such resolution for all purposes. 11.7 At every meeting of the directors the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or if the Chairman of the Board of Directors is not present at the meeting the Vice Chairman of the Board of Directors shall preside. If there is no Vice Chairman of 15 the Board of Directors or if the Vice Chairman of the Board of Directors is not present at the meeting the directors present shall choose someone of their number to be chairman of the meeting. 11.8 The directors shall cause the following corporate records to be kept: 11.8.1 minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members; 11.8.2 copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members; and 11.8.3 such other accounts and records as the directors by resolution of directors consider necessary or desirable in order to reflect the financial position of the Company. 11.9 The books, records and minutes shall be kept at the registered office of the Company or at such other place as the directors determine. 11.10 The directors may, by a resolution of directors, designate one or more committees, each consisting of one or more directors. 11.11 Each committee of directors has such powers and authorities of the directors, including the power and authority to affix the Seal, as are set forth in the resolution of directors establishing the committee, except that no committee has any power or authority either to amend the Memorandum or these Articles or with respect to the matters requiring a resolution of directors under Regulations 9.7, 9.8 and 10.2. 11.12 The meetings and proceedings of each committee of directors consisting of 2 or more directors shall be governed mutatis mutandis by the provisions of these Articles regulating the proceedings of directors so far as the same are not superseded by any provisions in the resolution establishing the committee. 12. OFFICERS 12.1 The Company may by resolution of directors appoint officers of the Company at such times as shall be considered necessary or expedient. Such officers may consist of a Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, President and one or more Vice Presidents, Secretaries and Treasurers and such other officers as may from time to time be deemed desirable. Any number of offices may be held by the same person. 12.2 The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by resolution of directors or resolution of members, but in the absence of any specific allocation of duties it shall be the responsibility of the Chairman of the Board of Directors to preside at meetings of director! and members, the Vice Chairman to act in the absence of the Chairman, the President to manage the day to day affairs of the Company, the Vice Presidents to act in order of seniority in the absence of the President but otherwise to perform such duties as may be delegated to them by the President, the Secretaries to maintain the share register, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company. 12.3 The emoluments of all officers shall be fixed by resolution of directors. 12.4 The officers of the Company shall hold office until their successors are duly elected and qualified, but any officer elected or appointed by the directors may be removed at any time, with or without cause, by resolution of directors. Any vacancy occurring in any office of the Company may be filled by resolution of directors. 13. CONFLICT OF INTERESTS 13.1 No agreement or transaction between the Company and one or more of it! directors or any person in which any director has a financial interest or to whom any director is related, including as a director of that other person, is void or voidable for this reason only or by reason only that the director is present at the meeting of directors or at the meeting of the committee of directors that approves the agreement or transaction or that the vote or consent of the director is counted for that purpose if the material facts of the interest of each director in the agreement or transaction and his interest in or relationship to any other party to the agreement or transaction are disclosed in good faith or are known by the other directors. 13.2 A director who has an interest in any particular business to be considered at a meeting of directors or members may be counted for purposes of determining whether the meeting is duly constituted. 14. INDEMNIFICATION 14.1 Subject to Regulation 14.2 the Company may indemnify against all expenses, including legal fees, and against all judgements, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who 14.1.1 is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, an officer or a liquidator of the Company; or 14.1.2 is or was, at the request of the Company, serving as a director, officer or liquidator of, or in any other capacity 17 is or was acting for, another company or a partnership, joint venture, trust or other enterprise. 14.2 Regulation 14.1 only applies to a person referred to in that Regulation if the person acted honestly and in good faith with a view to the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful. 14.3 The decision of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the Company and as to whether the person had no reasonable cause to believe that his conduct was unlawful, is in the absence of fraud, sufficient for the purposes of these Articles, unless a question of law is involved. 14.4 The termination of any proceedings by any judgement, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful. 14.5 If a person referred to in Regulation 14.1 has been successful in defence of any proceedings referred to in that Regulation the person is entitled to be indemnified against all expenses, including legal fees, and against all judgements, fines and amounts paid in settlement and reasonably incurred by the person in connection with the proceedings. 14.6 The Company may purchase and maintain insurance in relation to any person who is or was a director, an officer or a liquidator of the Company, or who at the request of the Company is or was serving as a director, an officer or a liquidator of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability under Regulation 14.1. 15. SEAL The directors shall provide for the safe custody of the Seal. An imprint of the Seal shall be kept at the registered office of the company. The Seal when affixed to any written instrument shall be witnessed by a director or any other person so authorised from time to time by resolution of directors. The directors may provide for a facsimile of the Seal and of the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the Seal had been affixed to such instrument and the same had been signed as hereinbefore described. 18 16. DIVIDENDS 16.1 The Company may by a resolution of directors declare and pay dividends in money, shares, or other property but dividends shall only be declared and paid out of surplus. In the event that dividends are paid in specie the directors shall have responsibility for establishing and recording in the resolution of directors authorising the dividends, a fair and proper value for the assets to be so distributed. 16.2 The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the Company. 16.3 The directors may, before declaring any dividend, set aside out of the profits of the Company such sum as they think proper as a reserve fund, and may invest the sum so set apart as a reserve fund upon such securities as they may selcct. 16.4 No dividend shall be declared and paid unless the directors determine that immediately after the payment of the dividend the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in its books of account, and its capital. In the absence of fraud, the decision of the directors as to the realisable value of the assets of the Company is conclusive, unless a question of law is involved. 16.5 Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned and all dividends unclaimed for 3 years after having been declared may be forfeited by resolution of directors for the benefit of the Company. 16.6 No dividend shall bear interest as against the Company and no dividend shall be paid on shares described in Regulation 4.10. 16.7 A share issued as a dividend by the Company shall be treated for all purposes as having been issued for money equal to the surplus that is transferred to capital upon the issue of the share. 16.8 In the case of a dividend of authorised but unissued shares with par value, an amount equal to the aggregate par value of the shares shall be transferred from surplus to capital at the time of the distribution. 16.9 In the case of a dividend of authorized but unissued shares without par value, the amount designated by the directors shall be transferred from surplus to capital at the time of the distribution, except that the directors must designate as capital an amount that is at least equal to the amount that the shares are entitled to as a preference, if any, in the assets of the Company upon liquidation of the Company. 16.10 A division of the issued and outstanding shares of a class or 19 series of shares into a larger number of shares of the same class or series having a proportionately smaller par value does not constitute a dividend of shares. 17. ACCOUNTS The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company. 18. AUDIT 18.1 The Company may by resolution of members call for the accounts to be examined by auditors. 18.2 The first auditors shall be appointed by resolution of directors; subsequent auditors shall be appointed by a resolution of members. 18.3 The auditors may be members of the Company but no director or other officer shall be eligible to be an auditor of the Company during his continuance in office. 18.4 The remuneration of the auditors of the Company 18.4.1 in the case of auditors appointed by the directors, may be fixed by resolution of directors; 18.4.2 subject to the foregoing, shall be fixed by resolution of members or in such manner as the Company may by resolution of members determine. 18.5 The auditors shall examine each profit and loss account and balance sheet required to be served on every member of the Company or laid before a meeting of the members of the Company and shall state in a written report whether or not 18.5.1 in their opinion the profit and loss account and balance sheet give a true and fair view respectively of the profit and loss for the period covered by the accounts, and of the state of affairs of the Company at the end of that period; 18.5.2 all the information and explanations required by the auditors have been obtained. 18.6 The report of the auditors shall be annexed to the accounts and shall be read at the meeting of members at which the accounts are laid before the Company or shall be served on the members. 18.7 Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the directors and officers of the Company such information and explanations as he thinks necessary for the performance of the duties of the auditors. 18.8 The auditors of the Company shall be entitled to receive notice of, and to attend any meetings of members of the Company at which the Company's profit and loss account and balance sheet are to be presented. 19. NOTICES 19.1 Any notice, information or written statement to be given by the Company to members must be served in the case of members holding registered shares by mail addressed to each member at the address shown in the share register and in the case of members holding shares issued to bearer, in the manner provided in the Memorandum. 19.2 Any summons, notice, order, document, process, information or written statement to be served on the Company may be served by leaving it, or by sending it by registered mail addressed to the Company, at its registered office, or by leaving it with, or by sending it by registered mail to, the registered agent of the Company. 19.3 Service of any summons, notice, order, document, process, information or written statement to be served on the Company may be proved by showing that the summons, notice, order, document, process, information or written statement was mailed in such time as to admit to its being delivered in the normal course of delivery within the period prescribed for service and was correctly addressed and the postage was prepaid. 20. PENSION AND SUPERANNUATION FUNDS The directors may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any persons who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid or who hold or held any salaried employment or office in the Company or such other company, or any persons in whose welfare the Company or any such other company as aforesaid is or has been at any time interested, and to the wives, widows, families and dependents of any such person, and may make payments for or towards the insurance of any such persons as aforesaid, and may do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid. Subject always to the proposal being approved by resolution of members, a director holding any such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension allowance or emolument. 21. ARBITRATION 21.1 Whenever any difference arises between the Company on the one hand and any of the members or their executors, administrators or assigns on the other hand, touching the true intent and construction or the incidence or consequences of these Articles or of the Ordinance, 21 touching anything done, or executed, omittcd or suffered in pursuance of the Ordinance or touching any breach or alleged breach or otherwise relating to the premises or to these Articles, or to any Act or Ordinance affecting the Company or to any of the affairs of the Company such difference shall, unless the parties agree to refer the same to a single arbitrator, be referred to two arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire. 21.2 If either party to the reference makes default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for 10 days after the other party has given him notice to appoint the same, such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party. 22. VOLUNTARY WINDING UP AND DISSOLUTION The Company may voluntarily commence to wind up and dissolve by a resolution of members but if the Company has never issued shares it may voluntarily commence to wind up and dissolve by resolution of directors. 23. CONTINUATION The Company may by resolution of members or by resolution passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws. We, B.V.I. COMPANY FORMATIONS LIMITED of P.O. Box 146, Wickhams Cay, Road Town, Tortola, British Virgin Islands for the purpose of incorporating an International Business Company under the laws of the British Virgin Islands hereby subscribe our name to the Articles of Association this 27th day of July, 1989 in the presence of the undersigned witness. NAME AND ADDRESS SUBSCRIBER OF WITNESS /s/ Joyce Simon /s/ B. R. Goodman Joyce Simon B.V.I. Company Formations Limited c/o P.O. Box 146, P.O. Box 146, Road Town, Tortola, Wickham's Cay 1, British Virgin Islands. Road Town, Tortola, British Virgin Islands. EX-3.19 18 CERTIFICATE OF INCORPORATION OF GGRI, AS AMENDED Exhibit 3.19 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF GRIFFIN RESORTS INC. Griffin Resorts Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies that the amendment set forth below was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware. Article FIRST of the Corporation's Certificate of Incorporation is hereby amended to read in its entirety as follows: "FIRST: The name of the Corporation is GGRI, Inc. (hereinafter the "Corporation)." IN WITNESS WHEREOF, the Corporation has caused the undersigned to execute and attest to, respectively, this Certificate of Amendment this 7th day of October, 1993. GRIFFIN RESORTS INC. By: /s/ David P. Hanlon --------------------- David P. Hanlon President Attest: By: /s/ Christopher D. Whitney -------------------------- Christopher D. Whitney Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF GRIFFIN RESORTS INC. Griffin Resorts, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify: FIRST: The Corporation has not received any payment for any of its stock. SECOND: The amendment to the Corporation's Certificate of Incorporation set forth in the following resolution was approved by a majority of the Corporation's Board of Directors and was duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware: "RESOLVED, that the Certificate of Incorporation of the Corporation be amended by substituting for Article Ninth in its entirety the following: NINTH: This certificate shall be subject to the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the rules and regulations of the New Jersey Casino Control Commission (the "Commission") as they currently exist or as they hereinafter may be amended (the "Act"). Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, a holding corporation as defined in the Act, or a direct or indirect subsidiary thereof, in accordance with N.J.S.A. 5:12-82(d)(7), (8) and (10), the Commission shall have the right of prior approval with regard to transfers of non-publicly traded securities, shares, and other interests in the Corporation and the Corporation shall have the absolute right to repurchase at the market price or purchase price, whichever is the lesser, any such security, share or other interest in the Corporation in the event that the Commission disapproves a transfer of such security, share or other interest in the Corporation in accordance with the Act. 'Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, a holding company as defined in the Act, or a direct or indirect subsidiary thereof, in accordance with N.J.S.A. 5:12-82(d)(7) and (9), all publicly traded securities of the Corporation shall be held subject to the condition that if a holder thereof is found to be disqualified by the Commission pursuant to the Act, such holder shall dispose of his interest in the Corporation. 'Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, either a privately held or publicly traded holding corporation as defined in the Act, or a direct or indirect subsidiary thereof, in accordance with N.J.S.A. 5:12-105(e), commencing on the date the Commission serves notice on the Corporation that a securityholder has been found disqualified, it shall be unlawful for the disqualified securityholder to: (1) Receive any dividends or interest upon any such securities of the Corporation held by such holder; (2) Exercise, directly or through any trustee or nominee, any right conferred by such securities, or (3) Receive any remuneration in any form, for services rendered or otherwise, from the Corporation.'" 2 IN WITNESS WHEREOF, Griffin Resorts Inc. has caused this Certificate to be signed and attested by its duly authorized officers, this 8th day of October, 1988. GRIFFIN RESORTS INC. /s/ Merv Griffin ---------------- Merv Griffin President ATTEST: /s/ Gloria Redlich - ------------------ Gloria Redlich Secretary NY:199OF LAWP:1442z 3 CERTIFICATE OF INCORPORATION OF GRIFFIN RESORTS INC. FIRST: The name of the Corporation is Griffin Resorts Inc. (hereinafter the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL"). FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 1000 shares of Common Stock, each having a par value of one dollar ($1.00). FIFTH: The name and mailing address of the Sole Incorporator is as follows: Name Mailing Address ---- --------------- Catherine S. Davis P.O. Box 636 Wilmington, DE 19899 SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (2) The directors shall have concurrent power with the stockholders to make, alter, amend, change add to or repeal the By-Laws of the Corporation. (3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (4) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article SIXTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. (5) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. SEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. EIGHTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of the GCL or on 2 the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of the GCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. NINTH: This certificate shall be subject to the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the rules and regulations of the New Jersey Casino Control Commission (the "Commission") as they currently exist or as they hereinafter may be amended (the "Act"). Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, a privately held holding corporation as defined in the Act, or a direct or indirect subsidiary thereof, in accordance with N.J.S.A 5:12-82(d)(7), (9) and (10), the Commission shall have the right of prior approval with regard to transfers of securities, shares, and other interests in the Corporation and the Corporation shall have the absolute right to repurchase at the market price or purchase price, whichever is the lesser, any security, share or other interest in the Corporation in the event that the Commission disapproves a transfer of such security, share or other interest in the Corporation in accordance with the Act. Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, a publicly traded holding company as defined in the Act, or a direct or indirect subsidiary thereof, in accordance with N.J.S.A. 5:12-82(d)(7) and (9), all securities of the Corporation shall be held subject to the condition that if a holder thereof is found to be disqualified by the Commission pursuant to the Act, such holder shall dispose of his interest in the Corporation. Without limiting the foregoing, if the Corporation shall become, and so long as it shall remain, either a privately held or publicly traded holding corporation as defined in the Act, or a direct or indirect subsidiary 3 EX-3.20 19 BY-LAWS OF GGRI, INC Exhibit 3.20 GRIFFIN RESORTS INC. (a Delaware corporation) BYLAWS ARTICLE I Offices SECTION 1.01 Registered Office. The registered office of Griffin Resorts Inc. (hereinafter called the Corporation) in the State of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle, and the name of the registered agent in charge thereof shall be The Corporation Trust Company. SECTION 1.02 Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors (hereinafter called the Board) may from time to time determine or as the business of the Corporation may require. ARTICLE II Meetings of Stockholders SECTION 2.01 Annual Meetings. Annual meetings of the stockholders of the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution. SECTION 2.02 Special Meetings. A special meeting of the stockholders for the transaction of any proper business may be called at any time by the Board or by the President. SECTION 2.03 Place of Meetings. All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof. SECTION 2.04 Notice of Meetings. Except as otherwise required by law, notice of each meeting of the stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his post office address furnished by him to the Secretary of the Corporation for such purpose or, if he shall not have furnished to the Secretary his address for such purpose, then at his post office address last known to the Secretary, or by transmitting a notice thereof to him at such address by telegraph, cable, or wireless. Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except as a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken. SECTION 2.05 Quorum. Except in the case of any meeting for the election of directors summarily ordered as provided by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof. In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. 2 SECTION 2.06 Voting. (a) Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him and registered in his name on the books of the Corporation: (i) on the date fixed pursuant to Section 6.05 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or (ii) if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which the meeting shall be held. (b) Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants in common, tenants by entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware. (c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. The attendance at any meeting of a 3 stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he shall in writing so notify the secretary of the meeting prior to the voting of the proxy. At any meeting of the stockholders all matters, except as otherwise provided in the Certificate of Incorporation, in these Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon, a quorum being present. The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and it shall state the number of shares voted. SECTION 2.07 List of Stockholders. The Secretary of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 2.08 Judges. If at any meeting of the stockholders a vote by written ballot shall be taken on any question, the chairman of such meeting may appoint a judge or judges to act with respect to such vote. Each judge so appointed shall first subscribe an oath faithfully to execute the duties of a judge at such meeting with strict impartiality and according to the best of his ability. Such judges shall decide upon the qualification of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed, shall ascertain and report the number of shares voted respectively for and against the question. Reports of judges shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The judges need not be stockholders of the 4 Corporation, and any officer of the Corporation may be a judge on any question other than a vote for or against a proposal in which he shall have a material interest. SECTION 2.09 Action Without Meeting. Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III Board of Directors SECTION 3.01 General Powers. The property, business and affairs of the Corporation shall be managed by the Board. SECTION 3.02 Number and Term of Office. The number of directors shall be three (3). Directors need not be stockholders. Each of the directors of the Corporation shall hold office until his successor shall have been duly elected and shall qualify or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3.03 Election of Directors. The directors shall be elected annually by the stockholders of the Corporation and the persons receiving the greatest number of votes, up to the number of directors to be elected, shall be the directors. SECTION 3.04 Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5 SECTION 3.05 Vacancies. Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum. Each director so chosen to fill a vacancy shall hold office until his successor shall have been elected and shall qualify or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting. SECTION 3.07 First Meeting. The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required. SECTION 3.08 Regular Meetings. Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given. SECTION 3.09 Special Meetings. Special meetings of the Board shall be held whenever called by the President or a majority of the authorized number of directors. Except as otherwise provided by law or by these Bylaws, notice of the time and place of each such special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least five (5) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegraph or cable or be delivered personally not less than forty-eight (48) hours before the time at which the meeting is to be held. Except where otherwise 6 required by law or by these Bylaws, notice of the purpose of a special meeting need not be given. Notice of any meeting of the Board shall not be required to be given to any director who is present at such meeting, except a director who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 3.10 Quorum and Manner of Acting. Except as otherwise provided in these Bylaws or by law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such. SECTION 3.11 Action by Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. SECTION 3.12 Removal of Directors. Subject to the provisions of the Certificate of Incorporation, any director may be removed at any time, either with or without cause, by the affirmative vote of the stockholders having a majority of the voting power of the Corporation given at a special meeting of the stockholders called for the purpose. SECTION 3.13 Compensation. The directors shall receive only such compensation for their services as directors as may be allowed by resolution of the Board. The Board may also provide that the Corporation shall reimburse each such director for any expense incurred by him on account of his attendance at any meetings of the Board or Committees of the Board. Neither the payment of such compensation nor the reimbursement of such expenses shall be construed to preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving compensation therefor. 7 SECTION 3.14 Committees. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board and except as otherwise limited by law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV Officers SECTION 4.01 Number. The officers of the Corporation shall be a President, one or more Vice Presidents (the number thereof and their respective titles to be determined by the Board), a Secretary and a Treasurer. SECTION 4.02 Election, Term of Office and Qualifications. The officers of the Corporation, except such officers as may be appointed in accordance with Section 4.03, shall be elected annually by the Board at the first meeting thereof held after the election thereof. Each officer shall hold office until his successor shall have been duly chosen and shall qualify or until his resignation or removal in the manner hereinafter provided. SECTION 4.03 Assistants, Agents and Employees, Etc. In addition to the officers specified in Section 4.01, the Board may appoint other assistants, agents and employees as it may deem necessary or advisable, including one or more Assistant Secretaries, and one or more Assistant Treasurers, each of whom shall hold office for such period, have such authority, and perform such duties as the Board may from time to time determine. The Board may delegate to any officer of the Corporation or any committee of the Board the power to 8 appoint, remove and prescribe the duties of any such assistants, agents or employees. SECTION 4.04 Removal. Any officer, assistant, agent or employee of the Corporation may be removed, with or without cause, at any time: (i) in the case of an officer, assistant, agent or employee appointed by the Board, only by resolution of the Board; and (ii) in the case of an officer, assistant, agent or employee, by any officer of the Corporation or committee of the Board upon whom or which such power of removal may be conferred by the Board. SECTION 4.05 Resignations. Any officer or assistant may resign at any time by giving written notice of his resignation to the Board or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof by the Board or the Secretary, as the case may be; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4.06 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or other cause, may be filled for the unexpired portion of the term thereof in the manner prescribed in these Bylaws for regular appointments or elections to such office. SECTION 4.07 The President. The President of the Corporation shall be the chief executive officer of the Corporation and shall have, subject to the control of the Board, general and active supervision and management over the business of the Corporation and over its several officers, assistants, agents and employees. SECTION 4.08 The Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board may from time to time prescribe. At the request of the President, or in case of the President's absence or inability to act upon the request of the Board, a Vice President shall perform the duties of the President and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. SECTION 4.09 The Secretary. The Secretary shall, if present, record the proceedings of all meetings of the Board, of the stockholders, and of all committees of which a secretary shall not have been appointed in one or more books provided for that purpose; he shall see that 9 all notices are duly given in accordance with these Bylaws and as required by law; he shall be custodian of the seal of the Corporation and shall affix and attest the seal to all documents to be executed on behalf of the Corporation under its seal; and, in general, he shall perform all the duties incident to the office of Secretary and such other duties as may from time to time be assigned to him by the Board. SECTION 4.10 The Treasurer. The Treasurer shall have the general care and custody of the funds and securities of the Corporation, and shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board. He shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever. He shall exercise general supervision over expenditures and disbursements made by officers, agents and employees of the Corporation and the preparation of such records and reports in connection therewith as may be necessary or desirable. He shall, in general, perform all other duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board. SECTION 4.11 Compensation. The compensation of the officers of the Corporation shall be fixed from time to time by the Board. None of such officers shall be prevented from receiving such compensation by reason of the fact that he is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary corporation, in any other capacity and receiving such compensation by reason of the fact that he is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary corporation, in any other capacity and receiving proper compensation therefor. ARTICLE V Contracts, Checks, Drafts, Bank Accounts, Etc. SECTION 5.01 Execution of Contracts. The Board, except as in these Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by these Bylaws, no officer, agent or employee shall have any 10 power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such officer, assistant, agent or attorney shall give such bond, if any, as the Board may require. SECTION 5.03 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the President, any Vice President or the Treasurer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation. SECTION 5.04 General and Special Bank Accounts. The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient. ARTICLE VI Shares and Their Transfer SECTION 6.01 Certificates for Stock. Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class 11 of shares of the stock of the Corporation owned by him. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President or a Vice President, and by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any of or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04. SECTION 6.02 Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be so expressed in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 6.03 Regulations. The Board may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, 12 transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them. SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates. In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. SECTION 6.05 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders or expressing consent to corporate action without a meeting the Board shall not fix such a record date, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board shall adopt the resolution relating thereto. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII Indemnification SECTION 7.01 Action, Etc. Other Than by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is 13 threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful. SECTION 7.02 Actions, Etc., by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such 14 person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 7.03 Determination of Right of Indemnification. Any indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 7.01 and 7.02. Such determination shall be made (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. SECTION 7.04 Indemnification Against Expenses of Successful Party. Notwithstanding the other provisions of this Article, to the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 7.01 or 7.02, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. SECTION 7.06 Other Rights and Remedies. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased 15 to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 7.07 Insurance. Upon resolution passed by the Board, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. SECTION 7.08 Constituent Corporations. For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation, so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. SECTION 7.09 Other Enterprises Fines, and Serving at Corporation's Request. For purposes of this Article, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. 16 ARTICLE VIII Miscellaneous SECTION 8.01 Seal. The Board shall provide a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that the Corporation was incorporated in the State of Delaware and the year of incorporation. SECTION 8.02 Waiver of Notices. Whenever notice is required to be given by these Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice. SECTION 8.03 Amendments. These Bylaws, or any of them, may be altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a majority of the number of directors then in office as directors, acting at any meeting of the Board, or (ii) by the stockholders, at any annual meeting of stockholders, without previous notice, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting. Any Bylaws made or altered by the stockholders may be altered or repealed by either the Board or the stockholders. 17 EX-3.21 20 CERT OF INCORPORATIONAS AMENDED, RESORTS INTL HOTE Exhibit 3.21 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF RESORTS INTERNATIONAL HOTEL, INC. To: The Secretary of State State of New Jersey Pursuant to Section 14A:9-2(4) and Section 14A:9-4(3), Corporations, General, of the New Jersey Statutes, the undersigned corporation executes the following Certificate of Amendment to its Certificate of Incorporation: 1. The name of the corporation is Resorts International Hotel, Inc. 2. The following amendment to the Certificate of Incorporation was approved by the directors and thereafter duly approved by the sole shareholder of the corporation on the 28th day of April, 1994. Resolved, that Article Fourth is hereby deleted and that the new Article Fourth is inserted into the Certificate of Incorporation as follows: "FOURTH: The aggregated number of shares which the corporation is authorized to issue is five million (5,000,000) shares of common stock, par value one dollar ($1.00) per share." 3. The number of shares outstanding at the time of the adoption of the amendment was 100. The total number of shares entitled to vote thereon was 100. 4. The number of shares voting for and against such amendment was as follows: NUMBER OF SHARES VOTING NUMBER OF SHARES VOTING FOR AMENDMENT AGAINST AMENDMENT 100 0 ------------------------ ----------------------- 5. The effective date of this Amendment to the Certificate of Incorporation shall be MAY 3, 1994. Dated this 3 day of May, 1994. ATTEST: RESORTS INTERNATIONAL HOTEL, INC. /s/William C. Murtha By: /s/Christopher D. Whitney - -------------------------- -------------------------------- William C. Murtha Christopher D. Whitney Assist. Secretary Executive Vice President CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF RESORTS INTERNATIONAL HOTEL, INC. To: The Secretary of State State of New Jersey Pursuant to the provisions of Section 14A:9-2(4) and Section 14A:9-4(3), Corporations, General, of the New Jersey Statutes, the undersigned corporation executes the following Certificate of Amendment to its Certificate of Incorporation: 1. The name of the corporation is Resorts International Hotel, Inc. 2. The following amendment to the Certificate of Incorporation was approved by the directors and thereafter duly adopted by the shareholders of the corporation on the 23rd day of December, 1988. Resolved, that new Article Seventh is hereby added to the Certificate of Incorporation as follows: "SEVENTH: No sale, assignment, transfer, pledge or other disposition (each a "Transfer") of any securities, shares or any other interest in the corporation (collectively, the "Securities") shall be effective unless and until such Transfer has received the prior approval of the New Jersey Casino Control Commission (the "Commission"). In the event that the Commission disapproves of a certain Transfer of Securities in accordance with the provisions of the New Jersey Casino Control Act, the Corporation shall have the absolute right to repurchase such Securities at the lesser of the market price or the purchase price. If the foregoing provision, or any portion thereof, is determined to be unenforceable in any instance, such a determination does not make this provision, or any portion thereof, void. If the foregoing provision, or any portion thereof, is found to be void by virtue of any legal decision, statute, rule or regulation, then the Board of Directors shall promptly adopt resolutions that, in its opinion, best effect the purposes of this Article and which would not be found void and propose to the stockholders an amendment to this Certificate of Incorporation implementing the provisions suggested in such resolutions." 3. The number of shares outstanding at the time of the adoption of the amendment was 100. The total number of shares entitled to vote thereon was 100. 4. The number of shares voting for and against such amendment is as follows: NUMBER OF SHARES VOTING NUMBER OF SHARES VOTING FOR AMENDMENT AGAINST AMENDMENT 100 0 5. The effective date of this Amendment to the Certificate of Incorporation shall be January 3, 1989. Dated this 23rd day of December, 1988. ATTEST: RESORTS INTERNATIONAL HOTEL, INC. /s/Robert L. Gensamer By: /s/John M. Donnelly - --------------------------- ----------------------------- Robert L. Gensamer John M. Donnelly Assistant Secretary Vice President RESTATED CERTIFICATE OF INCORPORATION of RESORTS INTERNATIONAL HOTEL, INC. (Formerly LEEDS AND LIPPINCOTT COMPANY) The undersigned, in accordance with Section 14:A:9-5 of the Business Corporation Act do hereby certify as follows: FIRST: The name of the Corporation is RESORTS INTERNATIONAL HOTEL, INC. The corporation was originally formed under the name The Leeds Company which name was changed to the Leeds and Lippincott Company on December 22, 1920. SECOND: The registered office of the corporation is to be the Resorts International Hotel, Inc. on the Boardwalk at North Carolina Avenue, Atlantic City, New Jersey 08404. The name of the registered agent at that address is Anthony M. Rey. THIRD: The purpose of the corporation is to engage in the conduct of casino gaming, subject to the approval of the New Jersey Casino Control Commission, and in any other activity within the purposes for which a corporation may be organized under the New Jersey Business Corporation Act. FOURTH: The aggregate number of shares which the corporation is authorized to issue is twenty-five hundred (2,500) shares of common stock, par value one dollar ($1.00) per share. FIFTH: The number of directors currently constituting the entire board of directors is five (5) and the names and addresses of such directors are as follows: NAME ADDRESS James M. Crosby Resorts International Hotel, Inc. Atlantic City, N. J. 08404 I. G. Davis, Jr. Resorts International Hotel, Inc. Atlantic City, N. J. 08404 Raymond M. Gore Resorts International, Inc. 915 N. E. 125th Street North Miami, Florida 33161 Charles E. Murphy, Jr. 522 Fifth Avenue New York, N. Y. 10036 Anthony M. Rey Resorts International Hotel, Inc. Atlantic City, N. J. 08404 SIXTH: Subject to the provisions of Section 14A:6-6 of the New Jersey Business Corporation Act, one or more or all of the directors of the corporation may be removed with or without cause by the shareholders by the affirmative vote of a majority of the votes cast by the holders of shares entitled to vote for the election of directors. The board of directors shall also have the power to remove one or more directors for cause and to suspend directors pending a final determination that cause exists for removal. IN WITNESS WHEREOF, we have hereunto set our hands and seals this 18th day of August, 1977. /s/Anthony M. Rey ---------------------------------- Anthony M. Rey - President /s/Charles E. Murphy ---------------------------------- Charles E. Murphy - Secretary - 2 - EX-3.22 21 BY-LAWS OF RESORTS INTERNATIONAL HOTEL, INC. Exhibit 3.22 BY-LAWS OF RESORTS INTERNATIONAL HOTEL, INC. ------------- ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE.--The registered office shall be established and maintained at Chalfonte-Haddon Hall on the Boardwalk at North Carolina Avenue, in the City or Atlantic City, in the County of Atlantic, in the State or New Jersey, and Anthony M. Rey shall be the registered agent of this corporation in charge thereof. SECTION 2. OTHER OFFICES.--The corporation may have other offices, either within or without the State of New Jersey, at such place or places as the Board or Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS SECTION 1. ANNUAL MEETINGS.--Annual meetings of shareholders for the election or directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of New Jersey, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. SECTION 2. SPECIAL MEETINGS.--Special meetings of the shareholders for any purpose or purposes may be called by the Chairman of the Board of Directors, the President, by resolution or the Board of Directors or at the request of the holders of a majority of the outstanding shares and may be held at such time and place within or without the State or New Jersey, as shall be stated in the notice of the meeting. SECTION 3. NOTICE OF MEETINGS.--Written notice, stating the place, date and time of the meeting, and the purpose or purposes of the meeting, shall be given to each shareholder entitled to vote thereat in the manner provided in Section 4, Article VII, not less than ten (10) nor more than sixty (60) days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent or all the shareholders entitled to vote thereat. SECTION 4. VOTING.--Each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. Each shareholder may vote, in person or by proxy, but no proxy shall be voted -2- after eleven months from its date unless such proxy provides for a longer period, and in no event shall a proxy be valid after three years from the date of execution. Upon the demand or any shareholder, before the voting begins, the vote for directors shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of New Jersey. A complete list of the shareholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. SECTION 5. QUORUM.--At any meeting, the presence, in person or by proxy, of the holders of a majority of the shares of the corporation entitled to vote shall constitute a quorum. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholder. In case a quorum shall not be present at any meeting, a majority in interest of the shareholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, -3- without notice other than announcement at the meeting, until the requisite amount of shares entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of shares entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. ACTION WITHOUT MEETING.--Except as otherwise provided by statute, whenever shareholders are required or permitted to take any action at a meeting or by vote, such action may be taken without a meeting, without prior notice and without a vote, by consent in writing setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. -4- ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM.--The number of directors constituting the whole Board of Directors shall be such number not less than one nor more than nine as may be fixed from time to time by resolution adopted by the shareholders or by the Board. The number of directors constituting the first Board shall be five. The directors shall be elected at the annual meeting of the shareholders and each director shall be elected to serve until his successor shall be elected and shall qualify. SECTION 2. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall be effective upon receipt thereof by the corporation or at such subsequent time as shall be specified in the notice of resignation. SECTION 3. VACANCIES.--Newly created directorships resulting from an increase in the number of directors, any directorship not filled at the annual meeting and any other vacancy, however caused, occurring in the Board may be filled by the affirmative vote of a majority of the remaining directors even though less than a quorum of the Board, or by a sole remaining director. A director so elected by the -5- Board shall hold office until the next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified. SECTION 4. REMOVAL.--Any one or more or all of the directors may be removed, (a) either with or without cause, at any time, by vote of the shareholders holding a majority of the outstanding shares of the corporation entitled to vote, present in person or by proxy, at any special meeting of the shareholders or (b) for cause, by action of the Board of Directors at any regular or special meeting of the Board. The Board of Directors may suspend any director pending a final determination that cause exists for removal. SECTION 5. POWERS.--The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the shareholders. SECTION 6. COMMITTEES.--The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more directors of the corporation. The Board may abolish any such committee at its pleasure or remove any director from membership on such -6- committee at any time, with or without cause. The Board may designate, by resolution, one or more directors as alternate memebers of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the By-Laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. SECTION 7. MEETINGS.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the shareholders; or the time and place of such meeting may be fixed by consent in writing of all the directors. Regular meetings of the Board of Directors may be held without notice at such times and places within or without the State of New Jersey or the United States of America, as may from time to time be fixed by the Board of Directors. Special meetings of the Board may be held at any time and place, within or without the State of New Jersey or the United States of America, upon the call of the Chairman of the Board, the President or a majority of the directors -7- on one day's notice to each director, either personally or by mail, telegram or telex. A notice, or waiver of notice, need not specify the purpose of any special meeting of the Board of Directors. SECTION 8. QUORUM.--At all meetings of the Board of Directors, a majority of the whole Board shall constitute a quorum for the transaction of business, except that when the number of directors constituting the whole Board shall be an even number, one half of that number shall constitute a quorum, or when the whole Board consists of one director, then one director shall constitute a quorum. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 9. COMPENSATION.--Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the Board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. -8- SECTION 10. ACTION WITHOUT MEETING.--Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior or subsequent to such action a written consent thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or Committee. ARTICLE IV OFFICERS SECTION 1. OFFICERS.--The officers of the corporation shall be a Vice Chairman, a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. All vacancies occurring among any of the officers shall be filled by the directors. Any officer may -9- be removed by the Board at any time with or without cause. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. SECTION 2. OTHER OFFICERS AND AGENTS.--The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN.--The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. VICE CHAIRMAN OF THE BOARD.--The Vice Chairman of the Board shall be the chief executive officer of the Corporation and shall preside at all meetings of the shareholders and the Board of Directors unless the Chairman is present. Subject to the control of the Board of Directors, he shall have general charge and active management of the conduct of the business of the Corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect and shall have and perform all powers and duties incident to the office of chief executive -10- officer of a corporation (except when the President, as such, must act in order to comply with the provisions of any law) and such other powers and duties as from time to time may be assigned to him by the Board of Directors. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. SECTION 5. PRESIDENT.--The President shall be the chief operating officer of the corporation, shall be the second executive officer or, if the office of Vice Chairman of the Board shall be vacant, the chief executive officer of the corporation and shall have general supervision over the business of the corporation, subject to the direction of the Vice Chairman of the Board and to the control of the Board. At the request of the Vice Chairman of the Board, or in the case of his absence or inability to act, or if the office of Vice Chairman of the Board shall be vacant, the President shall perform the duties of the Vice Chairman of the Board and, when so acting, shall have all the powers of the Vice Chairman of the Board. In general, he shall perform all -11- duties incident to the office of President and have such other powers and duties as from time to time may be assigned to him by the Chairman of the Board by the Board. SECTION 6. THE VICE-PRESIDENTS.--The Vice-President, or if there shall be more than one, the Vice-Presidents in the order determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 7. THE SECRETARY AND ASSISTANT SECRETARIES.--The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an Assistant Secretary, shall have -12- authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 8. THE TREASURER AND ASSISTANT TREASURERS.-- The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account -13- of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE V SHARE CERTIFICATES SECTION 1. CERTIFICATES.--The shares of the corporation shall be represented by certificates signed by the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice-President, and by the Treasurer or -14- an Assistant Treasurer, or the Secretary or an Assistant Secretary. The signatures of such individuals may be facsimiles if the certificates are countersigned by a transfer agent or registered by a registrar, other than the corporation or its employee. SECTION 2. LOST CERTIFICATES. A new certificate may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. LEGEND ON CERTIFICATES.--If, and as long as, the corporation holds a Casino License pursuant to the New Jersey Casino Control Act P.L. 1977 c. 110 (the "Casino Act") each certificate representing a security (as herein defined) issued by the corporation shall bear a legend on both sides as follows: "The security, share or other interest in the Corporation represented by the within certificate shall not be sold, assigned, pledged, transferred or -15- otherwise disposed of except upon condition that such sale, assignment, pledge, transfer or other disposition shall be null and void and in all respects ineffective if disapproved by the Casino Control Commission under the New Jersey Casino Control Act P.L. 1977 c. 110 (the 'Act'). The security, share or other interest represented by the within certificate and the holder thereof are subject to all the applicable provisions of the Act and in particular Section 105(a), (b), (d) and (e) of the Act." SECTION 4. TRANSFER OF SHARES.--Subject to the additional requirements of Article VI, shares of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 5. SHAREHOLDERS RECORD DATE.--In order that the corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive -16- payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. REGISTERED SHAREHOLDERS.--The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of New Jersey. SECTION 7. DIVIDENDS.--Subject to the provisions of the Certificate of Incorporation, the Board of Directors -17- may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the outstanding shares of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. ARTICLE VI COMPLIANCE WITH THE CASINO ACT IF THE CORPORATION OBTAINS A CASINO LICENSE SECTION 1. SECURITIES SUBJECT TO CASINO ACT.--All securities, shares, and other interests in the corporation shall be and the owners and holders thereof shall own or hold such securities, shares or other interests in the corporation subject to the applicable provisions of the Casino Act. Section 2. TRANSFER OF SECURITIES, ETC.--No security, share or other interest of the corporation shall be sold, assigned, pledged, transferred or otherwise disposed of except upon an express condition that such sale, assignment, pledge, transfer or other disposition shall be null and void and in all respects ineffective if the same be -18- disapproved by the Casino Control Commission (the "Commission") under the Casino Act, and the Commission shall at all times have the right to approve future transfers of such security, share or other interest in the corporation and in any holding company, intermediary company or subsidiary of the corporation. For the purposes hereof, "security" shall mean any instrument evidencing a direct or indirect ownership or creditor interest in the corporation, including but not limited to stock, common and preferred; bonds; mortgages; debentures; security agreements; notes; warrants; options; and rights. No security, share or other interest in the corporation shall be transferred on the books of the corporation unless the same has met all the requirements of the Casino Act applicable thereto and satisfactory evidence thereof has been received by the corporation. SECTION 3. REPURCHASE OF SECURITY, ETC.--In the event that the Commission shall disapprove the transfer of any security, share or other interest in the corporation, the corporation shall have the absolute right to repurchase such security, share or other interest in the corporation at the lesser of (i) the then current market price or (ii) the price at which the transferor acquired such security, share, or other interest. -19- ARTICLE VII GENERAL PROVISIONS SECTION 1. SEAL.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL, NEW JERSEY." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 2. FISCAL YEAR.--The fiscal year of the corporation shall be determined by resolution of the Board of Directors. SECTION 3. CHECKS.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 4. NOTICE AND WAIVER OF NOTICE.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated. In computing the period of time for the giving of any notice, the day on which the notice is given shall be excluded, and the day on which the matter noticed is to occur shall be included. If notice is given by mail, the notice shall be deemed to be -20- given when deposited in the mail addressed to the person to whom it is directed at his last address as it appears on the records of the corporation, with postage prepaid thereon. Shareholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation. or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VIII INDEMNIFICATION The corporation shall indemnify each present and future director and officer of the corporation against, and each such director and officer shall be entitled without further act on his part to indemnity from the corporation for, all expenses (including the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the corporation itself) reasonably incurred by him in -21- connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a director or officer of the corporation or of any company or corporation which he serves as a director or officer at the request of the corporation, whether or not he continues to be such director or officer at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such director or officer (a) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been derelict in the performance of his duties as such director or officer, or (b) in respect of any matter in which any settlement is effected, to any amount in excess of the amount of expenses which might reasonably have been incurred by such director or officer in conducting such litigation to a final conclusion; provided, further, that in no event shall anything herein contained be so construed as to protect, or to authorize the corporation to indemnify, such director or officer against any liability to the corporation or to its security holders to which he would otherwise be subject by reason of his wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office as such director or officer. The -22- foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such director or officer and shall be in addition to all other rights to which such director or officer may be entitled as a matter of law. ARTICLE IX AMENDMENTS These By-Laws may be altered, amended, or repealed or new by-laws may be adopted by the Board of Directors at any regular or special meeting of the Board. -23- EX-3.23 22 CERTIFICATE OF INCORPORATION OF SUN COVE LTD Exhibit 3.23 CERTIFICATE OF INCORPORATION STOCK CORPORATION 81-27 REV. 11172 STATE OF CONNECTICUT SECRETARY OF THE STATE 30 Trinity Street, Hartford, CT 06106 The undersigned incorporator(s) hereby form(s) a corporation under the Stock Corporation Act of the State of Connecticut: 1. The name of the corporation is Sun Cove, Ltd. 2. The nature of the business to be transacted, or the purposes to be promoted or carried out by the corporation, follows: To engage in any lawful act or activity for which corporations may be formed under the Connecticut Stock Corporation Act. ATTACHMENT A To the fullest extent permitted by the Connecticut Stock Corporation Act, as amended from time to time, a director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of duty as a director. EX-3.24 23 BY LAWS OF SUN COVE, LTD. Exhibit 3.24 * * * * * BY-LAWS OF SUN COVE, LTD. * * * * * ARTICLE I OFFICES Section 1. The principal office shall be located in Waterford, Connecticut. Section 2. The corporation may also have offices at such other places both within and without the State of Connecticut as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ANNUAL MEETINGS OF SHAREHOLDERS Section 1. All meetings of shareholders for the election of directors shall be held in the State of Connecticut, at such place as may be fixed from time to time by the board of directors. Section 2. Annual meetings of shareholders, shall be held on the first monday of July if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written or printed notice of the annual meeting stating the place, day and hour of the meeting shall be delivered not less than seven nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. ARTICLE III SPECIAL MEETINGS OF SHAREHOLDERS Section 1. Special meetings of shareholders for any purpose other than the election of directors may be held at such time and place within or without the State of Connecticut as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Special meetings of shareholders may be called at any time, for any purpose or purposes, by the board of directors or by such other persons as may be authorized by law. Section 3. Written or printed notice of a special meeting stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered not less than seven nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. Section 4. The business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. ARTICLE IV QUORUM AND VOTING OF STOCK Section 1. The holders of a majority of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 2. If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders unless the vote of a greater number of shares of stock is required by law or the certificate of incorporation. Section 3. Each outstanding share of stock, having voting power, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Section 4. Any action required to be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all -2- of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE V DIRECTORS Section 1. The number of directors shall be three (3). Directors need not be residents of the State of Connecticut nor shareholders of the corporation. The directors, other than the first board of directors, shall be elected at the annual meeting of the shareholders, and each director elected shall serve until the next succeeding annual meeting and until his successor shall have been elected and qualified. The first board of directors shall hold office until the first annual meeting of shareholders. Section 2. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected for the unexpired portion of the term of his predecessor in office. Any vacancy created by an increase in the number of directorships shall be filled for the unexpired term by action of shareholders. Any other vacancy may be filled for the unexpired term by action of the sole remaining director in office or by unanimous written consent of all the directors without a meeting or at a meeting of the board of directors by the concurring vote of a majority of the remaining directors in office, though such remaining directors are less than a quorum, though the number of directors at the meeting is less than a quorum and though such majority is less than a quorum. A director elected to fill a newly created directorship shall serve until the next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified. Section 3. The business affairs of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by laws directed or required to be exercised or done by the shareholders. Section 4. The directors may keep the books of the corporation, except such as are required by law to be kept within the state, outside of the State of Connecticut, at such place or places as they may from time to time determine. Section 5. The board of directors, by the affirmative vote of a majority of the directors then in office, and irrespective of -3- any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise. ARTICLE VI MEETINGS OF THE BOARD OF DIRECTORS Section 1. Meetings of the board of directors, regular or special, may be held either within or without the State of Connecticut. Section 2. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the shareholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or it may convene at such place and time as shall be fixed by the consent in writing of all the directors. Section 3. Regular meetings of the board of directors may be held upon such notice, or without notice, and at such time and at such place as shall from time to time be determined by the board. Section 4. Special meetings of the board of directors may be called by the president on five (5) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors. Section 5. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 6. Two (2) of the directors shall constitute a quorum for the transaction of business unless a greater number is required by law or by the certificate of incorporation. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 7. Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if a -4- consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. ARTICLE VII EXECUTIVE COMMITTEE Section 1. The board of directors, by resolution adopted by a majority of the number of directors fixed by the by-laws or otherwise, may designate two or more directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and exercise all of the authority of the board of directors in the management of the corporation, except as otherwise required by law. Vacancies in the membership of the committee shall be filled by the board of directors at a regular or special meeting of the board of directors. The executive committee shall keep regular minutes of its proceedings and report the same to the board when required. ARTICLE VIII NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or shareholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or shareholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice whatever is required to be given under the provisions of the statutes or under the provisions of the certificate of incorporation or these by-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE IX OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Section 2. The board of directors at its first meeting after -5- each annual meeting of shareholders shall choose a president, one or more vice-presidents, a secretary and a treasurer, none of whom need be a member of the board. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the shareholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors, shall, in the absence or disability of the president, perform the duties and exercise the powers of the president and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He -6- shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or, if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. -7- ARTICLE X CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by certificates signed by the president or a vice-president and the secretary or an assistant secretary or the treasurer or an assistant treasurer of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. When the corporation is authorized to issue shares of more than one class there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the corporation will furnish to any shareholder upon request and without charge, a full or summary statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series. Section 2. The signatures of the officers of the corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed. TRANSFERS OF SHARES Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be -8- issued to the person entitled thereto, and the old certificate cancelled and the transaction recorded upon the books of the corporation. CLOSING OF TRANSFER BOOKS Section 5. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days, immediately preceding such meeting. In lieu of closing the stock transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed, the determination of shareholders entitled to notice of or to vote at a meeting, or to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. REGISTERED SHAREHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Connecticut. LIST OF SHAREHOLDERS Section 7. The officer or agent having charge of the transfer books for shares shall make, at least five days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of each and the number of shares held by each, -9- which list, for a period of five days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of the shareholders. ARTICLE XI GENERAL PROVISIONS DIVIDENDS Section 1. Subject to the provisions of the certificate of incorporation relating thereto, if any, dividends may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividend-Q may be paid in cash, in property or in shares of the capital stock, subject to any provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 4. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 5. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Connecticut". The seal may be used by -10- causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE XII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted (a) at any regular or special meeting of shareholders at which a quorum is present or represented, by the affirmative vote of a majority of the stock entitled to vote, provided notice of the proposed alteration, amendment or repeal be contained in the notice of such meeting, or (b) by the affirmative vote of a majority of the board of directors at any regular or special meeting of the board. ARTICLE XIII INDEMNIFICATION Section 1. The corporation shall to the fullest extent permitted by the Connecticut Stock Corporation Act (the "Act") indemnify all officers and directors of the corporation and advance expenses reasonably incurred by all officers and directors of the corporation. Section 2. To the fullest extent permitted by the Act, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. -11- EX-4.6 24 FORM OF EXCHANGE NOTE Exhibit 4.6 SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. 9% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2007 Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the Issuers or their agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. If a Holder or a beneficial owner of a Note is required by any Gaming Authority to be found suitable, the Holder shall apply for a finding of suitability within 30 days after a Gaming Authority request or sooner if so required by such Gaming Authority. The applicant for a finding of suitability must pay all costs of the investigation for such finding of suitability. If a Holder or beneficial owner is required to be found suitable and is not found suitable by a Gaming Authority, the Holder shall, to the extent required by applicable law, dispose of his Notes within 30 days or within that time prescribed by a Gaming Authority, whichever is earlier. If the Holder fails to dispose of his Notes within such time period, the Issuers may, at their option, redeem such Holder's Notes at, depending on applicable law, (i) the principal amount thereof, together with accrued and unpaid interest to the date of the finding of unsuitability by a Gaming Authority, (ii) the amount that such Holder paid for the Notes, (iii) the fair market value of the Notes, (iv) the lowest of clauses (i), (ii) and (iii), or (v) such other amount as may be determined by the appropriate Gaming Authority. CUSIP NO. No. $ Sun International Hotels Limited, an international business company organized under the laws of the Commonwealth of The Bahamas ("Sun International"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun International ("SINA" and, together with Sun International, the "Issuers," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promise, jointly and severally, to pay to ____________, or registered assigns, the principal sum of __________ DOLLARS ($___________), on March 15, 2007. Interest Payment Dates: March 15 and September 15. Record Dates: March 1 and September 1. Reference is made to the further provisions of this Security on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Issuers have caused this Instrument to be duly executed under its corporate seal. SUN INTERNATIONAL HOTELS LIMITED By: ____________________________________ Name: Title: Attest: _______________ SUN INTERNATIONAL NORTH AMERICA, INC. By: ____________________________________ Name: Title: Attest: _______________ This is one of the Securities described in the within-mentioned Indenture. Dated: ___________, 1997 THE BANK OF NEW YORK, As Trustee By: ____________________________________ Authorized Signatory SUN INTERNATIONAL HOTELS LIMITED SUN INTERNATIONAL NORTH AMERICA, INC. 9% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2007 1. INTEREST. Sun International Hotels Limited, an international business company organized under the laws of the Commonwealth of The Bahamas ("Sun International"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun International ("SINA" and, together with Sun International, the "Issuers"), jointly and severally, promise to pay interest on the principal amount of this Security at a rate of 9% per annum. To the extent it is lawful, the Issuers promise to pay interest on any interest payment due but unpaid on such principal amount at a rate of 9% per annum compounded semi-annually. The Issuers will pay interest semi-annually on March 15 and September 15 of each year (each, an "Interest Payment Date"), commencing September 15, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities pursuant to the Indenture or, if no interest has been paid, from March 10, 1997. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. 2. METHOD OF PAYMENT. The Issuers shall pay interest on the Securities (except defaulted interest) to the persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date. Holders must surrender Securities to a Paying Agent to collect principal payments. Except as provided below, the Issuers shall pay principal and interest in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts ("Cash"). The Securities will be payable as to principal, premium and interest at the office or agency of the Issuers maintained for such purpose within the City and State of New York or, at the option of the Issuers, payment of principal, premium and interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and PROVIDED that payment by wire transfer of immediately available funds will be required with respect to principal of and interest and premium on all Global Securities and all other Securities the Holders of which shall have provided written wire transfer instructions to the Issuers and the Paying Agent. 3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Issuers may change any Paying Agent, Registrar or Co-registrar without notice to the Holders. The Issuers or any of their respective Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar or Co-registrar. 4. INDENTURE. The Issuers issued the Securities under an Indenture, dated March 10, 1997 (the "Indenture"), among the Issuers, the Guarantors named therein and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act, as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and said Act for a statement of them. The Securities are senior subordinated obligations of the Issuers limited in aggregate principal amount to $200,000,000. 5. REDEMPTION. Except as provided in this Paragraph 5 or as provided in Section 3.2 of the Indenture, the Issuers shall not have the right to redeem any Securities. The Securities are redeemable in whole or from time to time in part at any time on or after March 15, 2002, at the option of the Issuers, at the Redemption Price (expressed as a percentage of principal amount) set forth below, if redeemed during the 12-month period commencing March 15 of each of the years indicated below, in each case (subject to the right of Holders of record on the Record Date to receive interest due on an Interest Payment Date that is on or prior to such Redemption Date), plus any accrued but unpaid interest to the Redemption Date. Year Redemption Price ---- ---------------- 2002 . . . . . . . . . . . . . . . . 104.50% 2003 . . . . . . . . . . . . . . . . 103.00% 2004 . . . . . . . . . . . . . . . . 101.50% 2005 and thereafter. . . . . . . . . 100.00% On or prior to March 15, 2000, upon a Public Equity Offering of Ordinary Shares for cash of Sun International, up to $70 million aggregate principal amount of the Securities may be redeemed at the option of the Issuers with cash from the Net Cash Proceeds of such Public Equity Offering, at 109% of the principal amount thereof (subject to the right of Holders of record on a Record Date to receive interest due on an Interest Payment Date that is on or prior to such Redemption Date), plus accrued but unpaid interest to the date of redemption; PROVIDED, HOWEVER, that immediately following each such redemption not less than $130 million aggregate principal amount of the Notes are outstanding, PROVIDED, FURTHER that such redemption shall occur within 120 days of such Public Equity Offering. The Notes may be redeemed at the option of the Issuers, in whole but not in part, upon not less than 30 nor more than 60 days' notice given as provided herein, at any time at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest, if any, thereon, to the date fixed for redemption if, as a result of any change in or amendment to the laws, treaties, rulings or regulations of The Bahamas, or of any political subdivision or taxing authority thereof or therein, or any change in the official position of the applicable taxing authority regarding the application or interpretation of such laws, treaties, rulings or regulations (including a holding judgment or order of a court of competent jurisdiction) or any execution thereof or amendment thereto, which is enacted into law or otherwise becomes effective after the Issue Date, either Issuer is or would be required on the next succeeding Interest Payment Date to pay Additional Amounts on the Notes as a result of the imposition of a Bahamian withholding tax and the payment of such Additional Amounts cannot be avoided by the use of any reasonable measures available to the Issuers which do not cause the Issuers to incur any material costs. The Issuers shall also pay to holders on the redemption date any Additional Amounts then due and which will become due as a result of the redemption would otherwise be payable. If a Holder or a beneficial owner of a Note is required by any Gaming Authority to be found suitable, the Holder shall apply for a finding of suitability within 30 days after a Gaming Authority request or sooner if so required by such Gaming Authority. The applicant for a finding of suitability must pay all costs of the investigation for such finding of suitability. If a Holder or beneficial owner is required to be found suitable and is not found suitable by a Gaming Authority, the Holder shall, to the extent required by applicable law, dispose of his Notes within 30 days or within that time prescribed by a Gaming Authority, whichever is earlier. If the Holder fails to dispose of his Notes within such time period, the Issuers may, at their option, redeem such Holder's Notes at, depending on applicable law, (i) the principal amount thereof, together with accrued and unpaid interest to the date of the finding of unsuitability by a Gaming Authority, (ii) the amount that such Holder paid for the Notes, (iii) the fair market value of the Notes, (iv) the lowest of clauses (i), (ii) and (iii), or (v) such other amount as may be determined by the appropriate Gaming Authority. Any redemption of the Notes shall comply with Article III of the Indenture. 6. NOTICE OF REDEMPTION. Except as required by a Gaming Authority with respect to a redemption provided for in Section 3.2 of the Indenture, notice of redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be required by any Governmental Authority) to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, from and after any Redemption Date, if monies for the redemption of the Securities called for redemption shall have been deposited with the Paying Agent on such Redemption Date, the Securities called for redemption will cease to bear interest and the only right of the Holders of such Securities will be to receive payment of the Redemption Price, plus any accrued but unpaid interest to the Redemption Date. 7. DENOMINATIONS; TRANSFER; EXCHANGE. The Securities are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of, or exchange Securities in accordance with, the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption. 8. PERSONS DEEMED OWNERS. The registered Holder of a Security may be treated as the owner of it for all purposes. 9. UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money back to the Issuers at their written request. After that, all liability of the Trustee and such Paying Agent(s) with respect to such money shall cease. 10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Issuers at any time deposit into an irrevocable trust with the Trustee Cash or U.S. Government Obligations sufficient to pay the principal of and interest on the Securities to redemption or maturity and comply with the other provisions of the Indenture relating thereto, the Issuers will be discharged from certain provisions of the Indenture and the Securities (including the financial covenants, but excluding their obligation to pay the principal of and interest on the Securities). 11. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the written consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then out- standing. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, comply with the TIA or make any other change that does not adversely affect the rights of any Holder of a Security. 12. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on the ability of the Issuers and their respective Subsidiaries to, among other things, incur additional Indebtedness and Disqualified Capital Stock, make payments in respect of their Capital Stock, enter into transactions with Affiliates, incur Liens, merge or consolidate with any other person and sell, lease, transfer or otherwise dispose of substantially all of their properties or assets. The limitations are subject to a number of important qualifications and exceptions. The Issuers must annually report to the Trustee on compliance with such limitations. 13. CHANGE OF CONTROL. In the event there shall occur any Change of Control Triggering Event, each Holder of Securities shall have the right, at such Holder's option but subject to the limitations and conditions set forth in the Indenture, to require the Issuers to purchase on the Change of Control Purchase Date in the manner specified in the Indenture, all or any part (in integral multiples of $1,000) of such Holder's Securities at a cash price equal to 101% of the principal amount thereof, together with accrued but unpaid interest to and including the Change of Control Purchase Date. 14. CERTAIN ASSET SALES. The Indenture imposes certain limitations on the ability of the Issuers to sell assets. In the event the proceeds from a permitted Asset Sale exceed certain amounts, as specified in the Indenture, the Issuers generally will be required either to reinvest the proceeds of such Asset Sale in their business, use such proceeds to retire debt, or to make an asset sale offer to purchase a certain amount of each Holder's Securities at 100% of the principal amount thereof, plus accrued interest, if any, to the purchase date, as more fully set forth in the Indenture. 15. GAMING LAWS. The rights of the Holder of this Security and any owner of any beneficial interest in this Security are subject to various gaming laws and the jurisdiction and requirements of the Gaming Authorities and the further limitations and requirements set forth in the Indenture. 16. RANKING. Payment of principal, premium, if any, and interest on the Securities is subordinated, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Debt. 17. SUCCESSORS. When a successor assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor will be released from those obligations. 18. DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. 19. TRUSTEE DEALINGS WITH ISSUERS. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or their respective Affiliates, and may otherwise deal with the Issuers or their Affiliates as if it were not the Trustee. 20. NO RECOURSE AGAINST OTHERS. No direct or indirect stockholder, director, officer or employee, as such, past, present or future of the Issuers or any successor corporation shall have any personal liability in respect of the obligations of the Issuers under the Securities or the Indenture by reason of his status as such stockholder, director, officer or employee. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities. 21. AUTHENTICATION. This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Security. 22. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 23. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers will cause CUSIP numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon. 24. GOVERNING LAW. The Indenture and the Securities shall be governed by and construed in accordance with the internal laws of the State of New York. ASSIGNMENT I or we assign this Security to ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) Please insert Social Security or other identifying number of assignee _________________ and irrevocably appoint ___________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him. Dated: __________ Signed: ____________________________________________________ ___________________________________________________________________________ (Sign exactly as your name appears on the other side of this Security) Signature guarantee:___________________________________ OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Issuers pursuant to Section 4.13 or Article X of the Indenture, check the appropriate box: / / Section 4.13 / / Article X If you want to elect to have only part of this Security purchased by the Issuers pursuant to the Indenture, state the principal amount you want to have purchased: $________ Date: ________________ Signature: _____________________________________________ (Sign exactly as your name appears on the other side of this Security) Signature guarantee:___________________________ SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES The following exchanges of a part of this Global Security for Definitive Securities have been made:
Amount of Amount of Principal Amount Signature of decrease in increase in of this Global authorized Principal Amount Principal Amount Security following signatory of of this Global of this Global such decrease (or Trustee or Securities Date of Exchange Security Security increase) Custodian - ---------------------------------------------------------------------------------------------------------
EX-5.1 25 OPINION OF CRAVATH, SWAINE & MOORE Exhibit 5.1
CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA SAMUEL C. BUTLER ALLEN FINKELSON GEORGE J. GILLESPIE, II RONALD R. ROLFE THOMAS D. DARR PAUL C. SAUNDERS 825 EIGHTH AVENUE MELVIN L. BEDRICK MARTIN L. SETIEL NEW YORK, NY 10019-7475 GEORGE T. LOWT DOUGLAS D. BROADWATER ROBERT FOERNMAN ALAN C. STEPHENSON ALAN J. KRUGRA MAT A. GHULMAN TELEPHONE: (212) 474-1000 JAMES A. EDWARDS STUART W. GOLD FACSIMILE: (212) 474-3700 FREDERICK O. SCANNER, JR. JOHN W. WHITE CHRISTINE DEBMAN JOHN C. HESFROWER --------- ROBERT S. RIFKIND EVAN B. CHESLER 33 KING WILLIAM STREET SUITE HSOP, AGIA PACIFIC FINANCE TOWER DAVID COLES PATRICIA SEOGHEGUN LONDON, ECAR SDU ENGLAND 3 GARDER ROAD, CENTRAL DAVID D. BROWNWOOD D. COLLIER KIRKMAN TELEPHONE: aa-171-485-1800 HONG KONG PAUL M. DODYK MICHAEL C. GEHLER FACSIMILE: aa-171-850-1150 TELEPHONE: 858-8500-7200 RICHARD M. ALLEN DANIEL P. CUNNINGHAN FACSIMILE: 858-F509-7272 THOMAS R. GNOAR KATE R. MEINTERMAN ROBERT D. JOFFE S. ROBBINS KIESSLING WRITER'S DIRECT DIAL NUMBER ACADERT L. CARF ROBERT D. TURNER PHILIP A. GELSTON MARC S. ROSENBERG RORY G. MILLSON WILLIAM O. GRANNAM NEIL P. WESTREIGH LEWIS S. STEINBERG FRANCIS P. WARRON SUSAN WEBSTER RICHARD W. CLART WILLIAM M. WIOKN WILLIAM P. POWERS, JR. TIMOTHY G. MASBAD JAMES D. COOPER DAVID MERCADO STEPHEN L. STEPHEN L. GORDON ROWAN D. WILSON ROBERT A. KINDLER JOHN T. GAFTREY DANIEL L. ROGLEY PETER T. BANSUK GREGORY M. GNAIT GAMONS C. GOLDSTEIN PETER B. WILSON PAUL MICHALDRI JAMES C. VAROELL, II THOMAS G. RAFFERTY ROBERT M. BARON MICHAEL S. GOLDMAN KEVIN J. GREMAN GEORGE W. BILICIC, JR. W. CLATTON JOHNSON RICHARD HALL STEPHEN S. MADDEN ELIZABETH L. GRAYER C. ALLEN PARKER JULIE A. NORTH
March 20, 1997 Sun International Hotels Limited Sun International North America, Inc. 9% Exchange Senior Subordinated Notes Due 2007 Ladies and Gentlemen: We have acted as counsel for Sun International Hotels Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("Sun"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun ("SINA" and, together with Sun, the "Issuers"), in connection with the filing by the Issuers and certain guarantors (the "Guarantors") with the Securities and Exchange Commission (the "Commission") of a registration statement on Form F-4 (the "Registration Statement") under the Securities Act of 1933 (the "Act"), for the purpose of registering the Issuers' offer to exchange (the "Exchange Offer") an aggregate principal amount at maturity of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 (the "Exchange Notes") of the Issuers for a like principal amount at maturity of 9% Senior Subordinated Notes due 2007 (the "Outstanding Notes"). The Outstanding Notes are and the Exchange Notes are to be guaranteed by the Guarantors (the "Guarantees"). The Outstanding Notes have been and the Exchange Notes will be issued pursuant to an Indenture dated as of March 10, 1997 (the "Indenture") among the Issuers, the Guarantors and The Bank of New York, as trustee (the "Trustee"). In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion, including: (a) the Amended and Restated Memorandum of Association of Sun; (b) the Articles of Association, as amended, of Sun; (c) the Certificate of Incorporation of SINA, as amended; (d) the By-Laws of SINA; (e) resolutions adopted by the Board of Directors of each of the Issuers on March 4, 1997; (f) the Indenture; and (g) the Registration Statement. Based on the foregoing, we are of opinion as follows: 1. The Indenture has been duly authorized, executed and delivered by each Issuer and Guarantor; 2. The Exchange Notes have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and duly delivered in exchange for the Outstanding Notes in accordance with the Exchange Offer in the manner described in the Registration Statement, will constitute valid and binding obligations of each Issuer entitled to the benefits of the Indenture and enforceable against each Issuer in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' right generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether in a proceeding in equity or at law); and 3. Assuming the due authorization, execution and delivery of the Indenture by the Trustee, the Guarantees constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fradulent transfer and other similar laws affecting creditors' right generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether in a proceeding in equity or at law). 4. The statements in the Registration Statement under the caption "Tax Consequences - Certain United States Tax Considerations" insofar as they purport to describe the provisions of the law and documents referred to therein, fairly present the information disclosed therein in all material respects. We are admitted to practice in the State of New York, and we express no opinion as to any matters governed by any law other than the law of the State of New York, the General Corporation Law of the State of Delaware and the Federal law of the United States of America. In particular, we do not purport to pass on any matter governed by the laws of the Commonwealth of The Bahamas, the State of Connecticut, the State of New Jersey or the British Virgin Islands. In rendering this opinion, we have, with your approval, relied upon the opinions dated March 20, 1997, of Harry B. Sands and Company, Bahamian counsel for the Issuers, Rome McGuigan Sabanosh, P.C., Connecticut counsel for the Issuers, Kozlov, Seaton, Romanini & Brooks P.C., New Jersey counsel for the Issuers, and Smith-Hughes, Raworth & McKenzie, British Virgin Islands counsel for the Issuers, as to all matters of law covered therein relating to the laws of the Commonwealth of The Bahamas, the State of Connecticut, the State of New Jersey or the British Virgin Islands, respectively, and we do not express any opinion with respect to such law. We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement and to the filing, as an exhibit to the Registration Statement and any amendments thereto, of this opinion. In giving such consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Cravath, Swaine & Moore ---------------------------- Cravath, Swaine & Moore Sun International Hotels Limited Coral Towers Paradise Island The Bahamas Sun International North America, Inc. 1133 Boardwalk Atlantic City, NJ 08401 EX-5.2 26 OPINION OF KOZLOV,SEATON,ROMANINI,BROOKS&GREERNBER Exhibit 5.2 [Letterhead of Kozlov, Seaton, Romanini, Brooks & Greenberg] Re: Sun International Hotels Limited/Sun International North America, Inc. Dear Ladies and Gentlemen: We have acted as counsel for Sun International Hotels, Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("Sun"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun ("SINA" and, together with Sun, the "Issuers"), in connection with the filing by the Issuers and certain guarantors (the "Guarantors") with the Securities and Exchange Commission (the "Commission") of a registration statement on Form F-4 (the "Registration Statement") under the Securities Act of 1933 (the "Act"), for the purpose of registering the Issuers' offer to exchange (the "Exchange Offer") an aggregate principal amount at maturity of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 (the "Exchange Notes") of the Issuers for a like principal amount at maturity of 9% Senior Subordinated Notes due 2007 (the "Outstanding Notes"). The Outstanding Notes are and the Exchange Notes are to be guaranteed by the Guarantors (the "Guarantees"). The Outstanding Notes have been and the Exchange Notes will be issued pursuant to an Indenture dated as of March 10, 1997 (the "Indenture") among the Issuers, the Guarantors and The Bank of New York, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Registration Statement. For the purpose of rendering this opinion, we examined originals or copies certified or otherwise identified to our satisfaction as being true copies of such records, documents, instruments and certificates as, in our judgment, are necessary or appropriate to enable us to render the opinions expressed below. For the purposes of this opinion, we have also examined, to the extent necessary, such records, documents and certificates of public officials and officers or representatives of Sun International and SINA, and we have considered such questions of law, as we deem necessary or appropriate. When relevant facts were not independently established, we have relied upon the representations and warranties as to factual matters contained in and made pursuant to the foregoing documents, instruments, records and certificates. However, we have not been requested to conduct, nor have we undertaken, independent investigations to verify the content of factual statements made to us in connection with the representations and warranties referred to above, or the veracity of such representations and warranties. Without limiting the generality of the foregoing, in rendering 2 this opinion, we have, with your permission, assumed without independent verification and without any investigation of any kind that: (i) the obligations of each party set forth in the Registration Statement are its legal, valid and binding obligations, enforceable in accordance with its terms; (ii) all authorizations, approvals, actions and consents necessary to be obtained, taken or received from and on notice to or filings with, any governmental authority, other than New Jersey governmental authorities, that are required for the due execution, delivery and performance by each of the parties to the Registration Statement have been obtained, taken, received or given and are in full force and effect; (iii) each natural person executing any such documents has sufficient legal capacity to do so; (iv) the documents have been executed and delivered in the forms of the drafts reviewed by us; (v) except as disclosed in the Registration Statement, there are no oral or written agreements or understanding that we are aware of, and there is no course of prior dealing between any of the parties that we are aware of, that would in any manner vary or supplement the terms and provisions of the documents which we have examined or of the relationship set forth in the Registration Statement or which would have an effect on the opinions rendered herein; (vi) all documents submitted to us as originals are authentic, the signatures on all documents that we examined are genuine and all documents submitted to us as certified, conformed, photostatic or facsimile copies conform to the original document; and (vii) all corporate records made available to us by Sun 3 International and SINA and all public records we have reviewed are accurate and complete. Whenever our opinion herein with respect to the existence or absence of facts is qualified by the phrase "to our knowledge" or "known to us", or similar language, it is intended to indicate that during the course of our representation of Sun International and SINA, no information has come to our attention which would give us actual knowledge of the existence or absence of such facts or the inaccuracy of the statements made. Except as otherwise stated herein, we have undertaken no independent investigation or verification of such matters. The words "our knowledge" and similar language used herein are intended to be limited to the (i) knowledge of the existence or absence of the facts in the possession of the lawyers currently members or associated with this firm who have worked on matters on behalf of Sun International and SINA; and (ii) knowledge obtained from such certifications or representation letters of Sun International and SINA, or such of its officers or other representatives as we have deemed appropriate. We are qualified to practice law in the State of New Jersey. The opinions set forth herein are expressly limited to the laws of the State of New Jersey and we do not purport to be experts on, or to express any opinion herein concerning, any law other than the law in the State of New Jersey. We express no opinion herein concerning, and we assume no responsibility as to the laws or judicial decisions related to, or any orders, consents, or other 4 authorizations or approvals as may be required by, any federal law, including any federal securities law, or any state securities law or blue sky laws. Our opinion herein regarding compliance of certain statutes, rules and regulations and as to the lack of any required consents or approvals of, authorizations by, registrations, declarations or filings with certain governmental authorities, are based upon a review of those statutes, rules and regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Registration Statement. Based upon the foregoing and subject to the qualifications, exceptions and assumptions set forth herein, we are of the opinion that: 1. RIH has been duly incorporated and is a corporation validly existing and in good standing under the laws of the State of New Jersey, with full corporate power and authority to own, lease and operate its properties and conduct its businesses as described in the Registration Statement. 2. The Indenture and the Registration Statement have been duly authorized, executed and delivered by RIH. 3. The Guarantee has been duly authorized, executed and delivered by RIH. 4. The execution, delivery and performance of the Indenture and the Registration Statement by RIH, the issuance and sale of the Guarantee, compliance by RIH with all the provisions thereof and the consummation of the transactions contemplated thereby will not conflict with or constitute a breach or violation of (i) any New Jersey laws or administrative regulations; (ii) rulings or orders of any New Jersey court or governmental agency, body or official having jurisdiction over RIH or its properties; or (iii) the charter and by-laws of RIH. The opinions expressed herein are based upon the applicable laws, regulations and ordinances in effect as of the date of this 5 letter. In delivering this letter to you, we are not undertaking to apprise you either or any transaction, events or occurrences taking place after the date of this letter of which we may acquire any knowledge or of any change in any applicable laws taking place after the date of this letter which may affect the opinions set forth herein. This opinion may be relied upon by Cravath, Swaine & Moore, United States counsel for Sun International for the sole purpose of rendering its opinion in connection with the Exchange Offer. We hereby consent to the use of our name under the caption "Legal matters" in the Prospectus forming a part of the Registration Statement and to the filing, as an exhibit to the Registration Statement and any amendments thereto, of this opinion. In giving such consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act. KOZLOV, SEATON, ROMANINI, BROOKS & GREENBERG /s/ Kozlov, Seaton, Romanini, Brooks & Greenberg 6 EX-5.3 27 OPINION OF ROME MCGUIGAN SABANOSH Exhibit 5.3 ROME MCGUIGAN SABANOSH, P.C. ONE STATE STREET 1000 LAFAYETTE BOULEVARD HARTFORD, CT 06103-3101 BRIDGEPORT, CT 06604-4700 850-549-1000 203-382-9000 FAX 860-724-3921 FAX 203-382-8005 March 20, 1997 Sun International Hotels Limited Coral Towers Paradise Island The Bahamas Sun International North America, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Re: $200,000,000.00 Sun International Hotels Limited and Sun International North America, Inc. 9% Exchange Senior Subordinated Notes due 2007 Gentlemen: We have acted as special Connecticut counsel for Sun International Hotels Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("Sun"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun ("SINA" and, together with Sun, the "Issuers"), in connection with the filing by the Issuers and certain guarantors (the "Guarantors") with the Securities and Exchange Commission (the "Commission") of a registration statement on Form F-4 (the "Registration Statement") under the Securities Act of 1933 (the "Act"), for the purpose of registering the Issuers' offer to exchange (the "Exchange Offer") an aggregate principal amount at maturity of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 (the "Exchange Notes") of the Issuers for a like principal amount at maturity of 9% Senior Subordinated Notes due 2007 (the "Outstanding Notes"). The Outstanding Notes are and the Exchange Notes are to be guaranteed by the Guarantors (the "Guarantees"). The Outstanding Notes have been and the Exchange Notes will be issued pursuant to an Indenture dated as of March 10, 1997 (the "Indenture") among the Issuers, the Guarantors and The Bank of New York, as trustee (the "Trustee"). We have examined executed counterparts of: 1. The Registration Statement 2. The Indenture. Rome Mcguigan Sabonosh, P.C. ATTORNEYS AT LAW Sun International Hotels Limited Sun International North America, Inc. March 20, 1997 Page 2 3. The Outstanding Notes. 4. The Exchange Notes. 5. The Guarantees 6. The Amended and Restated Gaming Facility Management Agreement between the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (the "Manager") dated August 30, 1995, as assigned by the Mohegan Tribe of Indians of Connecticut to the Mohegan Tribal Gaming Authority and as amended on September 29, 1995 (the "Management Agreement"). The Registration Statement, the Indenture, the Outstanding Notes, the Exchange Notes and the Guarantees are hereinafter collectively referred to as the "Financing Documents". In connection with the foregoing transaction, we have examined and relied upon such documents, corporate and partnership records, certificates of public officials and of officers of the Issuers, as we have considered relevant and necessary as the basis for the opinion hereinafter set forth. As to various questions of fact material to our opinion, we have relied, without independent investigation, upon the representations made in the Financing Documents and in certificates of the officers of the Issuers and the Guarantors. We have assumed, without independent investigation, the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies. We have also assumed, without independent investigation, that all documents examined by us have been duly and validly authorized, executed and delivered by, and are legal, valid and binding on and enforceable against, each of the parties thereto, except as otherwise specifically opined to herein as to Sun Cove. The opinions expressed herein are limited to the existing laws of the State of Connecticut. We express no opinion as to matters of federal law, or as to matters of federal and state securities law, including but not limited to so-called "blue sky" laws. Rome McGuigan Sabanosh, P.C. Attorneys at Law Sun International Hotels Limited Sun International North America, Inc. March 20, 1997 Page 3 All opinions expressed herein are subject to the effect of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. We express no opinion as to the enforceability of any provisions of the Financing Documents. Based upon and subject to the foregoing, it is our opinion that: 1. Sun Cove is a validly existing corporation in good standing under the laws of the State of Connecticut and has all requisite power and authority to conduct its business as described in the Registration Statement; Sun Cove filed its Articles of Organization with the Secretary of State of Connecticut on June 30, 1994. 2. The Indenture and the Registration Statement have been duly authorized, executed and delivered by Sun Cove; 3. The Guarantees have been duly authorized, executed and delivered by Sun Cove; 4. The execution, delivery and performance of the Indenture and the Registration Statement by Sun Cove, the issuance of the Guarantees, compliance by Sun Cove with all the provisions thereof and the consummation of the transactions contemplated thereby will not conflict with or constitute a breach of violation of (i) any Connecticut laws or administrative regulations applicable to Sun Cove, (ii) any rulings or orders of any Connecticut court or governmental agency, body or official having jurisdiction over Sun Cove or its properties or (iii) the charter or by-laws of Sun Cove; 5. None of the issuance and sale of the Exchange Notes or the performance of the Issuers' obligations pursuant to the Financing Documents or the performance by the Manager of the Management Agreement will violate any Connecticut statute, rule or regulation with respect to gaming to which any of the Issuers or the Manager is subject or by which any of them is bound, ROME MCGUIGAN SABANOSH, P.C. ATTORNEYS AT LAW Sun International Hotels Limited Sun International North America, Inc. March 20, 1997 Page 4 6. No authorization, approval, consent or order of any Connecticut authority with jurisdiction over gaming is required to be obtained by the Issuers in connection with the sale of the Exchange Notes; 7. There is no requirement under any Connecticut statute, rule or regulation with respect to gaming which requires any holder of the Exchange Notes, solely in its capacity as a holder of the Exchange Notes, to apply for or receive any individual license, any individual certificate or any other authorization from any Connecticut authority to acquire or hold Exchange Notes under the Indenture; We consent to the reliance of Cravath, Swaine & Moore on this letter for purposes of their opinion letter to you of even date herewith. We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement and to the filing, as an exhibit to the Registration Statement and any amendments thereto, of this opinion. In giving such consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act. Sincerely, ROME MCGUIGAN SABANOSH, P.C. /s/ Lewis Blome By:-------------------------- a Principal EX-5.4 28 OPINION OF HARRY B. SANDS AND CO. Exhibit 5.4 LOGO 20th March, 1997 Sun International Hotels Limited, Coral Towers, Paradise Island, The Bahamas Sun International North America, Inc., 1133 Boardwalk, Atlantic City, N.J. 08401 Ladies and Gentlemen: We have acted as counsel to Sun International Hotels Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("Sun"), in connection with the filing by Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun ("SINA" and, together with Sun, "the Issuers"), and certain guarantors ("the Guarantors") with the Securities and Exchange Commission ("the Commission") of a registration statement on Form F-4 ("the Registration Statement") under the Securities Act of 1933 ("the Act"), for the purpose of registering the Issuers' offer to exchange ("the Exchange Offer") an aggregate principal amount at maturity of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 ("the Exchange Notes") of the Issuers for a like principal amount at maturity of 9% Senior Subordinated Notes due 2007 ("the Outstanding Notes"). The Outstanding Notes are and the Exchange Notes are to be guaranteed by the Guarantors ("the Guarantees"). The Outstanding Notes have been and the Exchange Notes will be issued pursuant to an Indenture dated as of March 10, 1997 ("the Indenture") among the Issuers, the Guarantors and The Bank of New York as trustee ("the Trustee"). In connection with this opinion, we have examined originals or copies certified or otherwise identified to our satisfaction, of such other documents, corporate records, certificates of officers of the Sun International and the Bahamian Guarantors and of public officials, and other Instruments, and we have conducted such other investigations OPINION LETTER 20th March, 1997 Registration Statement Page 2 of fact and law as we have deemed necessary or appropriate for the purposes of this opinion. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, relied upon certificates of Sun International, the Bahamian Guarantors or their respective officers, or of public officials. For the purposes of this opinion, we have assumed: (a) the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all such documents submitted to us as copies; (b) that such documents as are expressed to be governed by laws other than those of the Commonwealth of The Bahamas constitute legal, valid and binding obligations of each party thereto and are enforceable in accordance with their respective terms under the laws by which they are expressed to be governed; (c) the capacity, power and authority of each of the parties to all documents other than Sun International and the Bahamaian Guarantors to execute, deliver and perform their respective obligations under same; (d) the due execution and delivery of all documents by or on behalf of each of the parties thereto other than Sun International and the Bahamian Guarantors; and (e) that the public records examined by us were at the time of our examination (which occurred not more than one week prior to the date hereof) up to date and accurate. We are qualified to render opinions only as to the laws of the Commonwealth of The Bahamas applicable therein, and we express no opinion as the laws of any other jurisdiction. Based upon and relying upon the foregoing (and subject to the assumptions and qualifications contained herein), we are of the following opinion: (i) Sun International and each of the Bahamian Guarantors has all the requisite corporate power and authority to execute, deliver and perform their respective obligations under the Indenture and the Registration Statement to authorize, issue and sell the Securities and the Guarantees, as applicable, as contemplated by the Indenture and the Registration Statement; OPINION LETTER 20th March, 1997 Registration Statement Page 3 (ii) the Securities have been duly and validly authorized, executed and delivered by Sun International, and the Guarantees have been duly and validly authorized, executed and delivered by the Bahamian Guarantors; (iii) each of the Indenture and the Registration Statement has been duly and validly authorized, executed and delivered by Sun International and each of the Bahamian Guarantors; (iv) the statements in the Registration Statement under the captions "Enforceability of Civil Liabilities" and "Tax Consequences - Certain Bahamian Tax Considerations," insofar as such statements constitute summaries of Bahamian statutes, regulations, legal and governmental proceedings and contracts to which Sun International or any of its subsidiaries is a party, have been reviewed by us and are accurate summaries thereof in all material respects; (v) the execution, delivery and performance of the Indenture and the Registration Statement by Sun International and each of the Bahamian Guarantors, the issuance and sale of the Securities and the Guarantees, compliance by Sun International and each of the Bahamian Guarantors, as applicable, with all the provisions thereof and the consummation of the transactions contemplated thereby will not conflict with or constitute a breach or violation of (i) any Bahamian laws or administrative regulations (ii) rulings or orders of any Bahamian court or governmental agency, body or official having jurisdiction over Sun International, and of its Bahamian subsidiaries or their respective properties or (iii) the respective Memoranda or Articles of Association of Sun International or any of its Bahamian subsidiaries; (vi) no authorization, approval, consent or order of any governmental or regulatory agency, body or official or any court of the Commonwealth of The Bahamas is required to be obtained in connection with the issuance and sale of the Securities or the Guarantees or the consummation of the transactions contemplated by the Indenture and the Registration Statement; and (vii) to the best of our knowledge, after due inquiry, neither Sun International nor any of its Bahamian subsidiaries is in default or violation of any Bahamian laws, administrative regulations or order of any court or governmental agency, body, department, authority, board or official or other regulatory body. These opinions are subject to the following reservations: OPINION LETTER 20th March, 1997 Registration Statement Page 4 Any judgment obtained against Sun International or any Bahamian guarantor for liquidated amounts in civil matters, after due trial by a court of competent jurisdiction, and which is final and conclusive as to the issuers in contention, are actionable in the Bahamian courts and are impeachable only on the grounds of (a) fraud, (b) public policy and (c) natural justice. Such enforceability may be limited (a) by the effect of applicable bankruptcy, reorganization, insolvency, moratorium or similar laws of general application now or hereafter in effect, including without limitation, laws limiting or affecting the enforcement of creditors' rights generally; (b) by the application of general principles of equity (regardless of whether enforcement is considered in proceedings at law or in equity); and (c) by claims becoming barred under the Limitation Act or as claims may be or become subject to defenses of set-off or counterclaim. The charge of a higher rate of interest in the event of default may amount to a penalty and as such may be unenforceable. We hereby consent to reliance on the opinions expressed herein by Cravath, Swaine, & Moore, United States Counsel to Sun International, solely for the purpose of their respective opinions also to be rendered in connection with the Exchange Offer, and not in any other manner for any other purpose, or by any other persons, without our prior written consent. We hereby consent to the use of our name under the captions "Legal Matters" and "Enforceability of Civil Liabilities" in the Prospectus forming a part of the Registration Statement and to the filing, as an exhibit to the Registration Statement and any amendments thereto, of this Opinion. In giving such consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act. Yours faithfully, /s/ Harry B. Sands & Company HARRY B. SANDS & COMPANY EX-5.5 29 OPINION OF SMITH-HUGES, RAWORTH & MCKENZIE Exhibit 5.5 ----------- SMITH-HUGHES, RAWORTH & McKENZIE Barristers, Solicitors & Notaries Public Partners: Armrek Chambers DAVID A. RAWORTH, M.A. (Chron) 48 Main Street P.O. Box 173 CHRISTOPHER S. McKENZIE, L.L.B. Road Town, Terrota British Virgin Islands Associates: Telephone: (809-48) 4-3384/5or 4-0619 ANTHONY G. LYNTON, L.L.B. Telefax: (809-48) 4-4845 or 4-2914 ROBERT I. McINTYRE, L.L.B. E-mail: [illegible address] 20th March, 1997 SUN INTERNATIONAL HOTELS LIMITED Coral towers Paradise Island The Bahamas SUN INTERNATIONSL NORTH AMERICA, INC. 1133 Boardwalk Atlantic City, NJ 08401 USA Dear Sirs: Sun International Management Limited ("SIML") We act as legal counsel to SIML and have been asked to provide you with this opinion. We are lawyers licensed to practice in the Territory of the British Virgin Islands and as such are duly qualified to give this opinion. We have acted as counsel for Sun International Hotels Limited, a corporation organized and existing under the laws of the Commonwealth of the Bahamas ("Sun"), and Sun International North America, Inc., a Delaware corporation and a wholly owned subsidiary 20th March, 1997 Page 2 of Sun ("SINA" and, together with Sun, the "Issuers"), in connection with the filing by the Issuers and certain guarantors (the "Guarantors") with the Securities and Exchange Commission (the"Commission") of a registration statement on Form F-4 (the "Registration Statement") under the Securities Act of 1933 (the "Act"), for the purpose of registering the Issuers' offer to exchange (the "Exchange Offer") an aggregate principal amount at maturity of up to $200,000,000 of 9% Exchange Senior Subordinated Notes due 2007 (the "Exchange Notes") of the Issuers for a like principal amount at maturity of 9% Senior Subordinated Notes due 2007 ("Outstanding Notes"). The Outstanding Notes are and the Exchange Notes are to be guaranteed by the Guarantors (the "Guarantees"). The Outstanding Notes have been and the Exchange Notes will be issued pursuant to an Indenture dated as of March 10th, 1997 (the "Indenture") among the Issuers, the Guarantors and The Bank of New York, as trustee (the "Trustee"). We have assumed the accuracy of any and all representations of fact expressed or implied by the documents we have examined. We confirm as follows: 1. SIML is a corporation duly organized, validly existing and in good standing under the laws of the British Virgin Islands. 2. The Indenture and the Registration Statement have been duly authorised, executed and delivered by SIML. 3. The Guarantee has been duly authorised, executed and delivered by SIML. 4. To the best of our knowledge, having made due inquiry, SIML is not in material default under or in material violation of any material laws or regulations or any order of any court or governmental agency, authority department, board or other regulatory body in the British Virgin Islands. 5. The execution, delivery and performance of the Indenture and the Registration Statement by SIML, the issuance and sale of the Guarantee, compliance by SIML with all the provisions thereof and the consummation of the transactions contemplated thereby will not conflict with or constitute a breach or violation of (i) any British Virgin Islands laws or administrative regulations, (ii) rulings or orders of any British Virgin Islands court or governmental agency, body or official having jurisdiction over SIML or its properties or (iii) the charter and by-laws of SIML. This opinion is limited to the laws of the British Virgin Islands and no opinion is given with respect to the laws of any other jurisdiction. 20th March, 1997 Page 3 We understand that this opinion will be relied upon by the firm Cravath, Swaine & Moore for the purposes of preparing their legal opinions. We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement and to the filing, as an exhibit to the Registration Statement and any amendments thereto, of this opinion. In giving such consent we do not admit that we come within the category of persons whose consent is required under section 7 of the Act. Yours faithfully, SMITH-HUGHES, RAWORTH & MCKENZIE /s/ Anthony G. Lynton Anthony G. Lynton EX-10.8 30 OMNIBUS FINANCING AGMT DTD SEPT 21, 1995 BTWN SUN Exhibit 10.8 OMNIBUS FINANCING AGREEMENT dated as of September 21, 1995, between Trading Cove Associates ("TCA") and Sun International Hotels Limited ("SIHL"). WHEREAS, TCA has entered into a Management Agreement with the Mohegan Tribe of Indians of Connecticut, pursuant to which TCA will construct and manage a casino complex in Montville, Connecticut (the "Project"); WHEREAS, SIHL indirectly owns a 50% partnership interest in TCA; WHEREAS, in connection with the Project, the Mohegan Gaming Authority (the "Authority") proposes to issue $175 million of senior notes (the "Senior Notes"); WHEREAS, in order to enable the Authority to sell the Senior Notes, SIHL has been requested to (i) acquire $38.3 million of subordinated notes of the Authority (the "Original Subordinated Notes") pursuant to a note purchase agreement to be dated the same date as the closing of the sale of the Senior Notes (the "Note Purchase Agreement"), (ii) provide a completion guarantee, pursuant to which SIHL will guarantee that the Project will be completed (the "Completion Guarantee"), (iii) arrange for a pledge 750,000 shares of SIHL stock with a market value of approximately $43 million as collateral for its obligation under the Completion Guarantee and (iv) post a letter of credit in an amount up to $15 million to support its obligation under the Completion Guarantee (the "Letter of Credit"); WHEREAS, if SIHL becomes obligated to pay funds under the Completion Guarantee, the Authority is obligated to issue to SIHL certain subordinated notes (the "Guarantee Subordinated Notes") having the same terms as the Original Subordinated Notes except that the annual interest rate thereon shall be prime plus one percent (the "Base Interest Rate"); the first $15 million of Guarantee Subordinated Notes shall be "First Tranche Guarantee Sub Notes" and any additional Guarantee Subordinated Notes shall be "Second Tranche Guarantee Sub Notes"; and WHEREAS, SIHL and TCA are party to a letter agreement dated May 12, 1995 (the "Letter Agreement"). NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, TCA and SIHL agree as follows: 1. Termination of Letter Agreement. The Letter Agreement is hereby terminated. 2. Payments Relating to the Original Subordinated Notes. Interest on the Original Subordinated Notes shall be payable by the Authority on the outstanding principal balance thereof at an annual rate of fifteen percent (15%). Such interest shall be paid in accordance with the Note Purchase Agreement. Additional amounts 1 with respect to the Original Subordinated Notes (the "Original Additional Payments") shall be payable to the holders thereof by TCA on the outstanding principal balance of such Original Subordinated Notes at an annual rate of eleven and one-half percent (11 1/2%). The Original Additional Payments shall be payable on the interest payment dates provided in the Original Subordinated Notes directly from funds TCA would have received as its Management Fee. Subject to the priorities set forth in Section 10 of this Agreement, to the extent that TCA does not receive sufficient Management Fees to pay the full amount of any Original Additional Payment when due, TCA shall pay the entire Management Fee it receives as partial payment of the Original Additional Payment and such portion of the Original Additional Payment not paid shall be deferred until TCA receives sufficient Management Fees. 3. Acquisition of Original Subordinated Notes. The Original Partners of TCA shall have the right at anytime to purchase without premium from SIHL a participating interest (the "Participating Interest") in the Original Subordinated Notes. The total percentage Participating Interest in the Original Subordinated Notes which may be acquired shall not exceed the Original Partners' Percentage Interest in TCA. 4. Reimbursement of Financing Costs. If the Original Subordinated Notes are purchased by SIHL, TCA shall reimburse SIHL for the out-of-pocket expenses (without premium) incurred solely for the purpose of arranging the purchase of the Original Subordinated Notes. Such reimbursement shall not in any case exceed two and one-half percent (2-1/2%) of the principal issue amount of the Original Subordinated Notes. 5. Completion Guarantee Fee. If SIHL executes and delivers the Completion Guarantee, TCA shall pay to SIHL a completion guarantee fee ("Completion Guarantee Fee") equal to two percent (2%) of the total development costs of the Project (all so-called hard and soft costs with respect to construction of the Project, except land acquisition costs). The Completion Guarantee Fee shall be payable from funds TCA would have received as its Management Fee with a priority as set forth in Section 10. 6. Letter of Credit Fee. Upon the posting of the Letter of Credit, and on each anniversary such Letter of Credit is outstanding, TCA shall pay to SIHL a fee equal to the costs incurred by SIHL or its affiliates in posting such Letter of Credit plus 1% of the principal amount thereof; provided, however, the fee -------- ------- payable to SIHL by TCA shall not exceed for any one year 2% of the undrawn and outstanding principal amount of such Letter of Credit. 7. Payments Related to First Tranche Guarantee Sub Notes. Interest on the First Tranche Guarantee Sub Notes shall be payable by the Authority on the outstanding principal balance thereof at the Base Interest Rate. Such interest shall be paid in accordance with the Note Purchase Agreement. Additional amounts with respect to the First Tranche Guarantee Sub Notes (the "First Tranche Additional Payments") shall be payable to the holders thereof by TCA on the outstanding principal balance of such First Tranche Guarantee Sub Notes at an annual rate equal to the difference between 26 1/2% and the Base Interest Rate. The First Tranche Additional Payments shall be payable on the interest payment dates provided in the First Tranche Guarantee Sub Notes. If on such interest payment date the Authority is not permitted to pay accrued interest on the First Tranche Guarantee Sub Notes 2 due to restrictions in the indenture for the Authority's Senior Notes, TCA shall pay to the holder of the First Tranche Guarantee Sub Notes such accrued interest (the "Deferred Interest Amount"); provided, however, if and when the Authority -------- ------- does pay to the holder of First Tranche Guarantee Sub Notes any Deferred Interest Amounts, TCA's obligation to pay any First Tranche Additional Payments shall be reduced by the Deferred Interest Amounts previously paid by TCA; it being the agreed upon principal that the holder of any First Tranche Guarantee Sub Notes shall be entitled to an annual return of 26 1/2% on the principal amount of such First Tranche Guarantee Sub Notes and that to the extent TCA paid amounts otherwise payable by the Authority, once the Authority pays such amounts an accounting shall be made, and repayments made to TCA as necessary, so that the holders of the First Tranche Guarantee Sub Notes do not receive excess payments. The First Tranche Additional Payments and Deferred Interest Amounts shall be payable on the interest payment dates provided in the First Tranche Guarantee Sub Notes directly from funds TCA would have received as its Management Fee. Subject to the priorities set forth in Section 10 of this Agreement, to the extent that TCA does not receive sufficient Management Fees to pay the full amount of any First Tranche Additional Payment or Deferred Interest Amount when due, TCA shall pay the entire Management Fee it receives as partial payment of the First Tranche Additional Payment or Deferred Interest Amount and such portion of the First Tranche Additional Payment or Deferred Interest Amount not paid shall be deferred until TCA receives sufficient Management Fees. 8. Payments Related to Second Tranche Guarantee Sub Notes. Interest on the Second Tranche Guarantee Sub Notes shall be payable by the Authority on the outstanding principal balance thereof at the Base Interest Rate. Such interest shall be paid in accordance with the Note Purchase Agreement. Additional payments with respect to the Second Tranche Guarantee Sub Notes (the "Second Tranche Additional Payments") shall be payable to the holders thereof by TCA on the outstanding principal balance of such Second Tranche Guarantee Sub Notes at an annual rate equal to the difference between 26 1/2% and the Base Interest Rate. The Second Tranche Additional Payments shall be payable on the interest payment dates provided in the Second Tranche Guarantee Sub Notes directly from funds TCA would have received as its Management Fee. Subject to the priorities set forth in Section 10 of this Agreement, to the extent that TCA does not receive sufficient Management Fees to pay the full amount of any Second Tranche Additional Payment when due, TCA shall pay the entire Management Fee it receives as partial payment of the Second Tranche Additional Payment and such portion of the Second Tranche Additional Payment not paid shall be deferred until TCA receives sufficient Management Fees. 9. TCA Acquisition of First Tranche Guarantee Sub Notes. Subject to the priorities set forth in Section 10 of this Agreement, on each of the first, second and third anniversary of the issuance of the First Tranche Guarantee Sub Notes, TCA shall acquire from the holders of the First Tranche Guarantee Sub Notes one third of the outstanding principal amount of such First Tranche Guarantee Sub Notes at a purchase price equal to the outstanding principal amount thereof plus all accrued and unpaid interest thereon. 10. Priorities. The Parties agree that payments required to be made by TCA out of Management Fees shall be prioritized as follows: 3 (a) First, to return capital contributions made by the Partners of TCA after the closing of the sale of the Original Subordinated Notes; (b) Second, to pay Original Additional Payments; (c) Third, to pay Deferred Interest Amounts and First Tranche Additional Payments on a pari passu basis; (d) Fourth, to pay Second Tranche Additional Payments; (e) Fifth, to return capital contributions made by the Partners of TCA before the closing of the sale of the Original Subordinated Notes; provided, -------- however, such Partners shall use such funds to acquire outstanding First Tranche - ------- Guarantee Sub Notes from the holders thereof; (f) Sixth, to pay the Development Fee; (g) Seventh, to pay the Management Services Fee; (h) Eighth, to pay the Completion Guarantee Fee; (i) Ninth, to pay the Partners, pro rata based on their respective Percentage Interest, an amount equal to state and federal income tax obligations calculated in accordance with Section 3.03a.(1) of the Partnership Agreement; (j) Tenth, to acquire the First Tranche Guarantee Sub Notes in accordance with Section 9; (k) Eleventh, to pay the Organizational and Administrative Fee and the Marketing and Casino Operations Fee on a pari passu basis; and (l) Twelfth, to the distribution of Excess Cash to the Partners, pro rata based on their respective Percentage Interest, as specified in Section 3.03 of the Partnership Agreement. The obligation of TCA and its Partners under this Section 10 shall be limited to applying or directing its receipts from the Authority or Project to the payments in the priority herein set forth. The Partners of TCA shall have no personal recourse liability to make any of the payments provided for in this Section 10 of the Agreement. 11. Capitalized Terms. Capitalized words and terms used hereinbefore not defined in this Agreement shall take on the definitions set forth in the Amended and Restated Partnership Agreement of TCA (the "Partnership Agreement"). 4 12. Conflicts. If provisions of this Agreement should conflict with those of the Partnership Agreement, then the provisions of this Agreement shall prevail. SUN INTERNATIONAL HOTELS LIMITED By: /s/ Charles D. Adamo ------------------------------ Name: Charles D. Adamo Title: Executive Vice President TRADING COVE ASSOCIATES RJH Development Corp., a New York Corporation By: /s/Richard [ILLEGIBLE] ------------------------------ Name: Richard [ILLEGIBLE] Title: President Slavik Suites, Inc. a Michigan corporation By: /s/Del J. Lauria ------------------------------ Name: Del J. Lauria Title: Executive Vice President LMW Investments, Inc. a Connecticut corporation By: /s/Len Wolman ------------------------------ Name: Len Wolman Title: President 5 FIRST AMENDMENT TO OMNIBUS FINANCING AGREEMENT This First Amendment to Omnibus Financing Agreement (this "Agreement") is made this 19th day of October, 1996 between Trading Cove Associates, a Connecticut general partnership ("TCA"), Sun International Hotels Limited, a Bahamian corporation ("SIHL") and Waterford Gaming, L.L.C., a Delaware limited liability company ("Waterford"). PRELIMINARY STATEMENT The following is a recital of certain facts upon which this Agreement is based: On September 21, 1995, TCA and SIHL entered into that certain Omnibus Financing Agreement (the "Omnibus Financing Agreement") which deals with certain aspects of the construction, financing and management of a casino complex in Montville, Connecticut. Capitalized terms used herein shall be understood to have the meanings ascribed to them in the Omnibus Agreement. TCA wishes to transfer to Waterford certain of its rights and obligations under the Omnibus Agreement and Waterford wishes to acquire from TCA such rights and has agreed to perform such obligations. NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, TCA, SIHL and Waterford hereby agree as follows: 1. Acquisition of Original Subordinated Notes. TCA and SIHL hereby acknowledge that Waterford is about to become the sole Original Partner of TCA and has the right to purchase 50% of the outstanding Original Subordinated Notes from SIHL, all as set forth in a Note Purchase Agreement being executed concurrently herewith (the "Note Purchase Agreement"). 2. First Tranche Guarantee Sub Notes. Section 9 of the Omnibus Agreement is hereby deleted in its entirety and is hereby replaced with the following: "On each of October 12, 1997, October 12, 1998 and October 12, 1999 (each a "Closing Date"), Waterford shall purchase from SIHL or an Affiliate of SIHL, and SIHL shall sell, or cause an Affiliate to sell, to Waterford that portion of the outstanding principal amount of the First Tranche Guarantee Sub Notes equal, in each instance, to one- sixth (1/6) of the principal amount of the First Tranche Guarantee Sub Notes issued at any time which shall include all accrued and unpaid interest thereon to and including each Closing Date and any First Tranche Additional Payments that have accrued and are unpaid thereon as of each Closing Date, reduced, pro rata, by any redemptions or payments which may have occurred or been made prior to each applicable Closing Date. The purchase price which will be paid by Waterford to SIHL on each Closing Date will be equal to the outstanding principal balance of the First Tranche Guarantee Sub Notes to be acquired on the Closing Date plus all accrued and unpaid interest thereon as of each Closing Date and any First Tranche Additional Payments that have accrued and are unpaid thereon as of each Closing Date. The terms and conditions of such purchase and sale transactions shall be substantially similar to the terms and conditions upon which Waterford has or will acquire a portion of the Original Subordinated Notes." 3. Additional Amounts. As the holder of a portion of the Original Subordinated Notes and the First Tranche Guarantee Sub Notes, Waterford will be entitled to all benefits provided for in the Omnibus Agreement, including, but not being limited to a proportionate amount of each of the Original Additional Payments and the First Tranche Additional Payments. 4. Redemption or Repurchase of Subordinated Notes. If the Authority shall offer to purchase any of the Original Subordinated Notes, First Tranche Subordinated Notes or Second Tranche Subordinated Notes (collectively, the "Subordinated Notes"), other than a Change of Control Offer, then SIHL shall notify Waterford, no later than 10 business days prior to the expiration of such offer, of its irrevocable decision with respect to the principal amount that it or any of its Affiliates has determined to tender in such offer to purchase of each of the Original Subordinated Notes, if any. Waterford agrees to tender that principal amount of the Subordinated Notes that it owns equal to the product of the aggregate principal amount of the Subordinated Notes to be tendered by SIHL and its Affiliates times a fraction, the numerator of which is the aggregate principal amount of Subordinated Notes then owned by Waterford and the denominator of which is the aggregate principal amount of Subordinated Notes then owned by SIHL and its Affiliates, rounded to the nearest multiple of $1,000. SIHL agrees to tender, and to cause its Affiliates to tender, all such Subordinated Notes as it indicated in its notice to Waterford. In the event that the total amount available for an offer (other than a Change of Control Offer) is less than the total amount needed to purchase the Subordinated Notes to be tendered by Waterford and SIHL and its Affiliates pursuant to the above formula, Waterford, on the one hand, and SIHL and its Affiliates, on the other hand, shall reduce their amount of Subordinated Notes to be tendered pro rata, based on the ratio of Subordinated Notes originally tendered by each of them, rounded to the nearest multiple of $1,000, such that the total amount of Notes to be tendered can be purchased in such offer. SIHL agrees that if it, or any of its Affiliates, transfers any of the Subordinated Notes to anyone other than SIHL, an Affiliate of SIHL or the Authority, that it will cause such transferee to be bound by a similar agreement to notify Waterford of its irrevocable decision to tender in any such offer to purchase, and Waterford will agree to be similarly bound to tender a pro rata portion of its Subordinated Notes. 2 As used in this Agreement, the term "Affiliate" shall have the meaning set forth in the Note Purchase Agreement under which the Subordinated Notes were originally issued. SIHL hereby represents and warrants that it or its Affiliates own all of the Subordinated Notes other than the Subordinated Notes owned by TCA; provided, however, it is acknowledged that SIHL has pledged such Subordinated Notes to certain banks pursuant to a credit facility. 5. Initial Original Subordinate Notes. The parties agree that in satisfaction of the obligation to return capital contributions used by TCA to purchase $1,700,000 principal amount of Original Subordinated Notes, TCA shall return such capital contribution by distributing to each of SIHL and Waterford, $850,000 in principal amount of Original Subordinated Notes, in accordance with the terms of the Note Purchase Agreement. 6. Effective Date. The obligations hereunder are and shall be subject to the conditions that: (a) Waterford shall have successfully completed a debt offering to finance the transactions referred to in Paragraph 1 hereof; and (b) Waterford will own the entire Original Partners' percentage interest in TCA and by itself will be the Original Partner within the meaning of the TCA Partnership Agreement as then amended and in effect. 7. Continuation of Omnibus Agreement. The Omnibus Agreement, as amended by this Agreement, shall continue in full force and effect and is hereby ratified, confirmed and approved. 8. Counterpart. This Agreement may be executed in any number of counterparts, each of which shall, for all purposes, constitute an original and all of which, taken together, shall constitute one and the same agreement. 9. Successors and Assigns. This Agreement shall be binding upon, and inured to the benefit of, the parties hereto and their respective successors and assigns. 3 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first set forth above. SUN INTERNATIONAL HOTELS LIMITED By: ______________________________ Its: _________________________ WATERFORD GAMING, L.L.C. By: Slavic Suites, Inc. Its: Member By: _________________________ Its: ____________________ By: LMW Investments, Inc. Its: Member By: [ILLEGIBLE] ------------------------- Its: [ILLEGIBLE] -------------------- TRADING COVE ASSOCIATES By: Sun Cove, Ltd. Its: Partner By: _________________________ Its: ____________________ By: LMW Investments, Inc. Its: Partner By: [ILLEGIBLE] ------------------------- Its: [ILLEGIBLE] -------------------- [SIGNATURES CONTINUED ON NEXT PAGE] 4 By: RJH Development Corporation Its: Partner By: _________________________ Its: ____________________ By: Slavic Suites, Inc. Its: Partner By: _________________________ Its: ____________________ 5 EX-12.1 31 STATEMENT OF RECOMPUTATION OF RATIOS Exhibit 12.1 SUN INTERNATIONAL HOTELS LIMITED COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ------------------------------------------------- (000's omitted except in ratio calculation) Year Ended December 31,1996 Year Ended December 31, Pro Forma 1995 1996 As Adjusted ---------- ------------ ---------------- EARNINGS: Earnings before income taxes and extraordinary charges $ 18,894 $ 46,298 $ 53,011 Add: Dividends received from associated companies 1,453 1,419 1,419 Interest 9,746 8,571 31,000 Less: Equity in earnings from associated companies (2,313) (2,530) (2,530) Capitalized interest - (438) (1,002) -------- -------- -------- Total earnings 27,780 48,320 81,898 -------- -------- -------- FIXED CHARGES: Interest 9,746 3,571 31,000 -------- -------- -------- Total fixed charges 9,746 3,571 31,000 -------- -------- -------- Ratio of earnings to fixed charges 2.9 13.5 2.6 --- ---- --- EX-23.3 32 CONSENT OF ERNST AND YOUNG LLP Exhibit 23.3 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form F-4 No. 333-____) and related Prospectus of Sun International Hotels Limited and Sun International North America, Inc. for the registration of 9% Exchange Senior Subordinated Notes due 2007 and to the incorporation by reference therein of our report dated July 14, 1994, with respect to the combined financial statements and schedules of PIRL Group incorporated by reference in the Annual Report (Form 20-F) of Sun International Hotels Limited filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ----------------------------------- Ernst & Young LLP Philadelphia, Pennsylvania March 20, 1997 EX-23.4 33 CONSENT OF ARTHUR ANDERSEN LLP Exhibit 23.4 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- To Sun International Hotels Limited: As independent public accountants, we hereby consent to the use of (1) our report on the Company's financial statements dated February 21, 1997 included in this registration statement (2) our report on the Company's financial statements dated January 31, 1996 incorporated by reference in this registration statement (3) our report on the balance sheet as of September 28, 1995 of the Mohegan Tribal Gaming Authority dated December 15, 1995 incorporated by reference in this registration statement and (4) to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Roseland, New Jersey March 20, 1997 EX-23.5 34 CONSENT OF ERNST AND YOUNG LLP Exhibit 23.5 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form F-4 No. 333-_____) and related Prospectus of Sun International Hotels Limited and Sun International North America, Inc. for the registration of 9% Exchange Senior Subordinated Notes due 2007 and to the incorporation by reference therein of our report dated February 14, 1997, except for Note 18, as to which the date is March 17, 1997, with respect to the consolidated financial statements and schedule of Sun International North America, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ----------------------------------- Ernst & Young LLP Philadelphia, Pennsylvania March 20, 1997 EX-24.1 35 POWERS OF ATTY FOR SUN INT'L HOTELS LTD Exhibit 24.1 SUN INTERNATIONAL HOTELS LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Sun International Hotels Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("Sun International"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of Sun International thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Solomon Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Solomon Kerzner /s/ Derek Hawton Director - --------------------------- Derek Hawton /s/ Peter Buckley Director - --------------------------- Peter Buckley /s/ Howard Marks Director - --------------------------- Howard Marks /s/ Eric Siegel Director - --------------------------- Eric Siegel /s/ John Allison Chief Financial Officer and Secretary (Principal - --------------------------- Financial and Accounting Officer) John Allison /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.2 36 POWERS OF ATTY FOR SUN INT'L NORTH AMERICA, INC. Exhibit 24.2 SUN INTERNATIONAL NORTH AMERICA, INC. POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Sun International North America, Inc., a Delaware corporation ("SINA"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of SINA thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Howard Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Howard Kerzner /s/ Kevin DeSanctis Director (Principal Financial and Accounting - --------------------------- Officer) Kevin DeSanctis /s/ Charles Adamo Director - --------------------------- Charles Adamo Date: March 20, 1997 EX-24.3 37 POWERS OF ATTY FOR SUN INT'L BAHAMAS LTD Exhibit 24.3 SUN INTERNATIONAL BAHAMAS LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Sun International Bahamas Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("SIBL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of SIBL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Solomon Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Solomon Kerzner /s/ Kevin DeSanctis Director (Principal Financial and Accounting - --------------------------- Officer) Kevin DeSanctis /s/ J.B. Farrington Director - --------------------------- J.B. Farrington /s/ John Allison Director - --------------------------- John Allison /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.4 38 POWERS OF ATTY FOR PARADISE AQUISITIONS LTD Exhibit 24.4 PARADISE ACQUISITIONS LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Paradise Acquisitions Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("PAL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of PAL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Kevin DeSanctis Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive, Financial Kevin DeSanctis and Accounting Officer) /s/ J. B. Farrington Director - --------------------------- J. B. Farrington /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.5 39 POWERS OF ATTY FOR PARADISE ISLAND LTD Exhibit 24.5 PARADISE ISLAND LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Paradise Island Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("PIL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of PIL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Kevin DeSanctis Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive, Financial Kevin DeSanctis and Accounting Officer) /s/ J. B. Farrington Director - --------------------------- J. B. Farrington /s/ John Allison Director - --------------------------- John Allison /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.6 40 POWERS OF ATTY FOR PARADISE ENTERPRISES LTD Exhibit 24.6 PARADISE ENTERPRISES LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Paradise Enterprises Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("PEL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of PEL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Solomon Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Solomon Kerzner /s/ J. B. Farrington Director - --------------------------- J. B. Farrington /s/ Kevin DeSanctis Director (Principal Financial and Accounting - --------------------------- Officer) Kevin DeSanctis /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.7 41 POWERS OF ATTY FOR ISLAND HOTEL COMPANY LTD. Exhibit 24.7 ISLAND HOTEL COMPANY LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Island Hotel Company Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("IHCL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of IHCL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Kevin DeSanctis Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive, Financial Kevin DeSanctis and Accounting Officer) /s/ J. B. Farrington Director - --------------------------- J. B. Farrington /s/ John Allison Director - --------------------------- John Allison /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.8 42 POWERS OF ATTY FOR PARADISE BEACH INN LTD Exhibit 24.8 PARADISE BEACH INN LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Paradise Beach Inn Limited, a corporation organized and existing under the laws of the Commonwealth of The Bahamas ("PBIL"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of PBIL thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Kevin DeSanctis Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive, Financial Kevin DeSanctis and Accounting Officer) /s/ J. B. Farrington Director - --------------------------- J. B. Farrington /s/ John Allison Director - --------------------------- John Allison /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.9 43 POWERS OF ATTY FOR SUN INT'L MANAGEMENT LTD. Exhibit 24.9 SUN INTERNATIONAL MANAGEMENT LIMITED POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Sun International Management Limited, a corporation organized and existing under the laws of the British Virgin Islands ("SIML"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of SIML thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Solomon Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Solomon Kerzner /s/ Howard Kerzner Director (Principal Financial and Accounting - --------------------------- Officer) Howard Kerzner /s/ Charles Adamo Director - --------------------------- Charles Adamo /s/ Mandy Miller Authorized Representative in the United States - --------------------------- Mandy Miller Date: March 20, 1997 EX-24.10 44 POWERS OF ATTY FOR GGRI, INC. Exhibit 24.10 GGRI, INC. POWER OF ATTORNEY The undersigned director and/or officer, or both, of GGRI, Inc., a Delaware corporation ("GGRI"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of GGRI thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Matthew Kearney Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive, Financial Matthew Kearney and Accounting Officer) Date: March 20, 1997 EX-24.11 45 POWERS OF ATTY FOR RESORTS INT'L HOTEL, INC. Exhibit 24.11 RESORTS INTERNATIONAL HOTEL, INC. POWER OF ATTORNEY The undersigned director and/or officer, or both, of Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of RIH thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Matthew Kearney Chairman of the Board of Directors (Principal - --------------------------- Financial and Accounting Officer) Matthew Kearney /s/ Dan Cassella President and Chief Executive - --------------------------- Officer (Principal Executive Officer) Dan Cassella Date: March 20, 1997 EX-24.12 46 POWERS OF ATTY FOR SUN COVE Exhibit 24.12 SUN COVE, LTD. POWER OF ATTORNEY The undersigned directors and/or officers, or both, of Sun Cove Limited, a Connecticut corporation ("Sun Cove"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Act of 1933, as amended, a Registration Statement, hereby constitute and appoint Charles D. Adamo, Howard B. Kerzner, John Allison and Kevin DeSanctis alone or acting together, their true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, their true and lawful attorneys-in-fact and agent, for them and in their names, place and stead, in any and all capacities, to sign said Registration Statement, and any and all amendments thereto (including any post-effective amendments), with power where appropriate to affix the corporate seal of Sun Cove thereto and to attest said seal, and to file said Registration Statement and such amendments, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may pursuant to the requirements of the Securities Act of 1933, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have duly signed this Power of Attorney in the capacities and on the dates indicated. Name Title ---- ----- /s/ Howard Kerzner Chairman of the Board of Directors and Chief - --------------------------- Executive Officer (Principal Executive Officer) Howard Kerzner /s/ Kevin DeSanctis Director (Principal Financial and Accounting - --------------------------- Officer) Kevin DeSanctis /s/ John Allison Director - --------------------------- John Allison Date: March 20, 1997 EX-25.1 47 STATEMENT OF ELIGIBILITY Exhibit 25.1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) --------------------------- SUN INTERNATIONAL HOTELS LIMITED (Exact name of obligor as specified in its charter) Commonwealth of The Bahamas 98-013655 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Coral Towers Paradise Island, The Bahamas (Address of principal executive offices) (Zip code) --------------------------- SUN INTERNATIONAL NORTH AMERICA, INC. (Exact name of obligor as specified in its charter) Delaware 59-0763055 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1133 Boardwalk Atlantic City, New Jersey 08401 (Address of principal executive offices) (Zip code) --------------------------- 9% Senior Subordinated Notes due 2007 (Title of the indenture securities) =============================================================================== 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 18th day of March, 1997. THE BANK OF NEW YORK By: /s/ WALTER N. GITLIN ------------------------ Name: WALTER N. GITLIN Title: VICE PRESIDENT -4- EXHIBIT 7 -------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin .................. $ 4,404,522 Interest-bearing balances .......... 732,833 Securities: Held-to-maturity securities ........ 789,964 Available-for-sale securities ...... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold ................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income .................28,728,602 LESS: Allowance for loan and lease losses ..............584,525 LESS: Allocated transfer risk reserve........................429 Loans and leases, net of unearned income, allowance, and reserve 28,143,648 Assets held in trading accounts ...... 1,004,242 Premises and fixed assets (including capitalized leases) ................ 605,668 Other real estate owned .............. 41,238 Investments in unconsolidated subsidiaries and associated companies .......................... 205,031 Customers' liability to this bank on acceptances outstanding ............ 949,154 Intangible assets .................... 490,524 Other assets ......................... 1,305,839 ----------- Total assets ......................... $44,043,010 ----------- ----------- LIABILITIES Deposits: In domestic offices ................ $20,441,318 Noninterest-bearing .......8,158,472 Interest-bearing .........12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 11,710,903 Noninterest-bearing ..........46,182 Interest-bearing .........11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased ............ 1,565,288 Demand notes issued to the U.S. Treasury ........................... 293,186 Trading liabilities .................. 826,856 Other borrowed money: With original maturity of one year or less .......................... 2,103,443 With original maturity of more than one year ......................... 20,766 Bank's liability on acceptances exe- cuted and outstanding .............. 951,116 Subordinated notes and debentures .... 1,020,400 Other liabilities .................... 1,522,884 ----------- Total liabilities .................... 40,456,160 ----------- EQUITY CAPITAL Common stock ........................ 942,284 Surplus ............................. 525,666 Undivided profits and capital reserves .......................... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities ........................ ( 2,073) Cumulative foreign currency transla- tion adjustments .................. ( 8,403) ----------- Total equity capital ................ 3,586,850 ----------- Total liabilities and equity capital ........................... $44,043,010 ----------- ----------- I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith -------------------------------- EX-99.1 48 FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR TENDERS OF $200,000,000 AGGREGATE PRINCIPAL AMOUNT OF 9% SENIOR SUBORDINATED NOTES DUE 2007 OF SUN INTERNATIONAL HOTELS LIMITED AND SUN INTERNATIONAL NORTH AMERICA, INC. PURSUANT TO THE PROSPECTUS DATED _____, 1997, OF SUN INTERNATIONAL HOTELS LIMITED AND SUN INTERNATIONAL NORTH AMERICA, INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON _____________, 1997, UNLESS EXTENDED. TENDERED SECURITIES MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. MAIN DELIVERY TO: The Bank of New York, EXCHANGE AGENT BY HAND OR OVERNIGHT COURIER: The Bank of New York 101 Barclay Street Corporate Trust Services Window Ground Level New York, NY 10286 Attention: Reorganization Section, Arwen Gibbons BY MAIL: The Bank of New York 101 Barclay Street, 7E New York, NY 10286 Attention: Reorganization Section, Arwen Gibbons BY FAX FOR ELIGIBLE INSTITUTIONS: (212) 571-3080 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned acknowledges that he or she has received and reviewed the Prospectus dated _____, 1997 (the "Prospectus"), of Sun International Hotels Limited and Sun International North America, Inc. (collectively, the "Issuers"), and this Letter of Transmittal (the "Letter of Transmittal"), which together constitute the Issuers' offer (the "Exchange Offer") to exchange an aggregate principal amount of up to $200,000,000 9% Exchange Senior Subordinated Notes Due 2007 (the "Exchange Notes"), for a like principal amount of the Issuers' issued and outstanding 9% Senior Subordinated Notes Due 2007 (the "Outstanding Notes"). 2 The term "Expiration Date" shall mean 5:00 p.m., New York City time, on _______, 1997, unless the Issuers, in their sole discretion, extend the Exchange Offer. The Issuers reserve the right to extend the Exchange Offer at their discretion, in which event the term "Expiration Date" shall mean the time and date when the Exchange Offer as so extended shall expire. The Issuers shall notify the holders of the Outstanding Notes of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Exchange Notes will bear interest from the last interest payment date on which interest was paid on the Outstanding Notes surrendered in exchange therefor or, if no interest has been paid on such Outstanding Notes, from the date of original issue of the Outstanding Notes at the same rate and upon the same terms as the Outstanding Notes. Holders whose Outstanding Notes are accepted for exchange will not receive interest on such Outstanding Notes for any period subsequent to the last interest payment date, if any, of the Outstanding Notes to occur prior to the issue date of the Exchange Notes and will be deemed to have waived the right to receive any payment in respect of interest on the Outstanding Notes accrued from and after such interest payment date, if any. The Exchange Offer is not conditioned upon any minimum principal amount of Outstanding Notes being tendered for exchange. However, the Exchange Offer is subject to certain conditions. Please see the Prospectus under the section entitled "The Exchange Offer--Certain Conditions to the Exchange Offer". The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Outstanding Notes in any jurisdiction in which the making or acceptance of the Exchange Offer would not be in compliance with the laws of such jurisdiction. This Letter of Transmittal is to be completed by a holder of Outstanding Notes either if certificates are to be forwarded herewith or if a tender of certificates for Outstanding Notes, if available, is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" section of the Prospectus. Holders of Outstanding Notes whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Outstanding Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and deliver all other documents required by this Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date, may tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus under the section entitled "The Exchange Offer--Guaranteed Delivery Procedures". Holders who wish to tender their Outstanding Notes must complete this Letter of Transmittal in its entirety. PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE BOX 3 List below the Outstanding Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of Outstanding Notes should be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF OUTSTANDING NOTES (SEE INSTRUCTIONS 2, 3, AND 8) NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) (PLEASE FILL IN, IF BLANK) 1 2 3 PRINCIPAL AMOUNT OF OUTSTANDING AGGREGATE PRINCIPAL NOTES TENDERED(2) (MUST TITLE OF SECURITIES AND AMOUNT OF OUTSTANDING BE IN DENOMINATIONS OF $1,000 CERTIFICATE NUMBER(S)(1) NOTES OR INTEGRAL MULTIPLES THEREOF) TOTAL
(1) Certificate numbers not required if Outstanding Notes are being tendered by book-entry transfer. (2) Unless otherwise indicated, a holder will be deemed to have tendered ALL of the Outstanding Notes represented in column 2. / / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ------------------------------------------------- Account Number: ------------------------------------------------- Transaction Code Number: ------------------------------------------------- 4 / / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ------------------------------------------------ Window Ticket Number (if any): ------------------------------------------------ Date of Execution of Notice of Guaranteed Delivery: ---------------------------- If delivered by book-entry transfer, complete the following: Account Number: --------------------------------------------------------------- Transaction Code Number: ------------------------------------------------------ / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ------------------------------------------------------------------------- Address: --------------------------------------------------------------------- --------------------------------------------------------------------- 5 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Issuers the aggregate principal amount of Outstanding Notes indicated above. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Subject to, and effective upon, the acceptance for exchange of the Outstanding Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Issuers all right, title and interest in and to such Outstanding Notes as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Issuers) with respect to the tendered Outstanding Notes with full power of substitution to (i) deliver certificates for such Outstanding Notes to the Issuers and deliver all accompanying evidences of transfer and authenticity to, or upon the order of, the Issuers, (ii) present such Outstanding Notes for transfer on the books of the Issuers and (iii) receive for the account of the Issuers all benefits and otherwise exercise all rights of the beneficial ownership of such Outstanding Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Outstanding Notes tendered hereby and that the Issuers will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Issuers. The undersigned hereby further represents that (i) any Exchange Notes acquired in exchange for Outstanding Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the undersigned, (ii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes and (iii) neither the holder nor any such other person is an "affiliate", as described in Rule 405 under the Securities Act of 1933 (the "Securities Act"), of the Issuers. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Issuers to be necessary or desirable to complete the assignment, transfer and sale of the Outstanding Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the instructions contained in this Letter of Transmittal. For the purposes of the Exchange Offer, the Issuers shall be deemed to have accepted validly tendered Outstanding Notes when, as and if the Issuers have given oral and written notice thereof to the Exchange Agent. If any tendered Outstanding Notes are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Outstanding Notes will be returned (or, in the case of Outstanding Notes 6 tendered by book-entry transfer through the Book-Entry Transfer Facility, will be promptly credited to an account maintained at the Book-Entry Transfer Facility), without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under the "Special Delivery Instructions" as promptly as practicable after the Expiration Date. The undersigned understands that tenders of Outstanding Notes pursuant to the procedures described under the section entitled "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Issuers upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the Exchange Notes (and, if applicable, substitute certificates representing Outstanding Notes for any Outstanding Notes not exchanged) in the name(s) of the undersigned or, in the case of a book-entry delivery of Outstanding Notes, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, please send the Exchange Notes (and, if applicable, substitute certificates representing Outstanding Notes for any Outstanding Notes not exchanged) to the undersigned at the address shown above in the box entitled "Description of Outstanding Notes". In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes issued in exchange for the Outstanding Notes accepted for exchange in the name(s) of, and return any certificates for Outstanding Notes not tendered or not exchanged to, the person(s) so indicated. The undersigned understands that the Issuers have no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Outstanding Notes from the name of the registered holder(s) thereof if the Issuers do not accept for exchange any of the Outstanding Notes so tendered. THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OUTSTANDING NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE OUTSTANDING NOTES AS SET FORTH IN SUCH BOX ABOVE. 7 PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE) I hereby TENDER the Outstanding Notes described above in the box entitled "Description of Outstanding Notes" pursuant to the terms of the Exchange Offer. X , 1997 -------------------------------- ------------------------- X , 1997 -------------------------------- ------------------------- X , 1997 -------------------------------- ------------------------- SIGNATURE(S) OF OWNER(S) DATE If a holder is tendering any Outstanding Notes, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Outstanding Notes or on a security position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 4. Name(s): ---------------------------------------------------------------------- (Please Type or Print) - ------------------------------------------------------------------------------- Capacity: ---------------------------------------------------------------------- Address: --------------------------------------------------------------------- (Include Zip Code) SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 4) Signature(s) Guaranteed by an Eligible Institution: -------------------------- (Authorized Signature) - ------------------------------------------------------------------------------- (Title) - ------------------------------------------------------------------------------- (Name of Firm) - ------------------------------------------------------------------------------- (Area Code and Telephone Number) Dated: , 1997 ------------------------------------------------------------------ 8 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 4 AND 5) To be completed ONLY if certificates for Outstanding Notes not exchanged and/or Exchange Notes are to be issued in the name of and sent to someone other than the person or person(s) whose signature(s) appear(s) on this Letter of Transmittal above, or if Outstanding Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue Exchange Notes and/or Outstanding Notes to: Name __________________________________________________________________________ (PLEASE TYPE OR PRINT) __________________________________________________________________________ (PLEASE TYPE OR PRINT) Address _______________________________________________________________________ _______________________________________________________________________ (ZIP CODE) _______________________________________________________________________ EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER (COMPLETE SUBSTITUTE FORM W-9) Credit unexchanged Outstanding Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below __________________________________________________________________________ (BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4 AND 5) To be completed ONLY if certificates for Outstanding Notes not exchanged and/or Exchange Notes are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter of Transmittal above or to such person or persons at an address other than shown in the box entitled "Description of Outstanding Notes" on this Letter of Transmittal above. Mail Exchange Notes and/or Outstanding Notes to: Name __________________________________________________________________________ (PLEASE TYPE OR PRINT) __________________________________________________________________________ (PLEASE TYPE OR PRINT) Address _______________________________________________________________________ (ZIP CODE) 9 PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY BOX ABOVE. This Letter of Transmittal must be used to forward, and must accompany, all certificates for Outstanding Notes tendered pursuant to the Exchange Offer. INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be completed by holders either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" section of the Prospectus. Certificates for all physically tendered Outstanding Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal (or a copy hereof) and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Outstanding Notes tendered hereby must be in denominations of $1,000 and integral multiples thereof. The method of delivery of this Letter of Transmittal, the Outstanding Notes and all other required documents is at the election and risk of the tendering holders, but the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. If Outstanding Notes are sent by mail, it is suggested that the mailing be made sufficiently in advance of the Expiration Date to permit delivery to the Exchange Agent prior to the Expiration Date. No Letter of Transmittal or Outstanding Notes should be sent to the Issuers. Holders who wish to tender their Outstanding Notes and (i) whose Outstanding Notes are not immediately available, or (ii) cannot deliver their Outstanding Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (iii) who cannot comply with the procedures for book entry tender on a timely basis must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made through an Eligible Institution (as defined below); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by telegram, telex, fax transmission, or mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Outstanding Notes (except in the case of book-entry tenders) and the principal amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three NYSE trading days after the Expiration Date, this Letter of Transmittal (or a copy hereof) together with the certificate(s) representing the Outstanding Notes (except in the case of book-entry tenders) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or a copy hereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Outstanding Notes in proper form for transfer or a Book-Entry Confirmation with respect to such Outstanding Notes, must be received by the Exchange Agent within three NYSE trading days after the Expiration Date, all as provided in the Prospectus under the section entitled "The Exchange Offer--Guaranteed Delivery Procedures". Any holder who wishes to tender his Outstanding Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to the Expiration Date. As used in this Letter of Transmittal, "Eligible Institution" shall mean a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. 10 All questions as to the validity, eligibility (including time of receipt), acceptance and withdrawal of tendered Outstanding Notes will be determined by the Issuers in their sole discretion, which determination will be final and binding. The Issuers reserve the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes the Issuers' acceptance of which would, in the opinion of counsel for the Issuers, be unlawful. The Issuers also reserve the right to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. The Issuers' interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Issuers shall determine. Neither the Issuers, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. See "The Exchange Offer" in the Prospectus. 2. TENDER BY HOLDER. Only a holder of Outstanding Notes may tender such Outstanding Notes in the Exchange Offer. Any beneficial owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on behalf of such beneficial owner. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing this Letter of Transmittal and delivering such owner's Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. 3. PARTIAL TENDERS AND WITHDRAWALS. Tenders of Outstanding Notes will be accepted only in denominations of $1,000 and integral multiples thereof. If less than all of the Outstanding Notes are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Outstanding Notes to be tendered in the box above entitled "Description of Outstanding Notes -- Principal Amount of Outstanding Notes Tendered". A reissued certificate representing the balance of nontendered Outstanding Notes will be sent to such tendering holder (except in the case of book-entry tenders), unless otherwise provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. ALL OF THE OUTSTANDING NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. Any holder who has tendered Outstanding Notes may withdraw the tender by delivering written notice of withdrawal to the Exchange Agent prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at its address set forth on the first page of this Letter of Transmittal. Any such notice of withdrawal must (i) specify the name of the person having deposited the Outstanding Notes to be withdrawn (the "Depositor"); (ii) identify the Outstanding Notes to be withdrawn (including the certificate number or numbers and principal amount of such Outstanding Notes (except in the case of book-entry tenders)); (iii) be signed by the holder in the same manner as the original signature on this Letter of Transmittal by which such Outstanding Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee (as defined in the Prospectus) register the transfer of such Outstanding Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Outstanding Notes are to be registered, if different from that of the Depositor. If Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, the name of the registered holder and the certificate numbers of the particular Outstanding Notes withdrawn must also be furnished to the Exchange Agent as aforesaid 11 prior to the physical release of the withdrawn Outstanding Notes. If the Outstanding Notes have been tendered pursuant to the procedures for book-entry tender set forth in the Prospectus, a notice of withdrawal must specify, in lieu of certificate numbers, the name and account number at the Book-Entry Transfer Facility to be credited with the withdrawn Outstanding Notes. Outstanding Notes properly withdrawn will thereafter be deemed not validly tendered for purposes of the Exchange Offer; PROVIDED, HOWEVER, that withdrawn Outstanding Notes may be retendered by again following one of the procedures herein at any time prior to the Expiration Date. All questions as to the validity, form and eligibility (including time of receipt) of notice of withdrawal will be determined by the Issuers, whose determinations will be final and binding on all parties. Neither the Issuers, the Exchange Agent nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. See "The Exchange Offer -- Withdrawal Rights" in the Prospectus. 4. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURE. If this Letter of Transmittal is signed by the registered holder of the Outstanding Notes tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates (if applicable) without any change whatsoever. If any tendered Outstanding Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Outstanding Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates. When this Letter of Transmittal is signed by the registered holder or holders of the Outstanding Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Notes are to be issued, or any untendered Outstanding Notes are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. If this Letter of Transmittal is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder(s) appear(s) on the certificate(s). If this Letter of Transmittal or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuers, proper evidence satisfactory to the Issuers of their authority to so act must be submitted. Endorsements on certificates for Outstanding Notes or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal need not be guaranteed by an Eligible Institution, provided the Outstanding Notes are tendered: (i) by a registered holder of such Outstanding Notes (which term, for purposes of the Exchange Offer, includes any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the holder of such Outstanding Notes) who has not completed the box entitled "Special Issuance Instructions" on this Letter of Transmittal; or (ii) for the account of an Eligible Institution. 5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Outstanding Notes should indicate in the applicable box the name and address in or to which Exchange Notes issued pursuant to the Exchange Offer and/or substitute certificates evidencing Outstanding Notes not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter 12 of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such holder may designate hereon. If no such instructions are given, such Outstanding Notes not exchanged will be returned to the name or address of the person signing this Letter of Transmittal. 6. TRANSFER TAXES. The Issuers will pay all transfer taxes, if any, applicable to the transfer of Outstanding Notes to them or their order pursuant to the Exchange Offer. If however, Exchange Notes and/or substitute Outstanding Notes not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Outstanding Notes tendered hereby, or if tendered Outstanding Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer of Outstanding Notes to the Issuers or their order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Outstanding Notes specified in this Letter of Transmittal. 7. WAIVER OF CONDITIONS. Subject to the terms and conditions set forth in the Prospectus, the Issuers reserve the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus. 8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Outstanding Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Outstanding Notes for exchange. Neither the Issuers nor any other person is obligated to give notice of defects or irregularities in any tender, nor shall any of them incur any liability for failure to give any such notice. 9. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. Any holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING, AS WELL AS REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, MAY BE DIRECTED TO THE EXCHANGE AGENT, AT THE ADDRESS INDICATED ON THE FIRST PAGE OF THIS LETTER OF TRANSMITTAL OR BY TELEPHONE AT (800) 507-9357. 13 IMPORTANT TAX INFORMATION Under U.S. federal income tax laws, a registered holder of Outstanding Notes or Exchange Notes is required to provide the Trustee (as payor) with such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such holder is an individual, the TIN is his social security number. If the Trustee is not provided with the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments made to such holder with respect to Outstanding Notes or Exchange Notes may be subject to backup withholding. Certain holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Trustee a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. A Form W-8 can be obtained from the Trustee. If backup withholding applies, the Trustee is required to withhold 31% of any payments made to the holder or other payee. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made with respect to Outstanding Notes or Exchange Notes the holder is required to provide the Trustee with: (i) the holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that (A) such holder is exempt from backup withholding, (B) the holder has not been notified by the Internal Revenue Service that the holder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the Internal Revenue Service has notified the holder that the holder is no longer subject to backup withholding; and (ii) if applicable, an adequate basis for exemption. 14 TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE "IMPORTANT TAX INFORMATION" ABOVE) PAYER'S NAME: THE BANK OF NEW YORK NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU UNDER THE OUTSTANDING NOTES OR THE EXCHANGE NOTES.
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number Form W-9 BOX AT RIGHT AND CERTIFY BY SIGNING OR __________________________ AND DATING BELOW Employer Identification Number DEPARTMENT OF THE TREASURY PART 2--Certification--Under penalties of perjury, I certify PART 3 INTERNAL REVENUE SERVICE that: (1) The number shown on this form is my correct Taxpayer Identification Awaiting TIN / / Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) Certificate instructions:--You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE ____________________________________________________________ DATE ________________________ NAME _________________________________________________________________ (Please Print)
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that 31% of all reportable payments made to me prior to the time I provide a properly certified taxpayer identification number to the Exchange Agent will be withheld until I provide such a number. ________________________________________________________________________________ ___________________________________________________________________________,1995 Signature and Date______________________________________________________________ IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF (TOGETHER WITH THE CERTIFICATES FOR OUTSTANDING NOTES (IF APPLICABLE) AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. EX-99.2 49 FORM OF NOTICE OF GUARANTED DELIVERY EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR SUN INTERNATIONAL HOTELS LIMITED AND SUN INTERNATIONAL NORTH AMERICA, INC. This form or one substantially equivalent hereto must be used to accept the Exchange Offer of Sun International Hotels Limited and Sun International North America, Inc. (collectively, the "Issuers") made pursuant to the Prospectus, dated ____, 1997 (the "Prospectus"), if certificates for Outstanding Notes of the Issuers are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Exchange Agent prior to the Expiration Date of the Exchange Offer. Such form may be delivered or transmitted by telegram, telex, fax transmission, mail or hand delivery to The Bank of New York (the "Exchange Agent") as set forth below. In addition, in order to utilize the guaranteed delivery procedures to tender Outstanding Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or a copy thereof) must also be received by the Exchange Agent prior to the Expiration Date. Capitalized terms not defined herein are defined in the Prospectus. MAIN DELIVERY TO: The Bank of New York, EXCHANGE AGENT BY HAND OR OVERNIGHT COURIER: The Bank of New York 101 Barclay Street Corporate Trust Services Window Ground Level New York, NY 10286 Attention: Reorganization Section, Arwen Gibbons BY MAIL: The Bank of New York 101 Barclay Street, 7E New York, NY 10286 Attention: Reorganization Section, Arwen Gibbons FAX FOR ELIGIBLE INSTITUTIONS: (212) 571-3080 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FAX OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to the Issuers the principal amount of Outstanding Notes set forth below, pursuant to the guaranteed delivery procedures described in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. Principal Amount of Outstanding Notes Tendered:* $ _________________________________ Certificate Nos. (if available): If Outstanding Notes will be delivered ___________________________________ by book-entry transfer to The Depository Trust Company, provide account number. Total Principal Amount Represented by Outstanding Notes Certificate(s): $__________________________________ Account Number _______________________ _____________ *Must be in denominations of principal amount of $1,000 and any integral multiple thereof. ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. PLEASE SIGN HERE X _______________________________ ________ X _______________________________ ________ Signature(s) of Owner(s) Date or Authorized Signatory Area Code and Tel. No.: ________________________________- Must be signed by the holder(s) of Outstanding Notes as their name(s) appear(s) on certificates for Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ Capacity: ______________________________________________________________ ______________________________________________________________ Address(es): ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ GUARANTEE The undersigned, a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, hereby guarantees that the certificates representing the principal amount of Outstanding Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Outstanding Notes into the Exchange Agent's account at The Depository Trust Company pursuant to the procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus, together with a properly completed and duly executed Letter of Transmittal (or a copy thereof) with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, within three NYSE trading days after the date of execution hereof. _____________________________________ _________________________________ Name of Firm Authorized Signature _____________________________________ _________________________________ Address Title _____________________________________ Name: ___________________________ Zip Code (Please Type or Print) Area Code and Tel. No. ______________ Date: ___________________________ NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM. CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL. -----END PRIVACY-ENHANCED MESSAGE-----