SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8570
CIRCUS CIRCUS ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0121916
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109-1120
(Address of principal executive offices)
(702) 734-0410
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 31, 1996
Common Stock, $.01-2/3 par value 104,042,678 shares
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at
July 31, 1996 (Unaudited) and January 31,
1996........................................... 3-4
Condensed Consolidated Statements of Income
(Unaudited) for the Three and Six Months
Ended July 31, 1996 and 1995................... 5
Condensed Consolidated Statements of Cash
Flows (Unaudited) for the Six Months Ended
July 31, 1996 and 1995......................... 6-7
Notes to Condensed Consolidated Financial
Statements (Unaudited)......................... 8-18
Item 2. Management's Discussion and Analysis of Fi-
nancial Condition and Results of Operations.... 19-26
Part II. OTHER INFORMATION 27
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
July 31, January 31,
1996 1996
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents................ $ 58,737 $ 62,704
Receivables.............................. 17,039 14,527
Inventories.............................. 19,721 20,459
Prepaid expenses and other............... 27,039 26,690
Total current assets................ 122,536 124,380
PROPERTY, EQUIPMENT AND LEASEHOLD INTERESTS,
at cost, less accumulated depreciation
and amortization of $492,344 and $490,596
respectively............................. 1,540,507 1,474,684
EXCESS OF PURCHASE PRICE OVER FAIR MARKET
value of net assets acquired, net........ 390,688 394,518
NOTES RECEIVABLE............................ 36,529 27,508
INVESTMENTS IN UNCONSOLIDATED AFFILIATES.... 214,869 173,270
OTHER ASSETS................................ 20,877 17,533
Total Assets......................... $2,326,006 $2,211,893
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
July 31, January 31,
1996 1996
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt................ $100,207 $ 863
Accounts payable - trade ........................ 19,933 16,824
Accounts payable - construction.................. 6,896 -
Accrued liabilities ............................. 61,814 76,235
Total current liabilities ................ 188,850 93,922
LONG-TERM DEBT ...................................... 658,942 715,214
DEFERRED INCOME TAX ................................. 155,489 148,096
OTHER LONG-TERM LIABILITIES ......................... 8,831 9,319
Total liabilities ........................ 1,012,112 966,551
REDEEMABLE PREFERRED STOCK........................... 18,530 18,530
STOCKHOLDERS' EQUITY:
Common stock, $.01-2/3 par value
Authorized - 450,000,000 shares
Issued - 112,799,832 and 112,795,332 shares ... 1,880 1,880
Preferred stock, $.01 par value
Authorized - 75,000,000 shares ................ - -
Additional paid-in capital ...................... 532,932 527,205
Retained earnings ............................... 934,412 883,630
Treasury stock (8,845,659 and 9,828,809 shares),
at cost........................................ (173,860) (185,903)
Total stockholders' equity ............... 1,295,364 1,226,812
Total Liabilities and
Stockholders' Equity .................. $2,326,006 $2,211,893
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Three Months Six Months
Ended July 31, Ended July 31,
REVENUES: 1996 1995 1996 1995
Casino ......................... $167,853 $169,323 $343,031 $322,674
Rooms .......................... 71,093 66,972 148,783 135,201
Food and beverage .............. 55,582 52,487 110,548 99,619
Other .......................... 42,375 44,912 81,837 80,526
Earnings of unconsolidated
affiliates ................... 16,393 5,218 36,208 6,824
353,296 338,912 720,407 644,844
Less-complimentary allowances .. (14,490) (12,146) (28,716) (23,045)
338,806 326,766 691,691 621,799
COSTS AND EXPENSES:
Casino ......................... 75,853 67,039 150,200 130,401
Rooms .......................... 29,503 27,815 58,580 53,480
Food and beverage .............. 53,434 51,535 104,096 91,703
Other operating expenses ....... 25,950 25,605 49,382 45,289
General and administrative ..... 57,691 55,515 111,536 103,471
Depreciation and amortization .. 24,009 23,302 48,505 45,563
Abandonment losses ............. 40,103 45,148 48,309 45,148
306,543 295,959 570,608 515,055
OPERATING PROFIT BEFORE CORPORATE
EXPENSE ........................ 32,263 30,807 121,083 106,744
CORPORATE EXPENSE ................ 7,613 6,442 15,136 11,333
INCOME FROM OPERATIONS ........... 24,650 24,365 105,947 95,411
OTHER INCOME (EXPENSE):
Interest, dividend and
other income ................. 1,479 245 2,646 770
Interest income and guarantee
fees from unconsolidated
affiliate .................... 1,745 1,805 3,343 4,115
Interest expense ............... (11,439) (13,468) (23,573) (25,982)
Interest expense from
unconsolidated affiliates .... (3,554) (62) (6,097) (62)
(11,769) (11,480) (23,681) (21,159)
INCOME BEFORE PROVISION FOR
INCOME TAX...................... 12,881 12,885 82,266 74,252
Provision for income tax ....... 5,572 5,604 31,485 27,571
NET INCOME ....................... $ 7,309 $ 7,281 $ 50,781 $ 46,681
EARNINGS PER SHARE................ $ .07 $ .08 $ .49 $ .51
Average shares outstanding .. 103,896,790 96,887,911 103,510,964 91,464,930
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months
Ended July 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 50,781 $ 46,681
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 52,060 46,571
Loss on disposition of fixed assets 47,126 11,584
(Increase) decrease in other current assets (2,123) 338
(Increase) decrease in other noncurrent assets (3,305) 239
Increase (decrease) in interest payable (940) 451
Decrease in other current liabilities (10,372) (2,251)
Increase in deferred income tax 7,393 7,080
Decrease in other noncurrent liabilities (33) (33)
Unconsolidated affiliates' earnings in
excess of distributions (2,573) 2,307
Total adjustments 87,233 66,286
Net cash provided by operating activities 138,014 112,967
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (160,638) (97,188)
Increase (decrease) in construction payables 6,896 (1,081)
(Increase) decrease in investments in
unconsolidated affiliates (39,154) 11,953
(Increase) decrease in notes receivable (9,021) 37,908
Proceeds from sale of equipment and other assets 2,368 414
Net cash paid for acquisition of Gold Strike
Resorts - (3,386)
Other (1,273) -
Net cash used in investing activities (200,822) (51,380)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes 199,562 -
Net effect on cash of issuances and payments
of debt with initial maturities of
three months or less (140,043) (71,160)
Issuances of debt with original maturities
in excess of three months 644 11,878
Principal payments of debt with original
maturities in excess of three months (17,128) (6,133)
Exercise of stock options and warrants 16,231 11,069
Sale of stock warrants - 2,000
Other (425) (343)
Net cash provided by (used in)
financing activities 58,841 (52,689)
Net increase (decrease) in cash and cash equivalents (3,967) 8,898
Cash and cash equivalents at beginning of period 62,704 53,764
Cash and cash equivalents at end of period $ 58,737 $ 62,662
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
Six Months
Ended July 31,
1996 1995
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 23,380 $ 25,025
Income tax $ 47,040 $ 37,101
Acquisition of Gold Strike Resorts:
Current assets, other than cash $ - $ (1,487)
Property and equipment - (115,708)
Other assets - (484,481)
Current liabilities - 9,627
Long-term debt - 163,978
Other liabilities - 17,344
Subsidiary preferred stock - 18,530
Stockholders' equity - 388,811
Net cash used to acquire Gold Strike Resorts $ - $ (3,386)
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All information for the three and six months ended July 31, 1996
and 1995 is unaudited.)
(1) Principles of consolidation and basis of presentation -
Circus Circus Enterprises, Inc. (the "Company") was
incorporated February 27, 1974. The Company owns and operates
hotel and casino facilities in Las Vegas, Reno, Laughlin, Jean
and Henderson, Nevada and a dockside casino in Tunica County,
Mississippi. It is also an investor in several unconsolidated
affiliates, with operations that include a casino in Windsor,
Canada, a riverboat casino in Elgin, Illinois, a hotel/casino in
Reno, Nevada and a hotel/casino on the Las Vegas Strip which
opened on June 21, 1996 (see Note 8).
The condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.
Material intercompany accounts and transactions have been
eliminated.
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of
management, all adjustments (which include normal recurring
adjustments) necessary for a fair statement of results for the
interim periods have been made. The results for the three-month
and six-month periods are not necessarily indicative of results
to be expected for the full fiscal year.
Certain reclassifications have been made to the financial
statements for the three and six months ended July 31, 1995 to
conform to the financial statement presentation for the three and
six months ended July 31, 1996. These reclassifications have no
effect on net income.
These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended January
31, 1996.
(2) Acquisition of Gold Strike Resorts -
On June 1, 1995, the Company completed its acquisition of a
group of affiliated entities (collectively "Gold Strike Resorts")
in which it acquired two hotel and casino facilities in Jean,
Nevada, one in Henderson, Nevada, a 50% interest in a joint
venture which owns a riverboat casino and land-based
entertainment complex in Elgin, Illinois, and a 50% interest in a
joint venture which owns a major destination resort on the Las
Vegas Strip. In exchange for the equity interests in Gold Strike
Resorts, the Company issued 16,291,551 shares of its common stock
and preferred stock of a subsidiary which is convertible into an
additional 793,156 shares of the Company's common stock. In
addition, the Company paid approximately $12 million in cash,
while assuming approximately $165 million of debt. The
acquisition has been accounted for by the purchase method of
accounting and resulted in a total purchase price of
approximately $430 million. The purchase price was allocated to
assets and liabilities based on their estimated fair values on
the date of acquisition. The excess of the purchase price over
the fair market value of the net assets acquired was
approximately $390 million and is being amortized on a straight-
line basis over 40 years.
(3) Long-term debt -
Long-term debt consists of the following (in thousands):
July 31, January 31,
1996 1996
(Unaudited)
Amounts due under corporate
debt program at floating
interest rates, weighted
average of 5.6% $154,221 $210,188
6.45% Senior Notes due 2006
(net of unamortized discount
of $418) 199,582 -
7-5/8% Senior Subordinated
Debentures due 2013 150,000 150,000
6-3/4% Senior Subordinated Notes
due 2003 (net of unamortized
discount of $111 and $119) 149,889 149,881
<PAGE>
(3) Long-term debt (continued) -
10-5/8% Senior Subordinated Notes
due 1997 (net of unamortized
discount of $16 and $24) 99,984 99,976
Amounts due under bank credit
agreements at floating interest
rates - 100,000
Other notes 5,473 6,032
759,149 716,077
Less - current portion (100,207) (863)
$658,942 $715,214
The Company has established a corporate debt program whereby
it can issue commercial paper or similar forms of short-term
debt. Although the debt instruments issued under this program are
short-term in tenor, they are classified as long-term debt
because (i) they are backed by a long-term debt facility (see
below) and (ii) it is management's intention to continue to
replace such borrowings on a rolling basis as various instruments
come due and to have such borrowings outstanding for longer than
one year. To the extent that the Company incurs debt under this
program, it must maintain an equivalent amount of credit
available under its bank credit facility discussed more fully
below.
In January 1996, the Company renegotiated its $250 million
unsecured 364-day facility and its $500 million unsecured
reducing revolver, both of which were dated September 30, 1993,
as well as a $145 million reducing revolving credit agreement
assumed by the Company upon its acquisition of Gold Strike
Resorts in June 1995. These agreements were replaced by a new
$1.5 billion unsecured credit facility (reducing to $1.2 billion
on December 31, 1999) which matures on December 31, 2000 (the
"Facility"). The maturity date and reduction date may each be
extended for an unlimited number of one-year periods with the
consent of the bank group. The Facility contains financial
covenants regarding minimum net worth, interest charge coverage,
total debt and new venture capital expenditures and investments.
The Facility is for general corporate purposes. The Company
incurs commitment fees of 22.50 basis points on the unused
portion of the Facility. As of July 31, 1996, the Company had no
borrowings under the Facility. At such date, the Company had
$154.2 million of indebtedness outstanding under the corporate
debt program thus reducing, by that amount, the credit available
under the Facility for purposes other than repayment of such
(3) Long-term debt (continued) -
indebtedness. The fair value of the debt issued under the
corporate debt program approximates the carrying amount of the
debt due to the short-term maturities of the individual
components of the debt.
The Company filed a shelf registration statement, effective
January 11, 1996, with the Securities and Exchange Commission
which allows for the issuance of up to $400 million of various
types of debt securities. In February 1996, the Company issued
$200 million principal amount of 6.45% Senior Notes due February
1, 2006 (the "6.45% Notes"), with interest payable each February
and August. The 6.45% Notes, which were discounted to $199.6
million, are not redeemable prior to maturity and are not subject
to any sinking fund requirements. The net proceeds from this
offering were used primarily to repay borrowings under the
Company's corporate debt program.
In July 1993, the Company issued $150 million principal
amount of 6-3/4% Senior Subordinated Notes (the "6-3/4% Notes")
due July 2003 and $150 million principal amount of 7-5/8% Senior
Subordinated Debentures (the "7-5/8% Debentures") due July 2013,
with interest payable each July and January. The 6-3/4% Notes,
which were discounted to $149.8 million, and the 7-5/8%
Debentures are not redeemable prior to maturity and are not
subject to any sinking fund requirements. The net proceeds from
these offerings were used primarily to repay borrowings under the
Company's corporate debt program.
In June 1990, the Company issued $100 million principal
amount of 10-5/8% Senior Subordinated Notes (the "10-5/8% Notes")
due June 1997, with interest payable each June and December. The
10-5/8% Notes, which were discounted to $99.9 million, are not
redeemable prior to maturity and are not subject to any sinking
fund requirements. Holders of the 10-5/8% Notes may require the
Company to repurchase all or any portion of their notes at par
upon the occurrence of both a Designated Event (as defined in the
indenture) and a Rating Decline (as defined in the indenture).
As of July 31, 1996, $9.1 million principal amount of the 10-5/8%
Notes was owned by one of the Company's directors.
The Company has a policy aimed at managing interest rate
risk associated with its current and anticipated future
borrowings. This policy enables the Company to use any
combination of interest rate swaps, futures, options, caps and
similar arrangements. The Company has entered into various
(3) Long-term debt (continued) -
interest rate swaps, principally with its bank group, to manage
interest expense, which is subject to fluctuation due to the
variable-rate nature of the debt under the Company's corporate
debt program. The Company has interest rate swap agreements
under which it pays a fixed interest rate (weighted average of
approximately 8.8%) and receives a variable interest rate
(weighted average of approximately 5.6% at July 31, 1996) on
$113.0 million notional amount of "initial" swaps, and pays a
variable interest rate (weighted average of approximately 5.6% at
July 31, 1996) and receives a fixed interest rate (weighted
average of approximately 8.2%) on $60 million notional amount of
"reversing" swaps. The net effect of all such swaps resulted in
additional interest expense, due to an interest rate differential
which, at July 31, 1996, was approximately 1.2% on the total
notional amount of the swaps. One of the initial swaps provides
for quarterly reductions in the notional amount of up to $1
million. This swap has a current notional amount of $28.5
million, but declines to $22.5 million by its termination date in
fiscal 1999. Excluding this swap, the initial swaps have the
following termination dates: $30 million in fiscal 1997, $29.5
million in fiscal 1999 and $25 million in fiscal 2000. The
reversing swaps expire as follows: $30 million in fiscal 1997 and
$30 million in fiscal 2002.
In addition to the aforementioned swaps, the Company has
entered into an interest rate swap with a notional amount of $100
million in which the Company pays a floating rate (5.5% at July
31, 1996 and capped at 6.5%) and receives a fixed interest rate
of 4.75%. This swap corresponds in both notional amount and
maturity to the Company's 10-5/8% Notes due in 1997. The
variable interest rates which the Company pays or receives under
the various swaps are based primarily upon the London Interbank
Offering Rate (LIBOR). The Company is exposed to credit loss in
the event of nonperformance by the other parties to the interest
rate swap agreements. However, the Company considers the risk of
nonperformance by the counterparties to be minimal because the
parties to the swaps and reverse swaps are predominantly members
of the Company's bank group.
As of July 31, 1996, under the Company's most restrictive
loan covenants, the Company was restricted as to the payment of
dividends in excess of approximately $176 million, the purchase
of its own capital stock in excess of approximately $450 million
and was restricted from issuing additional debt in excess of
approximately $699 million.
(4) Warrants, stock options and stock rights -
In June 1989, the stockholders approved a stock purchase
warrant plan enabling the Company to offer warrants to its
officers and other key employees to purchase up to 4.5 million
shares of the Company's common stock. In accordance with the
provisions of such plan, the 4.5 million warrants were issued in
June 1989 at a price of $.17 per warrant with an exercise price
of $14.33 ($.67 per share over the fair market value on the date
the warrants were authorized). Each warrant had a term of seven
years, with 50% of the warrants becoming exercisable two years
from the date of grant and the remaining 50% three years from the
date of grant. As of July 31, 1996, all of the warrants had been
exercised, including warrants representing 683,500 shares which
were exercised during the six months ended July 31, 1996.
The Company also has various stock option plans for
executive, managerial and supervisory personnel as well as the
Company's outside directors and consultants. The plans permit
grants of options, performance shares and restricted stock
relating to the Company's common stock. During the six months
ended July 31, 1996, options for 260,000 shares were granted at
prices ranging from $31.00 to $39.76 with a weighted average
exercise price of $33.68 per share, while options for 304,150
shares were exercised at prices ranging from $15.29 to $21.25
with a weighted average exercise price of $21.16 per share. As
of July 31, 1996, options for 7.3 million shares remained
exercisable at prices ranging from $8.58 to $39.76 with a
weighted average exercise price of $25.21 per share, while
options covering 2.4 million shares remained available for grant.
The stock options are generally exercisable in one or more
installments beginning not less than six months after the grant
date.
On July 14, 1994, the Company declared a dividend of one
Common Stock Purchase Right (the "Rights") for each share of
common stock outstanding at the close of business on August 15,
1994. Each Right entitles the holder to purchase from the
Company one share of common stock at an exercise price of $125,
subject to certain antidilution adjustments. The Rights
generally become exercisable ten days after the earlier of an
announcement that an individual or group has acquired 15% or more
of the Company's outstanding common stock or the announcement of
commencement of a tender offer for 15% or more of the Company's
common stock. Effective April 16, 1996, the Rights Agreement was
amended to raise the trigger level from 10% to 15%.
(4) Warrants, stock options and stock rights (continued) -
In the event the Rights become exercisable, each Right
(except the Rights beneficially owned by the acquiring individual
or group, which become void) would entitle the holder to
purchase, for the exercise price, a number of shares of the
Company's common stock having an aggregate current market value
equal to two times the exercise price. The Rights expire August
15, 2004, and may be redeemed by the Company at a price of $.01
per Right any time prior to their expiration or the acquisition
of 15% or more of the Company's common stock. The Rights should
not interfere with any merger or other business combination
approved by the Company's Board of Directors and are intended to
cause substantial dilution to a person or group that attempts to
acquire control of the Company on terms not approved by the Board
of Directors.
(5) Redeemable preferred stock -
In connection with the acquisition of Gold Strike Resorts,
New Way, Inc., a wholly-owned subsidiary of the Company, issued
1,069,926 shares of $10.00 Cumulative Preferred Stock. Dividends
are payable when, as and if declared by the Board of Directors.
Each share of preferred stock is exchangeable for approximately
3.9 shares of the Company's common stock, however no dividends
are payable in the event of exchange. In general, the preferred
stock is exchangeable by the holder thereof after two years from
the date of issuance, and is redeemable by the company on the
occurrence of certain events, including a merger of New Way, Inc.
into another subsidiary of the Company. The exchange rate is
subject to adjustment in the event of certain dilutive events.
The preferred stock is subject to mandatory redemption on the
fifteenth anniversary of the date of original issuance at a price
equal to the liquidation preference ($100) plus all unpaid
dividends. Of the preferred shares issued, 866,640 were issued
to another wholly-owned subsidiary of the company.
(6) Preferred stock -
The Company is authorized to issue up to 75 million shares
of $.01 par value preferred stock in one or more series having
such respective terms, rights and preferences as are designated
by the Board of Directors. No such preferred stock has yet been
issued.
(7) Earnings per share -
Earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
period. Outstanding stock options and exchangeable preferred
stock are not included in earnings per share computations since
their assumed exercise or conversion would not have a material
dilutive effect.
(8) Investments in unconsolidated affiliates -
The Company has investments in unconsolidated affiliates
that are accounted for under the equity method. Using the equity
method, original investments are recorded at cost and adjusted by
the Company's share of earnings or losses of these entities. The
investment balance also includes interest capitalized during
construction. Investments in unconsolidated affiliates consist
of the following (in thousands):
July 31, January 31,
1996 1996
(Unaudited)
Circus and Eldorado Joint Venture (50%)
(Hotel/Casino, Reno, Nevada) $ 53,805 $ 52,917
Windsor Casino Limited (33 1/3%)
(Casino, Windsor, Canada) 16,068 11,799
Elgin Riverboat Resort (50%)
(Riverboat Casino, Elgin, Illinois) 51,290 56,719
Victoria Partners (50%)
(Hotel/Casino, Las Vegas, Nevada) 93,706 51,835
$214,869 $173,270
(9) Abandonment losses -
During the quarter ended July 31, 1996, the Company wrote-
off $40.1 million of various assets. These write-offs included
the special-effects films at Luxor, which are being replaced by
IMAX special-format filmed attractions ($12.0 million),
structural elements being demolished as part of Luxor's
remodeling ($12.1 million), and fixtures and equipment at Circus
Circus-Las Vegas, Excalibur and Circus Circus-Tunica being
replaced in the course of upgrading and expanding those
properties ($16.0 million).
During the first quarter, the Company wrote-off $8.2 million
of costs associated with the demolition of a people-mover at
Circus Circus-Las Vegas and the removal of the Nile River at
Luxor. These write-offs were related to the ongoing construction
of new hotel towers and related remodeling at both properties.
(9) Abandonment losses (continued) -
During the second quarter of 1995, the Company wrote-off
$45.1 million of costs associated with various assets which were
disposed of or whose values had otherwise become impaired. The
Company sold its partially completed riverboat gaming facility in
Chalmette, Louisiana for $4 million. The Company had a net
investment (including a loan to the other joint venturer) of
$35.5 million in this project and thus recognized a loss of $31.5
million on this sale. After reevaluating the New Orleans market,
the Company determined that this project could no longer promise
a sufficiently high rate of return to meet Company objectives.
The Company also wrote off $6.2 million representing the
remaining value of the parking garage and people mover at Circus
Circus-Reno, $3.7 million for a dismantled monorail system
between Luxor and Excalibur, $2.1 million for a dismantled
gondola system at Circus Circus-Las Vegas and $1.6 million for
miscellaneous other assets.
(10) Commitments and contingent liabilities -
In December 1993, Windsor Casino Limited (WCL), a
corporation owned equally by Circus Circus Enterprises, Inc.,
Caesars World, Inc. and Hilton Hotels Corporation or their
subsidiaries, was selected to exclusively negotiate an agreement
to design, build and operate a casino complex in Windsor,
Ontario, Canada. Currently, WCL operates an interim casino which
opened in May 1994 in Windsor's central business district,
immediately across the Detroit River from Detroit, Michigan. In
December 1995, this interim facility was expanded to include a
dockside casino, bringing the total casino space to approximately
75,000 square feet. Definitive agreements concerning a permanent
facility are nearing completion and under arrangements with the
applicable government authorities, construction recently began on
this facility, which will include a 75,000-square-foot casino and
400-room hotel, as well as a showroom and meeting facilities.
The total cost for this project is estimated at $290 million and
it is expected to be completed by spring 1998. In connection
with the permanent facility, a revolving credit facility was
established in the amount of $90 million Canadian (approximately
$66 million U.S. as of July 31, 1996) and each of WCL's three
shareholders, including Circus, has guaranteed payment of one-
third of any amounts due under the facility. As of July 31,
1996, there were no borrowings under the facility.
(10) Commitments and contingent liabilities (continued) -
In July 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. As a condition to the joint venture's
$220 million bank credit agreement (which amended and restated
the joint venture's previous $230 million credit agreement),
Circus entered into a make-well agreement whereby it is obligated
to make additional contributions to the joint venture as may be
necessary to maintain a minimum coverage ratio (as defined). As
of July 31, 1996, the Company had outstanding loans to the joint
venture in the principal amount of $35.1 million.
The Company owns a 50% interest in a joint venture (with
Mirage Resorts, Incorporated) which developed Monte Carlo, a
major destination resort on the Las Vegas Strip which opened June
21, 1996, and for which the Company serves as the venture's
manager. Monte Carlo had a total cost of approximately $350
million including land and capitalized interest. The Company's
total equity contribution was $85.8 million, all of which had
been funded as of July 31, 1996.
In January 1996, the Company commenced construction on a
major expansion at Luxor that will include approximately 2,000
additional rooms, situated in two identical 22-story towers
designed in a stepped-pyramid style, located between Luxor and
Excalibur. The expansion will also include additional casino
space, retail area, restaurants, a multipurpose showroom, and a
reworking of the upstairs "attractions floor". The rooms should
open by the end of 1996. The estimated cost for this expansion
is approximately $270 million and as of July 31, 1996, $76.9
million had been incurred.
Also in January 1996, the Company commenced construction of
a 1,000-room tower addition at Circus Circus-Las Vegas, which is
scheduled for completion by the end of 1996. This addition will
bring the total number of rooms at Circus Circus-Las Vegas to
approximately 3,800. The estimated cost of the 1,000-room tower
is approximately $75 million and as of July 31, 1996, $28.7
million had been incurred. In addition to the new tower, the
Company is currently refurbishing all of the 1,188 rooms in the
Skyrise Tower. This refurbishment is budgeted at $10 million, of
which approximately $1.4 million had been incurred as of July 31,
1996. The Company plans to remodel the balance of rooms at this
property, in phases, over the coming year.
In Reno, the Company recently completed refurbishing all of
the rooms at Circus Circus. The total cost of the refurbishment
was estimated at $15 million and through July 31, 1996, $12.9
million had been spent on the project. Additionally, a new
parking garage is under construction immediately north of the
property, between Circus Circus-Reno and Interstate 80. This
project is budgeted at $12 million and a total of $5.4 million
had been spent through July 31, 1996. The garage is scheduled
for completion in November 1996.
The Company has funded the above projects from internal cash
flows, project specific financing or its credit facility, and
anticipates that future funding for such projects will be from
these sources, including the $1.5 billion credit facility, of
which approximately $154 million was drawn as of July 31, 1996.
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation
will not have a material effect on the results of operations or
the financial position of the Company.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited)
RESULTS OF OPERATIONS
Earnings per Share
For the second quarter ended July 31, 1996, the Company reported
net income of $7.3 million, or $.07 per share, versus $7.3
million, or $.08 per share, in the prior year quarter. For the
six months, net income was $50.8 million, or $.49 per share,
against $46.7 million, or $.51 per share last year.
Results in the current year second quarter reflect asset write-
offs of $40.1 million necessitated by the ongoing construction
and remodeling at Luxor and Circus Circus-Las Vegas, as well as
planned construction and remodeling at the Company's other
properties. These write-offs include the removal of special-
effects films at Luxor, which are being replaced by IMAX special-
format filmed attractions ($12.0 million), structural elements
being demolished as part of Luxor's remodeling ($12.1 million),
the removal of furnishings and fixtures at Excalibur related to a
complete refurbishment of all the property's rooms slated to
begin next year ($10.4 million), the removal of fixtures and
equipment at Circus Circus-Tunica related to the retheming and
expansion of that property, scheduled to begin later this year
($3.0 million), and the removal of furnishings and fixtures
related to the rooms refurbishment at Circus Circus-Las Vegas
($2.6 million). Circus previously wrote off $8.2 million in this
year's first quarter related to the demolition of a people-mover
at Circus Circus-Las Vegas and the removal of the Nile River at
Luxor. In addition to the above asset write-offs, the Company
recognized $5.6 million in the second quarter as its share of
preopening expenses related to the June 21, 1996 debut of the
Monte Carlo in Las Vegas (50% owned with Mirage). See Financial
Position and Capital Resources for additional discussion of
ongoing and planned construction projects.
Results in the prior-year second quarter were similarly affected,
with asset write-offs totaling $45.1 million (the majority of
which related to the discontinued riverboat project in Chalmette,
Louisiana) and preopening expenses of $6.2 million (representing
the Company's 50% share related to the July 28, 1995 opening of
Silver Legacy in Reno, Nevada).
On the same basis of operations, excluding asset write-offs and
preopening expenses, earnings for the second quarter were $.36
per share, compared against $.42 per share in the prior year.
Construction disruption at Luxor and Circus Circus-Las Vegas
hampered results, but was partially offset by continued strong
results at Excalibur and a full quarter of results at The Grand
Victoria, the Company's 50% owned riverboat casino in Elgin,
Illinois.
Revenues
Revenues for the Company increased $12.0 million, or 4%, for the
three months and $69.9 million, or 11%, for the six months,
versus the prior year. The acquisition of Gold Strike Resorts on
June 1, 1995 was a significant factor in this increase, as these
properties (Gold Strike, Nevada Landing, Railroad Pass and The
Grand Victoria) generated additional revenues of $12.7 million in
the quarter and $51.7 million in the six months compared against
the prior year when they were owned for only two months of the
comparable periods. The Company's 50% ownership in The Grand
Victoria accounted for the most significant portion of these
increased revenues. (For accounting purposes, the Company's
share of the operating income of joint ventures is reflected as
revenue under earnings of unconsolidated affiliates.)
The acquisition of the Hacienda Hotel and Casino on September 1,
1995 was also a contributing factor, as this property produced
$11.5 million in revenues for the second quarter and $27.0
million for the six months. In connection with the Company's
planned construction of a new hotel/casino on the Hacienda site,
the Hacienda will cease operations and be demolished later this
calendar year.
In Las Vegas, revenues at the Company's major properties (Circus
Circus, Luxor and Excalibur) were down 5% in the quarter and 3%
year-to-date. Results at Circus Circus-Las Vegas and Luxor
declined substantially in both periods, as these properties
experienced continuing disruption due to the construction of
1,000 new rooms at Circus Circus and 2,000 new rooms at Luxor, as
well as other remodeling at both properties. These expansion
projects are scheduled for completion by calendar year-end. It
is anticipated that the disruptive effect of these construction
projects (that will add 3,000 new rooms by calendar year-end)
will continue into the fourth quarter. The results at Luxor and
Circus Circus were partially offset by the performance of
Excalibur, whose revenues climbed 6% in the three months and 7%
in the six months. Additionally, the June 21, 1996 opening of
Monte Carlo (a 50% owned joint venture with Mirage) contributed
$3.3 million in revenues (before preopening expenses) for the
quarter and six months.
In Reno, revenues at Circus Circus-Reno declined $4.6 million, or
13%, and $7.4 million, or 12%, for the three and six months ended
July 31, 1996. This market has suffered from the absence of a
major bowling tournament this year (men's and women's tournaments
are held two out of every three years). Results at this property
have also been affected by competition from the adjacent Silver
Legacy (50% owned by the Company), which opened July 28, 1995.
The Company's share of Silver Legacy generated $3.4 million and
$6.1 million in revenues for the quarter and year-to-date periods.
In Laughlin, the Colorado Belle and the Edgewater reported a
combined 5% decrease in revenues for the quarter, with a 1%
increase year-to-date. While these properties experienced
positive comparisons in the first quarter, they trended down in
the second quarter, as the continued impact of unregulated Native
American casinos in Laughlin's Arizona and California feeder
markets, as well as competition from new resorts in Las Vegas
(including the opening of the Stratosphere in April and the Monte
Carlo in June) once again impaired results. Circus Circus-Tunica
also experienced a decline, as revenues fell 13% in both the
quarter and six months, reflecting the presence of three new
competitors in the market compared to the prior year. The
Company has previously announced a $125 million expansion that
will add 1,200 rooms to the property (there were previously no
rooms at this property) and retheme it into a more elegant resort
under the name Gold Strike.
Operating Income (excluding asset write-offs and preopening
expenses)
For the quarter ended July 31, 1996, income from operations
declined $5.4 million, or 7%, from last year's second quarter.
For the six months, income from operations rose $13.1 million, or
9%, from the prior year. The Company's composite operating
margin was 20.4% and 22.9% for the three and six months ended
July 31, 1996 versus 22.7% and 23.4% for the comparable periods
in the prior year. The Hacienda, which was a principal factor in
the increase in revenues, generated only a 5% operating margin in
the quarter, as operations at that property have been adversely
affected by the anticipated closing later this year to make way
for a new megaresort being constructed on that site.
The decrease in operating income for the quarter was attributable
primarily to the construction disruption experienced at Circus
Circus-Las Vegas and Luxor, as well as declines at the Company's
Reno, Laughlin and Tunica properties, for reasons discussed
previously .
The increase in operating income for the six months was due
primarily to the June 1, 1995 acquisition of Gold Strike Resorts,
which contributed $22.3 million in additional operating income
during the six months ended July 31, 1996 versus the prior year
when it was owned only two months. The Grand Victoria (the 50%
owned riverboat casino in Elgin, Illinois acquired as part of the
Gold Strike transaction) was the principal contributor.
Additionally, Excalibur continued on pace for a record year,
posting an 18% increase in operating income in the second quarter
and a 26% increase year-to-date. These results were partially
offset by lower comparisons at the Company's other properties, as
previously discussed.
Interest Expense
Interest expense (excluding joint venture interest expense) for
the three and six months ended July 31, 1996 decreased $2.0
million and $2.4 million versus the comparable periods a year
ago. The decrease was due primarily to higher capitalized
interest ($3.6 million and $6.5 million for the quarter and six
months ended July 31, 1996 versus $1.9 million and $3.3 million
in the prior year). Total indebtedness at July 31, 1996 stood at
$759 million compared to $732 million at July 31, 1995.
The Company also recorded interest expense related to joint-
venture projects of $3.6 million in the quarter and $6.1 million
in the six months, representing its 50% share of Silver Legacy
and Monte Carlo interest expense.
Income Tax
The Company's effective tax rate for the three and six months
ended July 31, 1996 was 43.3% and 38.3%, compared with 43.5% and
37.1% for the three and six months ended July 31, 1995. These
rates reflect the corporate statutory rate of 35% plus the effect
of various nondeductible expenses, including the amortization of
goodwill associated with the Gold Strike acquisition. The higher
quarterly rates were due largely to the application of the
statutory rate of 35% to the asset write-offs in each quarter.
Financial Position and Capital Resources
The Company had cash and cash equivalents of $58.7 million at
July 31, 1996, reflecting levels consistent with normal daily
operating requirements. The Company's pretax cash flow from
operations (before asset write-offs and preopening expenses) was
$96.2 million and $211.9 million for the three and six months
ended July 31, 1996 versus $99.6 million and $193.3 million for
the same periods last year -- a decrease of 3% and an increase of
10%, respectively. In this context, pretax cash flow from
operations is defined as the Company's income from operations
plus noncash operating expenses (primarily depreciation and
amortization).
Capital expenditures for the three and six months ended July 31,
1996 were $109.0 million and $160.6 million. Of these amounts,
$50.6 million and $72.2 million related to the construction of
the new hotel towers at Luxor, $24.0 million and $27.5 million
related to the construction of the new hotel tower at Circus
Circus-Las Vegas, $3.2 million and $8.7 million related to the
rooms refurbishment at Circus Circus-Reno, and $3.8 million and
$4.7 million related to construction of a new parking garage at
Circus Circus-Reno. Expenditures for the quarter and six months
also include the acquisition of additional land near Circus
Circus-Reno at a cost of $5.1 million. Expenditures for the six
months include $10.2 million spent on upgrading slot equipment at
Excalibur and Circus Circus-Las Vegas.
On January 29, 1996, the Company arranged a $1.5 billion
unsecured credit facility with its bank group (see Note 3 of
Notes to Condensed Consolidated Financial Statements). This
facility replaced facilities with borrowing limits aggregating
$895 million. As of July 31, 1996, Circus had borrowed $154.2
million against its current facility.
On February 5, 1996, the Company issued $200 million principal
amount of 6.45% Senior Notes due February 1, 2006. Proceeds from
this offering were used to reduce the Company's outstanding bank
borrowings.
The Company holds a 50% interest in and manages a joint venture
(with Mirage Resorts, Incorporated) which developed Monte Carlo,
a major destination resort which opened June 21, 1996 on the Las
Vegas Strip. Monte Carlo features over 3,000 rooms and a 90,000-
square-foot casino, with a palatial style reminiscent of the
Belle Epoque, the French Victorian architecture of the late 19th
century. This project had a total cost of approximately $350
million including land and capitalized interest. The Company's
total equity contribution was $85.8 million, all of which had
been funded as of July 31, 1996.
In July 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. As a condition to the joint venture's
$220 million bank credit agreement (which amended and restated
the joint venture's previous $230 million credit agreement),
Circus entered into a make-well agreement whereby it is obligated
to make additional contributions to the joint venture as may be
necessary to maintain a minimum coverage ratio (as defined). As
of July 31, 1996, the Company had a net equity investment of
approximately $53.8 million in the project and had outstanding
loans to the joint venture in the principal amount of $35.1
million.
During 1995, the Company purchased the Hacienda Hotel and Casino
(including 47 acres of land) and 73 acres of undeveloped land
south of the Hacienda. By virtue of these purchases, Circus owns
a contiguous mile of frontage on the Las Vegas Strip. This
includes Excalibur and Luxor and runs from Tropicana Avenue to
Russell Road, encompassing the first two freeway exits on
Interstate 15, the main artery from Southern California, and
benefits from the most immediate access to the Strip from
McCarran International Airport. The Company is developing a
masterplan linking as many as five or six destination gaming
resorts on this parcel, including the existing Excalibur and
Luxor, that involves sequential stages of development commencing
this year.
In January 1996, the Company commenced construction on a major
expansion at Luxor that will add approximately 2,000 additional
rooms, situated in two identical 22-story towers designed in a
stepped-pyramid style, located between Luxor and Excalibur. The
expansion will also include additional casino space, retail area,
restaurants, a multipurpose showroom, and a reworking of the
upstairs "attractions floor". The rooms are expected to open by
the end of 1996. The estimated cost for this expansion is
approximately $270 million and as of July 31, 1996, $76.9 million
had been incurred.
Also in January 1996, the Company commenced construction of a
1,000-room tower addition at Circus Circus-Las Vegas, scheduled
for completion by the end of 1996. This addition will bring the
total number of rooms at Circus Circus-Las Vegas to approximately
3,800. The estimated cost of the 1,000-room tower is
approximately $75 million and as of July 31, 1996, $28.7 million
had been incurred. In addition to the new tower, the Company is
currently refurbishing all of the 1,188 rooms in the Skyrise
Tower. This refurbishment is budgeted at $10 million, of which
approximately $1.4 million had been incurred as of July 31, 1996.
The Company plans to remodel the balance of rooms at this
property, in phases, over the coming year.
The Company has also announced that it expects to commence
construction before fiscal year-end on an entertainment megastore
of approximately 4,000 rooms on the site of the current Hacienda
Hotel and Casino. The Company expects to announce the theme,
cost and other elements later this year, and anticipates this
signature resort would open in the second half of 1998. Plans
for this project include a stand-alone, 400-room Four Seasons
Hotel that will connect to the new megastore, providing Las Vegas
visitors with a luxury "five-star" hospitality experience. This
hotel, which will be owned by Circus and managed by Four Seasons,
represents the first step pursuant to a cooperative effort with
Four Seasons Regent Hotels and Resorts to identify strategic
opportunities for development of hotel and casino properties
worldwide.
It is the Company's view that the Las Vegas market can absorb
sizeable new capacity, including that contemplated in its
aforementioned masterplan. The direction of development in Las
Vegas has shifted toward the south end of the Strip, where the
Company can essentially create the gateway to Las Vegas.
At Circus Circus-Reno, the Company recently completed refurbish-
ing all of the rooms. The total cost of the refurbishment was
estimated at $15 million and through July 31, 1996, $12.9 million
had been spent on the project. Additionally, a new parking
garage is under construction immediately north of the property,
between Circus Circus-Reno and Interstate 80. This project is
budgeted at $12 million and a total of $5.4 million had been
spent through July 31, 1996. The garage is scheduled for
completion by November 1996.
In Tunica County, Mississippi, the Company has announced that it
plans to add a 1,200-room tower to its property (currently it has
no rooms) and will remodel and retheme the property into a more
elegant resort under the name Gold Strike. The estimated cost of
this expansion is $125 million and construction should be
underway before year-end, with a completion date of late 1997.
Also in Mississippi, the Company has announced that it plans to
develop a hotel/casino resort on the Mississippi Gulf Coast at
the north end of the Bay of St. Louis, near the Delisle exit on
Interstate 10. The planned resort will feature 1,500 rooms and
has an estimated cost of $225 million. The Company anticipates
construction to begin after receipt of all customary approvals,
with the resort opening in early 1998. Circus will own 90% of
the project, with a partner contributing land (up to 500 acres)
in exchange for the remaining 10%.
In December 1993, Windsor Casino Limited (WCL), a corporation
owned equally by Circus Circus Enterprises, Inc., Caesars World,
Inc. and Hilton Hotels Corporation or their subsidiaries, was
selected to exclusively negotiate an agreement to design, build
and operate a casino complex in Windsor, Ontario, Canada.
Currently, WCL operates an interim casino which opened in May
1994 in Windsor's central business district, immediately across
the Detroit River from Detroit, Michigan. In December 1995, this
interim facility was expanded to include a dockside casino,
bringing the total casino space to approximately 75,000 square
feet. Definitive agreements concerning a permanent facility are
nearing completion and under arrangements with the applicable
government authorities, construction recently began on this
facility, which will include a 75,000-square-foot casino and 400-
room hotel, as well as a showroom and meeting facilities. The
total cost for this project is estimated at $290 million and it
is expected to be completed by spring 1998. In connection with
the permanent facility, a revolving credit facility was
established in the amount of $90 million Canadian (approximately
$66 million U.S. as of July 31, 1996) and each of WCL's three
shareholders, including Circus, has guaranteed payment of one-
third of any amounts due under the facility. As of July 31,
1996, there were no borrowings under the facility.
The Company has entered into an agreement with Mirage Resorts,
Incorporated to participate in the development of a 150-acre site
located in the Marina District of Atlantic City. The agreement
provides for the Company to obtain sufficient land for the
development of a destination resort and casino of at least 2,000
rooms, including dramatic public spaces, in an architectural
format that conforms to a "masterplan". While Mirage will act as
master-developer for the new Marina District, Circus will own its
land and its resort project, which will connect to Mirage's
resort as well as to a joint-venture resort to be developed by
Boyd Gaming Corporation and Mirage. Mirage's development of the
site is subject to the satisfaction of a number of conditions.
Accordingly, there can be no assurances as to whether or when
Mirage will proceed with its development of the site. The
Company's participation, among other conditions, is subject to
Mirage's determination to proceed with development of the site.
The Company's ability to proceed is also subject to its obtaining
the requisite gaming and other approvals and licenses in New
Jersey, as well as the approval of the gaming authorities of
various other jurisdictions. While neither the exact extent of a
potential development nor a starting date for construction can be
determined at this time, the Company is currently contemplating
an investment of approximately $600 million to construct this
hotel/casino megaresort.
The Company believes that it has ample capital resources, through
its existing bank arrangements and its operating cash flows, to
meet all of its existing cash obligations, opportunistically
repurchase shares and fund its commitments on the projects
enumerated above. The Company believes that additional funds
could be raised through debt or equity markets, if necessary.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On June 18, 1996, a Final Judgement and Order of Dismissal
(the "Order of Dismissal") was entered in the District Court,
Clark County, Nevada (the "Court") in the consolidated actions of
7547 Partners, a Florida partnership, and Harry Dines, two
purported stockholders of the Company, against the Company and
its directors (the "Consolidated Action"). The Consolidated
Action involved alleged class action and derivative claims for
breach of fiduciary and other common law duties and waste of
corporate assets in connection with, among other things, the
Company's adoption of the Rights Agreement described in the
Company's Form 8-K report filed with the Securities and Exchange
Commission on July 14, 1994 (the "Rights Agreement"), and the
failure to initiate an auction for the sale of the Company. In
accordance with an executed Stipulation of Settlement, dated
April 16, 1996 (the "Settlement Agreement"), the Order of
Dismissal dismissed the Consolidated Action with prejudice, and
released all pending and threatened claims raised in connection
with the subject matters of the litigation. The Company agreed
to pay a total of $285,000 of plaintiffs' counsel fees (of which
$250,000 was paid by applicable insurance) and an additional
$35,000 to cover other costs. In accordance with the Settlement
Agreement, the Company also (i) amended the Rights Agreement,
effective the date of the Settlement Agreement, to increase from
10% to 15% the amount of the Company's Common Stock which must be
acquired in order to cause the "Rights" (as defined) to become
exercisable in accordance with the terms if the Rights Agreement
and (ii) adopted certain corporate resolutions and measures
formalizing procedures relating to the review of acquisition
proposals and "related party" transactions and the standstill
agreement executed by former principals of Gold Strike Resorts
now on the Company's Board of Directors.
Item 2. Change in Securities.
Reference is made to Item 1 of this Report for information
concerning the amendment of the Rights Agreement, which
information is incorporated herein by this reference.
Item 4. Submission of Matters to a Vote of Security Holders.
The 1996 Annual Meeting of the Company's stockholders was
held June 21, 1996. At the meeting, management's nominees,
William A. Richardson, Fred W. Smith and Clyde T. Turner, were
elected to fill the three available positions as Class II
directors. Voting (expressed in number of shares) was as
follows: Mr. Richardson -- 91,380,932 for, 1,597,390 against or
withheld and no abstentions or broker non-votes; Mr. Smith --
91,396,302 for, 1,582,020 against or withheld and no abstentions
or broker non-votes; and Mr. Turner -- 91,398,574 for, 1,579,748
against or withheld and no abstentions or broker non-votes.
At the meeting, stockholders ratified the appointment of
Arthur Andersen LLP as the Company's independent auditors to
examine and report on its financial statements for the fiscal
year ending January 31, 1997, by a vote of 92,783,777 shares for,
101,515 shares against or withheld and 93,030 abstentions or
broker non-votes.
At the meeting, a stockholder proposal to eliminate the
Company's classified board of directors was defeated. The vote
on the proposal was as follows: 31,747,540 shares for,
51,698,518 shares against or withheld and 9,532,264 abstentions
or broker non-votes.
At the meeting, a stockholder proposal to eliminate the
Company's non-employee pension benefits plan was defeated. The
vote on the proposal was as follows: 24,610,470 shares for,
58,416,030 shares against or withheld and 9,951,822 abstentions
or broker non-votes.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits filed as part of this report are listed on
the Index to Exhibits accompanying this report.
(b) Reports on Form 8-K. No report on Form 8-K was filed
during the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CIRCUS CIRCUS ENTERPRISES, INC.
(Registrant)
Date: September 13, 1996 By CLYDE T. TURNER
Clyde T. Turner
Chairman of the Board and
Chief Executive Officer
Date: September 13, 1996 By GLENN W. SCHAEFFER
Glenn W. Schaeffer
President, Chief Financial
Officer and Treasurer
INDEX TO EXHIBITS
Exhibit
No. Description
4(a). Amendment to Rights Agreement, effective as of April
16, 1996, between the Company and First Chicago Trust
Company of New York.
10(a). Amendment No. 5 to the Victoria Partners Joint Venture
Agreement dated as of August 1, 1996.
10(b). Amended and Restated Credit Agreement, dated as of
September 9, 1996, by an among Circus and Eldorado
Joint Venture, the Lendors named therein and Wells
Fargo Bank, N.A. as Arranger and Administrative Agent
and the related Note, the Amended and Restated Make-
Well Agreement, the Amended and Restated Deed of Trust
and the Subordination and Debt Put Agreement.
10(c). Amendment No. 1 to Standstill Agreement, effective
April 16, 1996, by and among the Company and Michael S.
Ensign, William A. Richardson, David R. Belding, Peter
A. Simon II and Glenn W. Schaeffer. (Incorporated by
reference to Exhibit 99.7 of Amendment No. 2 to the
Schedule 13D of Michael S. Ensign, relating to the
Company's Common Stock, filed on September 5, 1996.)
10(d). Guarantee of Circus Circus Enterprises, Inc. dated as
of July 10, 1996 pursuant to a revolving credit
facility of the same date between Windsor Financial
Limited and Canadian Imperial Bank of Commerce.
27. Financial Data Schedule for the six months ended July
31, 1996 as required under EDGAR.
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, effective as of April 16, 1996, to the Rights
Agreement, dated as of July 14, 1994 between Circus Circus
Enterprises, Inc., a Nevada corporation (the "Company"), and First
Chicago Trust Company of New York, a New York corporation, as
Rights Agent (the "Rights Agent") (the "Rights Agreement").
RECITALS
The Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement. Pursuant to Section 26 of the
Rights Agreement, the Company and the Rights Agent may from time to
time supplement or amend the Rights Agreement. All acts and things
necessary to make this Amendment a valid agreement, enforceable
according to its terms, have been done and performed, and the
execution and delivery of this Amendment by the Company and the
Rights Agent have been in all respects duly authorized by the
Company and the Rights Agent.
AGREEMENT
In consideration of the foregoing and the mutual agreements
set forth herein, the parties hereto agree as follows:
1. Section 1.1 of the Rights Agreement is hereby modified
and amended by deleting the percentage "10%" in each of the first
and second (including the proviso thereto) sentences thereof and
substituting the percentage "15%" therefor.
2. Section 3.1 of the Rights Agreement is hereby modified
and amended by deleting the percentage "10%" in the first sentence
thereof and substituting the percentage "15%" therefor.
3. Exhibit B of the Rights Agreement is hereby modified and
amended by deleting the percentage "10%" in each of the second and
sixth paragraphs thereof and substituting the percentage "15%"
therefor.
4. If any term, provision, covenant or restriction of this
Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Amendment, and the Rights Agreement, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
5. This Amendment shall be deemed to be a contract made
under the laws of the State of Nevada and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within
such State.
6. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
7. In all respects not inconsistent with the terms and
provisions of this Amendment, the Rights Agreement is hereby
ratified, adopted, approved and confirmed. In executing and
delivering this Amendment, the Rights Agent shall be entitled to
all the privileges and immunities afforded to the Rights Agent
under the terms and conditions of the Rights Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed, all effective as of the date and
year first above written.
CIRCUS CIRCUS ENTERPRISES, INC.
By: CLYDE T. TURNER
Name: Clyde T. Turner
Title: Chairman of the Board
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: JAMES KUZMICH
Name: James Kuzmich
Title: Operation Officer
AMENDMENT NO. 5 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 5 to Reducing Revolving Loan
Agreement (this "Amendment") dated as of August 1, 1996 is
entered into with reference to the Reducing Revolving Loan
Agreement dated as of December 21, 1994 among Victoria
Partners, a Nevada general partnership (as "Borrower"), the
Banks referred to therein, The Long-Term Credit Bank of Japan,
Ltd., Los Angeles Agency and Societe Generale (as "Co-Agents"),
and Bank of America National Trust and Savings Association, as
Administrative Agent. The Loan Agreement has previously been
as amended by the Amendment No. 1 dated as of January 31, 1995,
Amendment No. 2 dated as of June 30, 1995, Amendment No. 3
dated as of July 28, 1995 and Amendment No. 4 dated as of
October 16, 1995 (as so amended, the "Loan Agreement").
RECITALS
A. As of the date of this Amendment, the Project, now
known as the Monte Carlo Resort Casino is
substantially complete and open for business.
B. Borrower has requested that the Banks agree to defer
certain technical conditions to the occurrence of the
Construction Termination Date and to amend the Loan
Agreement as set forth herein.
NOW, THEREFORE, Borrower, the Administrative Agent
and the Banks agree to amend the Loan Agreement as follows:
1. Amendment to Section 1.1 - Amended Definitions.
The definition of "Commitment" set forth in Section 1.1 of the
Loan Agreement is amended to read in full as follows:
"Commitment" means (a) at all times prior to the
Construction Termination Date, $200,000,000 and (b) at all
times after the Construction Termination Date,
$200,000,000, minus the amount of any reductions thereto
made pursuant to Sections 2.4, 2.5 and 2.6. The
respective Pro Rata Shares of the Banks with respect to
the Commitment are set forth in Schedule 1.1."
"Maturity Date" means June 30, 2001.
"Post-Construction Fiscal Quarter" means each Fiscal
Quarter beginning with the Fiscal Quarter beginning on
July 1, 1996 and ending on September 30, 1996.
2. Section 2.5 - Scheduled Reductions of the
Commitment. Section 2.5 of the Loan Agreement is amended to
read in full as follows:
"2.5 Scheduled Mandatory Reductions of Commitment.
The Commitment shall automatically and permanently reduce
(a) on June 30, 1997, to $170,000,000, (b) on September
30, 1997 and on the last day of each of the next seven
Fiscal Quarters, by $7,250,000, and (c) on the last day of
each subsequent Fiscal Quarter, by $14,000,000."
3. Deletion of Project Costs Ratio Condition to
Advances. Section 8.3(a) of the Loan Agreement (which formerly
conditioned Advances upon the Funded Debt to Project Costs
Ratio being not greater than .70 to 1.00) is hereby deleted.
4. Agreement Re Construction Termination Date. The
parties hereto agree that, notwithstanding the non-satisfaction
of all conditions precedent to the Construction Termination
Date, the Construction Termination Date shall be deemed to have
occurred on June 30, 1996.
5. Representations Regarding Project Costs, Etc.
Borrower represents and warrants to the Administrative Agent
and the Banks that, as of the date of this Amendment:
(a) a temporary certificate of occupancy has been
issued for the Project by the Clark County Building
Department, a copy of which has been delivered to the
Administrative Agent;
(b) a Notice of Completion for the Project has been
duly recorded;
(c) The amount of all materialmen's claims,
mechanics liens or other Liens or claims for Liens
directly related to the Project (other than those created
pursuant to the Loan Documents) which have been incurred
as of the date of this Amendment but which have not been
paid (the "Remaining Claims") is not in excess of
$30,000,000;
(d) the Project has been substantially completed in
accordance with the Plans and all applicable building
laws, ordinances and regulations;
(e) the Project is in a condition (including
installation of fixtures, furnishings and equipment) to
receive customers and engage in its operations in the
ordinary course of business;
(f) Borrower has been awarded all necessary licenses,
permits and consents (including all licenses required
under applicable Gaming Laws) currently required to
operate the Project and the gaming operations intended to
be conducted thereon; and
(g) Construction Costs incurred in connection with
the Project are not greater than $310,000,000 (excluding
any Attributed Land Value), of which not less than
$280,000,000 have been paid by Borrower.
6. Covenant Regarding Payment of Remaining Claims.
Borrower covenants and agrees that it shall:
(a) Diligently process all Remaining Claims and
pursue the settlement and payment of each Remaining Claim
which is or hereafter becomes a recorded Lien against the
Property (each a "Mechanics Lien") and the receipt and
recordation of releases of all Mechanics Liens;
(b) Not later than October 31, 1996, cause the final
settlement and payment of, or bond over, all Remaining
Claims which are in an aggregate principal amount in
excess of $1,000,000 and the recordation of releases with
respect to all Mechanics Liens or obtain bonds reasonably
acceptable to the Administrative Agent with respect
thereto.
(c) Until the Reduction of the Remaining Claims to
an aggregate amount which is not greater than $1,000,000,
provide to the Administrative Agent, not later than the
fifteenth Banking Day of each calendar month, a report
detailing the Remaining Claims which is in form and detail
acceptable to the Administrative Agent.
7. Conditions Precedent. The effectiveness of this
Amendment shall be conditioned upon the fulfillment of each of
the following conditions precedent:
(a) The Administrative Agent shall have
received all of the following, each of which shall be
originals unless otherwise specified, each properly
executed by a Responsible Official of each party thereto,
each dated as of the date hereof and each in form and
substance satisfactory to the Administrative Agent and its
legal counsel (unless otherwise specified or, in the case
of the date of any of the following, unless the
Administrative Agent otherwise agrees or directs):
(1) Counterparts of this Amendment
executed by all parties hereto;
(2) a letter agreement executed by Circus
Circus Enterprises, Inc. in the form of Exhibit A
hereto;
(3) Certificates of the Project architect
and Project manager to the Administrative Agent and
the Banks certifying that the Project has been
substantially completed in accordance with the Plans
and all applicable building laws, ordinances and
regulations; and
(4) Such other assurances, certificates,
documents, consents or opinions as the Administrative
Agent reasonably may require.
(b) The representations and warranties of
Borrower contained in Article 4 of the Loan Agreement
shall be true and correct.
(c) All legal matters relating to the Loan
Documents shall be satisfactory to Sheppard, Mullin,
Richter & Hampton LLP, special counsel to the
Administrative Agent.
8. Representation and Warranty. Borrower
represents and warrants to the Administrative Agent and the
Banks that no Default or Event of Default has occurred and
remains continuing.
9. Confirmation. In all other respects, the terms
of the Loan Agreement and the other Loan Documents are hereby
confirmed.
IN WITNESS WHEREOF, Borrower, the Administrative
Agent and the Banks have executed this Amendment as of the date
first written above by their duly authorized representatives.
"Borrower"
VICTORIA PARTNERS, a Nevada general
partnership
By: Gold Strike L.V., managing
general partner
By: Last Chance Investments,
Incorporated, general partner
By: WILLIAM A. RICHARDSON
Title: President
By: MRGS Corp., a Nevada corporation,
general partner
By:DANIEL R. LEE
Daniel R. Lee, Chief Financial
Officer and Treasurer
"Administrative Agent"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By:L. CHENEVERT
L. Chenevert, Jr., Vice President
"Banks"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: PATRICK CARROLL
For Jon Varnell, Managing Director
BANK OF AMERICA NEVADA, as a Bank and
as Swing Line Bank
By: ALAN F. GORDON
Alan F. Gordon, Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as Co-Agent
and a Bank
By: MOTOKAZU UEMATSU
Motokazu Uematsu,
Deputy General Manager
SOCIETE GENERALE, as Co-Agent and a
Bank
By: DONALD L. SCHUBERT
Donald L. Schubert, Vice President
FIRST SECURITY BANK, N.A., as a Bank
By: VICTOR W. GILLETT
Victor W. Gillett, Vice President
FIRST SECURITY BANK, N.A., as a Bank
By: DAVID P. WILLIAMS
David P. Williams, Vice President
BANK OF SCOTLAND, as a Bank
By: CATHERINE M. ONIFFREY
Catherine M. Oniffrey,
Vice President
MIDLANTIC BANK, N.A., as a Bank
By: DENISE D. KILLEN
Denise D. Killen, Vice President
U.S. BANK OF NEVADA, as a Bank
By: AMY ROBINSON
Amy Ethridge, Vice President
CREDIT LYONNAIS LOS ANGELES BRANCH
By: THIERRY VINCENT
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: MARY JO JOLLY
Title:Assistant Vice President
BANKERS TRUST COMPANY, as a Bank
By: __________________________________
Title: _______________________________
CIBC INC., as a Bank
By: PAUL CHAKMAK
Title: Director
[Exhibit A]
August 1, 1996
Bank of America National Trust and Savings Association,
As Administrative Agent under the Reducing Revolving
Loan Agreement referred to below
Dear Ladies and Gentlemen:
This letter is delivered with reference to the
Reducing Revolving Loan Agreement dated as of December 21, 1994
among Victoria Partners, a Nevada general partnership (as
"Borrower"), the Banks referred to therein, The Long-Term
Credit Bank of Japan, Ltd., Los Angeles Agency and Societe
Generale (as "Co-Agents"), and Bank of America National Trust
and Savings Association, as Administrative Agent, as amended
(the "Loan Agreement"). Capitalized terms used in this letter
are used with the meanings set forth for those terms in the
Loan Agreement.
Concurrently with the execution of this letter,
the parties to the Loan Agreement are entering into an
Amendment No. 5 thereto, pursuant to which it has been agreed
that the Construction Termination Date shall be deemed to have
occurred on June 30, 1996, even though certain of the elements
described in the Loan Agreement to be the "Termination of
Construction" have not occurred.
As Completion Guarantor, Circus Circus
Enterprises hereby agrees that:
(a) notwithstanding the execution of the proposed
Amendment No. 5, its liability under the Completion
Guaranty shall not be deemed to have been terminated until
(i) all of the Remaining Claims (as defined in the
Amendment No. 5) have been settled or paid, and (ii)
releases of all Mechanics Liens (as defined in the
Amendment No. 5) have been recorded or bonds reasonably
acceptable to the Administrative Agent have been obtained
with respect to each Remaining Claim not settled or paid
and each Mechanics Lien not so released; and
(b) unless the Completion Guaranty is sooner
released, it shall pay all unsettled and unpaid Remaining
Claims (or obtain bonds reasonably acceptable to the
Administrative Agent with respect thereto) upon the
earliest to occur of (i) December 31, 1996 (unless the
Remaining Claims have then been reduced to an amount which
is not greater than $1,000,000), (ii) the occurrence of an
Event of Default of the type described in Section 9.1(l)
of the Loan Agreement, or (iii) the date upon which the
Loans are accelerated.
CIRCUS CIRCUS ENTERPRISES, INC.,
a Nevada corporation
By: GLENN SCHAEFFER
Title: President
Accepted:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By: JANICE HAMMOND
Title: Vice President
_______________________________________________________________
_______________________________________________________________
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of September 9, 1996
among
CIRCUS AND ELDORADO JOINT VENTURE,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
WELLS FARGO BANK, N.A.,
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
and SOCIETE GENERALE,
as Managing Agents,
and
CIBC INC., and
CREDIT LYONNAIS, LOS ANGELES BRANCH
as Co-Agents,
and
WELLS FARGO BANK, N.A.,
as Arranger and Administrative Agent
_______________________________________________________________
_______________________________________________________________
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement . . . . . . . 31
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . 32
SECTION 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . 33
2.1 Commitments; Making of Loans; the Register;
Optional Notes . . . . . . . . . . . . . . . . . . . . 33
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . 37
2.4 Prepayments and Reductions in Commitments;
General Provisions Regarding Payments. . . . . . . . . 41
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 45
2.6 Special Provisions Governing Eurodollar Rate
Loans. . . . . . . . . . . . . . . . . . . . . . . . . 46
2.8 Obligation of Lenders and Issuing Lender to
Mitigate . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3 LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . 56
3.1 Issuance of Letters of Credit and Lenders'
Purchase of Participations Therein . . . . . . . . . . 56
3.2 Letter of Credit Fees. . . . . . . . . . . . . . . . . . 58
3.3 Drawings and Reimbursement of Amounts Drawn
Under Letters of Credit. . . . . . . . . . . . . . . . 59
3.4 Obligations Absolute . . . . . . . . . . . . . . . . . . 62
3.5 Indemnification; Nature of Issuing Lender's
Duties . . . . . . . . . . . . . . . . . . . . . . . . 63
3.6 Increased Costs and Taxes Relating to
Letters of Credit. . . . . . . . . . . . . . . . . . . 64
SECTION 4 CONDITIONS TO LOANS AND LETTERS OF CREDIT. . . . . . . . . . 66
4.1 Conditions to Initial Loans. . . . . . . . . . . . . . . 66
4.2 Conditions to All Loans. . . . . . . . . . . . . . . . . 69
4.3 Conditions to Letters of Credit. . . . . . . . . . . . . 71
SECTION 5 PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES . . . . . . . . 73
5.1 Organization, Powers, Qualification, Good
Standing, Business and Subsidiaries. . . . . . . . . . 73
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . 74
5.3 Financial Condition. . . . . . . . . . . . . . . . . . . 75
5.4 No Material Adverse Change; No Restricted
Junior Payments. . . . . . . . . . . . . . . . . . . . 75
5.5 Title to Properties; Liens; All Collateral . . . . . . . 76
5.6 Litigation; Adverse Facts. . . . . . . . . . . . . . . . 76
5.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . 77
5.8 Performance of Agreements; Materially
Adverse Agreements . . . . . . . . . . . . . . . . . . 77
5.9 Governmental Regulation. . . . . . . . . . . . . . . . . 77
5.10 Securities Activities. . . . . . . . . . . . . . . . . 77
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . 78
5.12 Certain Fees . . . . . . . . . . . . . . . . . . . . . 78
5.13 Environmental Protection . . . . . . . . . . . . . . . 78
5.14 Employee Matters . . . . . . . . . . . . . . . . . . . 80
5.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . 80
5.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . 81
5.17 Representations and Warranties
Incorporated From the General Partner
Subordinated Debt. . . . . . . . . . . . . . . . . . . 81
5.18 Compliance With Laws; Licenses, Permits
and Authorizations . . . . . . . . . . . . . . . . 81
5.19 Intangible Property. . . . . . . . . . . . . . . . . . 82
5.20 Rights to Hotel Agreements, Permits and
Licenses . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 6 PARTNERSHIP'S AFFIRMATIVE COVENANTS. . . . . . . . . . . . . 84
6.1 Financial Statements and Other Reports . . . . . . . . . 84
6.2 Partnership or Corporate Existence, etc. . . . . . . . . 91
6.3 Payment of Taxes and Claims; Tax
Consolidation. . . . . . . . . . . . . . . . . . . . . 91
6.4 Maintenance of Properties; Insurance . . . . . . . . . . 92
6.5 Inspection; Lender Meeting . . . . . . . . . . . . . . . 92
6.6 Compliance with Laws, etc. . . . . . . . . . . . . . . . 93
6.7 Environmental Disclosure and Inspection. . . . . . . . . 93
6.8 Partnership's Remedial Action Regarding
Hazardous Material . . . . . . . . . . . . . . . . . . 95
SECTION 7 PARTNERSHIP'S NEGATIVE COVENANTS . . . . . . . . . . . . . . 96
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 96
7.2 Liens and Related Matters. . . . . . . . . . . . . . . . 97
7.3 Investments. . . . . . . . . . . . . . . . . . . . . . . 99
7.4 Contingent Obligations . . . . . . . . . . . . . . . . .100
7.5 Restricted Junior Payments . . . . . . . . . . . . . . .100
7.6 Financial Covenants. . . . . . . . . . . . . . . . . . .101
7.7 Restriction on Fundamental Changes; Asset
Sales and Acquisitions . . . . . . . . . . . . . . . .102
7.8 Capital Expenditures . . . . . . . . . . . . . . . . . .103
7.9 Sales and Lease-Backs. . . . . . . . . . . . . . . . . .104
7.10 Sale or Discount of Receivables. . . . . . . . . . . . .105
7.11 Transactions with Shareholders and
Affiliates . . . . . . . . . . . . . . . . . . . . . .105
7.12 Disposal of Subsidiary Stock . . . . . . . . . . . . . .105
7.13 Conduct of Business. . . . . . . . . . . . . . . . . . .106
7.14 Amendments of Related Documents. . . . . . . . . . . . .106
7.15 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . .106
7.16 Transfer of Partnership Interests. . . . . . . . . . . .107
SECTION 8 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . .108
8.1 Failure to Make Payments When Due. . . . . . . . . . . .108
8.2 Default in Other Agreements. . . . . . . . . . . . . . .108
8.3 Breach of Certain Covenants. . . . . . . . . . . . . . .109
8.4 Breach of Warranty . . . . . . . . . . . . . . . . . . .109
8.5 Other Defaults Under Loan Documents. . . . . . . . . . .109
8.6 Involuntary Bankruptcy; Appointment of
Receiver, etc. . . . . . . . . . . . . . . . . . . . .110
8.7 Voluntary Bankruptcy; Appointment of
Receiver, etc. . . . . . . . . . . . . . . . . . . . .110
8.8 Judgments and Attachments. . . . . . . . . . . . . . . .110
8.9 Dissolution. . . . . . . . . . . . . . . . . . . . . . .111
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . .111
8.11 Material Adverse Effect. . . . . . . . . . . . . . . . .111
8.12 Change in Control. . . . . . . . . . . . . . . . . . . .111
8.13 Invalidity of Environmental Indemnities or
Guaranties . . . . . . . . . . . . . . . . . . . . . .111
8.14 Impairment of Collateral . . . . . . . . . . . . . . . .112
8.15 Loss of Governmental Authorizations. . . . . . . . . . .112
8.16 Gaming License . . . . . . . . . . . . . . . . . . . . .112
8.17 Remedies . . . . . . . . . . . . . . . . . . . . . . . .112
SECTION 9 AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .115
9.1 Appointment. . . . . . . . . . . . . . . . . . . . . . .115
9.2 Powers; General Immunity . . . . . . . . . . . . . . . .115
9.3 Representations and Warranties; No
Responsibility For Appraisal of Credit-
worthiness . . . . . . . . . . . . . . . . . . . . . .117
9.4 Right to Indemnity . . . . . . . . . . . . . . . . . . .117
9.5 Successor Agent. . . . . . . . . . . . . . . . . . . . .118
9.6 Collateral Documents . . . . . . . . . . . . . . . . . .118
SECTION 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .120
10.1 Assignments and Participations in Loans and
Letters of Credit. . . . . . . . . . . . . . . . . . .120
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . .122
10.3 Indemnity. . . . . . . . . . . . . . . . . . . . . . . .123
10.4 Set-Off; Security Interest in Deposit
Accounts . . . . . . . . . . . . . . . . . . . . . . .124
10.5 Ratable Sharing. . . . . . . . . . . . . . . . . . . . .125
10.6 Amendments and Waivers; Release of
Collateral . . . . . . . . . . . . . . . . . . . . . .125
10.7 Independence of Covenants. . . . . . . . . . . . . . . .127
10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . .127
10.9 Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . .128
10.10 Failure or Indulgence Not Waiver; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . . . .128
10.11 Marshalling; Payments Set Aside. . . . . . . . . . . . .128
10.12 Severability . . . . . . . . . . . . . . . . . . . . . .129
10.13 Obligations Several; Independent Nature of
Lenders' Rights. . . . . . . . . . . . . . . . . . . .129
10.14 Headings . . . . . . . . . . . . . . . . . . . . . . . .129
10.15 Applicable Law . . . . . . . . . . . . . . . . . . . . .129
10.16 Successors and Assigns . . . . . . . . . . . . . . . . .129
10.17 Consent to Jurisdiction and Service of
Process. . . . . . . . . . . . . . . . . . . . . . . .130
10.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . .130
10.19 Confidentiality. . . . . . . . . . . . . . . . . . . . .131
10.20 Counterparts; Effectiveness. . . . . . . . . . . . . . .131
10.21 Non-Recourse to General Partners . . . . . . . . . . . .131
10.22 Cooperation With Gaming Boards . . . . . . . . . . . . .132
10.23 Principles of Restatement. . . . . . . . . . . . . . . .133
EXHIBITS
I NOTICE OF BORROWING
II NOTICE OF CONVERSION/CONTINUATION
III NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV NOTE
V COMPLIANCE CERTIFICATE
VI OPINIONS OF PARTNERSHIP'S COUNSEL
VII OPINION OF SHEPPARD, MULLIN, RICHTER & HAMPTON, LLP
VIII ASSIGNMENT AGREEMENT
IX CERTIFICATE RE NON-BANK STATUS
X AMENDED AND RESTATED COLLATERAL ACCOUNT AGREEMENT
XI AMENDED AND RESTATED SECURITY AGREEMENT
XII AMENDED AND RESTATED MAKE-WELL AGREEMENT
XIII AMENDED AND RESTATED DEED OF TRUST
XIV AMENDED AND RESTATED ASSIGNMENT OF RENTS AND REVENUES
XV SUBORDINATION AND DEBT PUT AGREEMENT
SCHEDULES
2.1 LENDERS' COMMITMENTS
5.1 SUBSIDIARIES
5.13 ENVIRONMENTAL MATTERS
5.19 INTELLECTUAL PROPERTY
7.2 CERTAIN EXISTING LIENS
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated
as of September 9, 1996 and entered into by and among CIRCUS
AND ELDORADO JOINT VENTURE, a Nevada general partnership
("Partnership"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as
a "Lender" and collectively as "Lenders"), WELLS FARGO BANK,
N.A. ("Wells Fargo"), in its capacity as Arranger and
Administrative Agent for Lenders ("Agent"), THE LONG-TERM
CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY and SOCIETE
GENERALE, collectively, as Managing Agents for Lenders (in such
capacity, "Managing Agents") and CIBC INC. and CREDIT LYONNAIS,
LOS ANGELES BRANCH, collectively, as Co-Agents for Lenders (in
such capacity, "Co-Agents").
R E C I T A L S
Pursuant to a Credit Agreement (the "Original Credit
Agreement") dated as of May 30, 1995, among the Partnership, as
borrower, certain Co-Agents, Managing Agents and Lenders named
therein, and First Interstate Bank of Nevada, N.A., as Arranger
and Administrative Agent, the Lenders made credit facilities in
the aggregate principal amount of $230,000,000 available to the
Partnership.
The Partnership used these credit facilities, and
other funds, to develop, construct and operate the Silver
Legacy Hotel and Casino in Reno, Nevada (the "Hotel") and for
its general working capital purposes.
Wells Fargo Bank, N.A., as successor by merger to
First Interstate Bank of Nevada, N.A. has succeeded its
predecessor as Administrative Agent.
The parties hereto desire to amend and restate the
Original Credit Agreement in its entirety as set forth herein,
and to reduce the aggregate credit facilities thereunder to
$220,000,000.
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Partnership, Lenders, Managing Agents, Co-Agents and Agent
agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have
the meanings set forth below:
"Adjusted Eurodollar Rate" means, for any Interest
Rate Determination Date with respect to an Interest Period for
a Eurodollar Rate Loan, the rate per annum obtained by dividing
(i) the offered quotation, if any, to Wells Fargo (or an
Affiliate of Wells Fargo) by prime banks for U.S. dollar
deposits of amounts in same day funds comparable to the
principal amount of the Eurodollar Rate Loan of Wells Fargo for
which the Adjusted Eurodollar Rate is then being determined
with maturities comparable to such Interest Period as of
approximately 10:00 A.M. (Pacific time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under
Regulation D).
"Affected Lender" has the meaning assigned to that
term in subsection 2.4C.
"Affected Loans" has the meaning assigned to that
term in subsection 2.4C.
"Affiliate," as applied to any Person, means any
other Person directly or indirectly controlling, controlled by,
or under common control with, that Person. For the purposes of
this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any
successor Agent appointed pursuant to subsection 9.5.
"Agreement" means this Amended and Restated Credit
Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Applicable Base Rate Margin" means (i) during the
Make-Well Period, the percentage set forth below (expressed in
basis points) opposite the then applicable Circus Pricing
Level:
Circus Pricing Level Margin
I 0
II 0
III 12.50
IV 27.50
V 75.00
VI 137.50
and (ii) during each portion of any Pricing Period after the
Make-Well Period, the percentage set forth below (expressed in
basis points) opposite the Stand-Alone Leverage Ratio as of the
last day of the Fiscal Quarter ended approximately 60 days
prior to the first day of such Pricing Period:
Stand-Alone Leverage Ratio Margin
Less than 1.50:1.00 0
Equal to or greater
than 1.50:1.00 but less
than 2.00:1.00 50.00
Equal to or greater
than 2.00:1.00 but less
than 2.50:1.00 100.00
Equal to or greater
than 2.50:1.00 150.00
"Applicable Eurodollar Rate Margin" means (i) during
the Make-Well Period, the percentage set forth below (expressed
in basis points) opposite the then applicable Circus Pricing
Level:
Circus Pricing Level Margin
I 75.00
II 100.00
III 112.50
IV 127.50
V 175.00
VI 237.50
and (ii) during each Pricing Period which occurs following the
Make-Well Period, the percentage set forth below (expressed in
basis points) opposite the Stand-Alone Leverage Ratio as of the
last day of the Fiscal Quarter ended approximately 60 days
prior to the first day of such Pricing Period:
Stand-Alone Leverage Ratio Margin
Less than 1.50:1.00 100.00
Equal to or greater
than 1.50:1.00 but less
than 2.00:1.00 150.00
Equal to or greater
than 2.00:1.00 but less
than 2.50:1.00 200.00
Equal to or greater
than 2.50:1.00 250.00
"Asset Sale" means the sale by Partnership or any of
its Subsidiaries to any Person other than Partnership or any of
its wholly-owned Subsidiaries of (i) any of the stock of any of
Partnership's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of Partnership or
any of its Subsidiaries, or (iii) any other assets (whether
tangible or intangible) of Partnership or any of its
Subsidiaries outside of the ordinary course of business
(including, without limitation, sale of the Premises);
provided, in each case, that no such sale or disposition shall
be an Asset Sale for purposes of this Agreement unless the fair
market value of the assets sold or disposed exceeds $3,000,000
for any given transaction or series of related transactions or
$6,000,000 in the aggregate in any calendar year.
"Assignment Agreement" means an Assignment Agreement
in substantially the form of Exhibit VIII.
"Assignment of Rents and Revenues" means the
Assignment of Rents and Revenues executed and delivered by
Partnership and Agent on the Closing Date and recorded in the
official records of Washoe County, Nevada, on May 31, 1995 in
Book 4312, Page 859, as Instrument 1837111, as amended and
restated on the Restatement Date by an Amended and Restated
Assignment of Rents and Revenues, substantially in the form of
Exhibit XIV, as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Available Cash Flow" means, for any period, an
amount equal to EBITDA for that period minus the sum, without
duplication, during that period of (a) the amount by which the
average daily Total Utilization of the Commitments during the
four Fiscal Quarter period ending concurrently with that period
exceeds Maximum Facility Availability as of the last day of
that period, (b) payments made by Partnership with respect to
Capital Leases, (c) Permitted Subordinated Debt Payments made
by Partnership in Cash (to the extent that the same are
principal payments), (d) Cash Interest Expense, (e) Make-Well
Fees paid in cash, (f) Tax Distributions permitted under
subsection 7.5(ii) made by Partnership in Cash, and (g) Capital
Expenditures, in each case during that period.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect, or
any successor statute.
"Base Rate" means, at any time, the higher of (x) the
Prime Rate or (y) the rate which is 1/2 of 1% in excess of the
Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at
rates determined by reference to the Base Rate as provided in
subsection 2.2A.
"Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of
the States of Nevada, New York or California or is a day on
which banking institutions located in any such state are
authorized or required by law or other governmental action to
close.
"Capital Expenditures" means, for any period, the sum
of (i) the aggregate of all expenditures (whether paid in cash
or other consideration or accrued as a liability and including
that portion of Capital Leases that is capitalized on the
balance sheet of Partnership and its Subsidiaries) by
Partnership and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property,
plant or equipment" or comparable items reflected in the
statement of cash flows of Partnership and its Subsidiaries
plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Partnership
and its Subsidiaries during that period to acquire (by purchase
or otherwise) the business, property or fixed assets of any
Person, or the stock or other evidence of beneficial ownership
of any Person that, as a result of such acquisition, becomes a
Subsidiary of Partnership.
"Capital Lease," as applied to any Person, means any
lease of any property (whether real, personal or mixed) by that
Person as lessee that, in conformity with GAAP, is accounted
for as a capital lease on the balance sheet of that Person.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means, as at any date of
determination, (i) marketable securities (a) issued or directly
and unconditionally guaranteed as to interest and principal by
the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct
obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year
after such date and having, at the time of the acquisition
thereof, the highest rating obtainable from either Standard &
Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing no more than one
year from the date of creation thereof and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P
or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year after such date
and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any
state thereof or the District of Columbia that, at the time of
the acquisition of such certificates or acceptances (a) is at
least "adequately capitalized" (as defined in the regulations
of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than
$100,000,000; (v) shares of any money market mutual fund that
(a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) and (ii) above,
(b) has net assets of not less than $500,000,000, and (c) has
the highest rating obtainable from either S&P or Moody's, and
(vi) overnight repurchase agreements executed with Lenders;
provided that the terms of such repurchase agreements require
physical delivery of securities (which must be "Cash
Equivalents" as described in clauses (i) - (iv) above), except
in the case of treasury obligations delivered through the
Federal Reserve book entry system.
"Cash Interest Expense" means Interest Expense paid
or payable in cash, other than Interest Expense accrued but
unpaid with respect to the General Partner Subordinated Debt.
"Certificate re Non-Bank Status" means a certificate
substantially in the form of Exhibit IX delivered by a Lender
to Agent pursuant to subsection 2.7B(iii).
"Circus" means Circus Circus Enterprises, Inc., a
Nevada corporation, its successors and permitted assigns.
"Circus Bridge" means the elevated building structure
that spans Fifth Street and connects the Improvements with the
buildings located on the adjacent real property owned by Circus
Circus Casinos, Inc., a Nevada corporation.
"Circus Debt Rating" means, as of each date of
determination, the most creditworthy rating, actual or
implicit, assigned to (i) senior unsecured Indebtedness of
Circus by S&P, (ii) senior unsecured Indebtedness of Circus by
Moody's or (iii) in the event such a rating is issued, the bank
debt rating assigned to the Indebtedness evidenced by the
Circus Loan Agreement by Moody's or S&P, whichever is highest.
"Circus Funded Debt Ratio" means, as of any date of
determination, the ratio of (a) the "Average Daily Funded Debt"
of Circus as of the last day of the then most recently ended
fiscal quarter of Circus to (b) "EBITDA" of Circus for the four
most recent fiscal quarters of Circus, in each case determined
in accordance with the terms of the Circus Loan Agreement.
"Circus Loan Agreement" means that certain Loan
Agreement dated as of January 29, 1996, among Circus, the Banks
and Co-Agents named therein, and Bank of America National Trust
and Savings Association, as Administrative Agent as in effect
as of the Restatement Date.
"Circus Pricing Date" means (a) with respect to any
change in the Circus Funded Debt Ratio which results in a
change in the Circus Pricing Level, the earlier of (i) the date
upon which Circus delivers a copy of its compliance certificate
under the Circus Loan Agreement to the Agent pursuant to
Section 2.14 of the Make-Well Agreement reflecting such changed
Circus Funded Debt Ratio and (ii) the date upon which Circus is
required to deliver such a compliance certificate, and (b) with
respect to any change in the Circus Debt Rating which results
in a change in the Circus Pricing Level, the date which is
five (5) Banking Days after the Agent has received evidence
reasonably satisfactory to it of such change.
"Circus Pricing Level" means the pricing level set
forth below opposite the pricing criteria achieved by Circus as
of the then most recent Circus Pricing Date (and, if the Circus
Funded Debt Ratio and the Circus Debt Rating are then at
different pricing levels, then the pricing level which yields
the lowest Applicable Base Rate Margin and Applicable
Eurodollar Margin to Partnership):
Circus Pricing Level Pricing Criteria
Circus Funded Circus Debt
Debt Ratio Rating
I
Less than 0.75 to
1.00
At least
A or A2
II
Equal to or
greater than 0.75
to 1.00 but less
than 1.25 to 1.00
A- or A3
III
Equal to or
greater than 1.25
to 1.00 but less
than 1.75 to 1.00
BBB or
Baa2
IV
Equal to or
greater than 1.75
to 1.00 but less
than 2.25 to 1.00
BBB- or
Baa3
V
Equal to or
greater than 2.25
to 1.00 but less
than 2.75 to 1.00
BB+ or
Ba1
VI
Equal to or
greater than 2.75
to 1.00
BB or Ba2
or below
"Closing Date" means May 30, 1995.
"Co-Agents" has the meaning assigned to that term in
the introduction to this Agreement.
"Collateral" means all the real, personal and mixed
property made subject to a Lien pursuant to the Collateral
Documents.
"Collateral Account Agreement" means the Collateral
Account Agreement executed and delivered by Partnership and
Agent on the Closing Date, as amended and restated on the
Restatement Date substantially in the form of Exhibit X, as
such Collateral Account Agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"Collateral Documents" means the Security Agreement,
the Collateral Account Agreement, the Deed of Trust and the
Assignment of Rents and Revenues and all other instruments or
documents now or hereafter granting Liens on property of the
Partnership or its Subsidiaries to Agent for benefit of
Lenders.
"Commitment" means the Commitment of any Lender, and
"Commitments" means such commitments of all Lenders in the
aggregate at the time of reference. Initially, the amount of
the Commitment is $220,000,000, but it may hereafter be reduced
in the manner provided for in Section 2.4.
"Commitment Termination Date" means June 30, 2003.
"Compliance Certificate" means a certificate substan-
tially in the form of Exhibit V delivered to Agent and Lenders
by Partnership pursuant to subsection 6.1(iv).
"Contingent Obligation," as applied to any Person,
means any direct or indirect liability, contingent or
otherwise, of that Person (i) with respect to any Indebtedness,
lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of
such obligation of another that such obligation of another will
be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for
the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under
Interest Rate Agreements and Currency Agreements. Contingent
Obligations shall include, without limitation, (a) the direct
or indirect guaranty, endorsement (other than for collection or
deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person
of the obligation of another, (b) the obligation to make take-
or-pay or similar payments if required regardless of non-
performance by any other party or parties to an agreement, and
(c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise)
or (Y) to maintain the solvency or any balance sheet item,
level of income or financial condition of another if, in the
case of any agreement described under subclauses (X) or (Y) of
this sentence, the primary purpose or intent thereof is as de-
scribed in the preceding sentence. For purposes of this
definition, the amount of any Contingent Obligation at any time
of determination shall be computed as the amount that, in light
of all the facts and circumstances existing at such time
represents the amount that reasonably can be expected at such
time of determination to become an actual or matured liability.
"Contractual Obligation," as applied to any Person,
means any provision of any Security issued by that Person or of
any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument (which other
instrument is for the payment of money) to which that Person is
a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"Coverage Ratio" means, for the purposes of Section
7.6A, (a) as of the last day of each Fiscal Quarter ending
before the termination of the Make-Well in accordance with
Section 2.9, the Make-Well Coverage Ratio, and (b) as of the
last day of each subsequent Fiscal Quarter, the Stand-Alone
Coverage Ratio.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement, futures contract, option
contract, synthetic cap, currency collar agreement or other
similar agreement or arrangement designed to protect
Partnership or any of its Subsidiaries against fluctuations in
currency values.
"Deed of Trust" means that certain Deed of Trust,
Fixture Filing and Security Agreement with Assignment of Rents
executed by Partnership in favor of Agent as of the Closing
Date and recorded in the official records of Washoe County,
Nevada on May 31, 1995 at Book 4312, Page 814 and as Instrument
1897110, as amended on the Restatement Date by an Amended and
Restated Deed of Trust substantially in the form of
Exhibit XIII, as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
"Dollars" and the sign "$" mean the lawful money of
the United States of America.
"EBITDA" means, for any period, Net Income for such
period plus, to the extent such items were subtracted in the
determination of Net Income, the sum of the amounts for such
period of (i) Interest Expense, (ii) provisions for taxes based
on income, (iii) total depreciation expense, (iv) total
amortization expense, (v) Pre-Opening Expenses, and (vi) other
non-cash items reducing Net Income less, to the extent such
items were added in the determination of Net Income, the sum of
the amounts for such period of non-cash items increasing Net
Income, all of the foregoing as determined for Partnership and
its Subsidiaries in conformity with GAAP.
"Eldorado Bridge" means the elevated building
structure that spans Fourth Street and connects the
Improvements with the buildings located on the adjacent real
property owned by Eldorado Hotel.
"Eldorado Hotel" means Eldorado Resorts, LLC, a Nevada
limited liability company (successor by merger to Eldorado
Hotel Associates Limited Partnership) and a member of Eldorado
LLC.
"Eldorado LLC" means Eldorado Limited Liability
Company, a Nevada limited liability company.
"Eligible Assignee" means (A)(i) a commercial bank
organized under the laws of the United States or any state
thereof; (ii) a savings and loan association or savings bank
organized under the laws of the United States or any state
thereof; and (iii) a commercial bank organized under the laws
of any other country or a political subdivision thereof;
provided that (x) such bank is acting through a branch or
agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a
political subdivision of such country; and (B) any Lender and
any Affiliate of any Lender which qualifies as a lender under
applicable Nevada laws; provided that no Affiliate of
Partnership, Circus or Eldorado Hotel shall be an Eligible
Assignee.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is, or was at
any time, maintained or contributed to by Partnership or any of
its ERISA Affiliates.
"Environmental Claim" means any accusation,
allegation, notice of violation, claim, demand, abatement
order, cleanup order, removal order, or other order or
direction (conditional or otherwise) by any governmental
authority or any Person for any injury, loss or damage,
including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or
for fines, penalties or restrictions or to compel cleanup or
remediation, in each case relating to, resulting from or in
connection with any Hazardous Material and relating to
Partnership, any of its Subsidiaries or any Facility.
"Environmental Indemnities" means the Environmental
Indemnities from Circus, Eldorado Hotel and Partnership in
favor of Agent for the benefit of Lenders dated as of the
Closing Date and reaffirmed as of the Restatement Date, as they
may hereafter be amended, supplemented or otherwise modified
from time to time.
"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, plans, policies, decrees, permits,
guidance documents, and any other requirements of Governmental
Authorities relating to (i) environmental matters, including,
without limitation, those relating to fines, injunctions,
penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened
Release of Hazardous Material, (ii) the presence, generation,
use, storage, transportation or disposal of Hazardous Material,
or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or
welfare, in any manner applicable to Partnership or any of its
Subsidiaries or any of their respective properties, including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. SEC. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. SEC. 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.
SEC. 6901 et seq.), the Federal Water Pollution Control Act ( 33
U.S.C. SEC. 1251 et seq.), the Clean Air Act (42 U.S.C. SEC. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. SEC. 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. SEC.136 et seq.), the Occupational Safety and Health Act
(29 U.S.C. SEC. 651 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. SEC. 11001 et seq.), each
as amended or supplemented, and any analogous future or present
local, state and federal statutes, ordinances and other laws,
and rules and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate", as applied to any Person, means
(i) any Person that is, or was at any time, a member of a
controlled group of Persons within the meaning of
Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any
time, a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal
Revenue Code of which that Person is, or was at any time, a
member; and (iii) any member of an affiliated service group
within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that Person, any Person described in
clause (i) above or any trade or business described in
clause (ii) above is, or was at any time, a member.
"ERISA Event" means (i) a "reportable event" within
the meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those
for which the provision for 30-day notice to the PBGC has been
waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code
with respect to any Pension Plan (whether or not waived in
accordance with Section 412(d) of the Internal Revenue Code) or
the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect
to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by
the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Partnership or
any of its ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Sections 4063
or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of
any event or condition which might constitute grounds under
ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (vi) the imposition of
liability on Partnership or any of its ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the
withdrawal by Partnership or any of its ERISA Affiliates in a
complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by
Partnership or any of its ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends
to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which could
give rise to the imposition on Partnership or any of its ERISA
Affiliates of fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee
Benefit Plan; (ix) the assertion of a material claim (other
than routine claims for benefits) against any Employee Benefit
Plan other than a Multiemployer Plan or the assets thereof, or
against Partnership or any of its ERISA Affiliates in
connection with any such Employee Benefit Plan; (x) receipt
from the Internal Revenue Service of notice of the failure of
any Pension Plan (or any other Employee Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension
Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or pursuant to ERISA with respect
to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest
at rates determined by reference to the Adjusted Eurodollar
Rate as provided in subsection 2.2A.
"Event of Default" means each of the events set forth
in Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Executive Committee" means the executive committee of
Partnership organized in accordance with subsection 5.7 of the
Joint Venture Agreement.
"Executive Committee Signatories" means the
individuals from time to time serving as Partnership's Director
of Finance and Administration and General Manager each of whom
shall have been authorized to sign on behalf of the Executive
Committee and the Partnership pursuant to a resolution of the
Executive Committee.
"Facility" and "Facilities" mean any and all real
property (including, without limitation, all buildings,
fixtures or other improvements located thereon) now, hereafter
or heretofore owned, leased, operated or used by Partnership or
any of its Subsidiaries.
"Federal Funds Effective Rate" means, for any period,
a fluctuating interest rate equal for each day during such
period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on
such transactions received by Agent from three Federal funds
brokers of recognized standing selected by Agent.
"Fee Letter" means that certain letter agreement of
even date herewith between Partnership and Agent.
"Fiscal Quarter" means a fiscal quarter of Partnership
as at the Restatement Date.
"Fiscal Year" means the fiscal year of Partnership as
determined under GAAP as applied by Partnership as at the
Restatement Date.
"Flood Act" means the National Flood Insurance Act of
1968 as amended by the Flood Disaster Protection Act of 1973
(42 U.S.C. SEC.4013 et. seq.).
"Funding and Payment Office" means the office of Agent
located at the address set forth on the signature pages hereof.
"Funding Date" means, with respect to any particular
Loan, the date of the funding of that Loan.
"GAAP" means, subject to the limitations on the
application thereof set forth in subsection 1.2, generally
accepted accounting principles set forth in opinions and pro-
nouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as may be
approved by a significant segment of the accounting profession
(including, without limitation, in the AICPA Audit and
Accounting Guide: Audits of Casinos), in each case as the same
are applicable to the circumstances as of the date of
determination.
"Gaming Board" means, collectively, (a) the Nevada
Gaming Commission, (b) the Nevada State Gaming Control Board,
and (c) any other Governmental Authority that holds regulatory,
licensing or permit authority over gambling, gaming or casino
activities conducted by Partnership and its Subsidiaries within
its jurisdiction.
"Gaming Laws" means all statutes, rules, regulations,
ordinances, codes and administrative or judicial precedents
(including, without limitation, the Nevada Gaming Control Act
(N.R.S. Ch. 463)) pursuant to which any Gaming Board possesses
regulatory, licensing or permit authority over gambling, gaming
or casino activities conducted by Partnership and its
Subsidiaries within its jurisdiction.
"General Partner Subordinated Debt" means any
Subordinated Indebtedness of Partnership issued to any General
Partner, Circus or any of Circus' wholly-owned Subsidiaries
pursuant to the Subordinated Debt Documents and subject to the
Subordination and Debt Put Agreement.
"General Partners" means, at any time, Galleon, Inc.,
a Nevada corporation and a wholly-owned Subsidiary of Circus,
and Eldorado LLC, a Nevada limited liability company, each a
general partner of Partnership, and their respective successors
and assigns at such time.
"Governmental Authority" means any of the United
States government, the government of the State of Nevada or any
other state and any political subdivision, agency, department,
commission, court, board, bureau or instrumentality of any of
them, including any local authorities.
"Governmental Authorization" means any permit,
license, authorization, plan, directive, consent order or
consent decree of or from any Governmental Authority.
"Hazardous Material" means (i) any chemical, material
or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste", "restricted
hazardous waste", "infectious waste", "toxic substances" or any
other formulations intended to define, list or classify
substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable
Environmental Law or publication promulgated pursuant thereto;
(ii) any oil, petroleum, petroleum fraction or petroleum
derived substance; (iii) any drilling fluid, produced water and
other waste associated with the exploration, development or
production of crude oil, natural gas or geothermal resources;
(iv) any flammable substance or explosive; (v) any radioactive
material; (vi) asbestos in any form; (vii) urea formaldehyde
foam insulation; (viii) electrical equipment which contains any
oil or dielectric fluid containing polychlorinated biphenyls;
(ix) any pesticide; and (x) any other chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could
pose a hazard to human health and safety or the environment if
released into the workplace or the environment.
"Hotel" means the Silver Legacy Hotel and Casino in
Reno, Nevada, including, without limitation, the Premises; the
Improvements (including, without limitation, the Silver Legacy
Bridge and the Tunnel); the Skyways, all street work; drainage;
plantings; signalization; and other installations, equipment
and facilities located on or off of the Premises and required
of Partnership by Governmental Authorities in connection with
development of the Premises.
"Hotel-Casino Management" means Hotel-Casino
Management, Inc., a Nevada corporation and a member of both
Eldorado LLC and Eldorado Hotel, and its successors and
permitted assigns.
"Improvements" means all buildings, structures,
facilities and other improvements of every kind and description
now or hereafter located on the Premises, including all parking
areas, roads, driveways, walks, fences, walls, beams,
recreation facilities, drainage facilities, lighting facilities
and other site improvements, all water, sanitary and storm
sewer, drainage, electricity, steam, gas, telephone and other
utility equipment and facilities, all plumbing, lighting,
heating, ventilating, air-conditioning, refrigerating,
incinerating, compacting, fire protection and sprinkler,
surveillance and security, vacuum cleaning, public address and
communications equipment and systems, all screens, awnings,
floor coverings, partitions, elevators, escalators, motors,
machinery, pipes, fittings and other items of equipment and
personal property of every kind and description now or
hereafter located on the Premises or attached to the
improvements (excluding the Skyways but including any support
structures attached to the improvements with respect to the
Skyways and including the Silver Legacy Bridge and the Tunnel)
that by the nature of their location thereon or attachment
thereto are real property under applicable law.
"Indebtedness" as applied to any Person, means,
without duplication, (i) all indebtedness for borrowed money,
(ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations
incurred under ERISA), which purchase price is (a) due more
than six months from the date of incurrence of the obligation
in respect thereof or (b) evidenced by a note or similar
written instrument, (excluding, as an example, any trade
payables payable in the ordinary course of business that are
not so due or so evidenced) and (v) all indebtedness secured by
any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute Contingent
Obligations and not Indebtedness. Indebtedness under this
Agreement shall be determined by reference to Total Utilization
of Commitments on any date of determination.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Intellectual Property" means all patents, trademarks,
tradenames, customer lists, copyrights, technology, know-how
and processes (i) used in or necessary for the conduct of the
business of Partnership and its Subsidiaries as currently
conducted and as proposed to be conducted and (ii) that are
material to the condition (financial or otherwise), business or
operations of Partnership and its Subsidiaries, taken as a
whole.
"Interest Expense" means, for any period, total
interest expense (including that portion attributable to
Capital Leases in accordance with GAAP and capitalized
interest) of Partnership and its Subsidiaries with respect to
all outstanding Indebtedness of Partnership and its
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements.
"Interest Payment Date" means (i) with respect to any
Base Rate Loan, the last day of each month of each year,
commencing on the first such date to occur after the
Restatement Date, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such
Loan; provided that in the case of each Interest Period of
longer than three months "Interest Payment Date" shall also
include each date that is three months, or an integral multiple
thereof, after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that
term in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement designed to
protect Partnership or any of its Subsidiaries against fluc-
tuations in interest rates.
"Interest Rate Determination Date" means, with respect
to any Interest Period, the second Business Day prior to the
first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended to the date hereof and from time to
time hereafter.
"Investment" means (i) any direct or indirect purchase
or other acquisition by Partnership or any of its Subsidiaries
of, or of a beneficial interest in, any Securities of any other
Person, (ii) any direct or indirect redemption, retirement,
purchase or other acquisition for value, by Partnership or any
Subsidiary of Partnership from any Person other than
Partnership or any of its Subsidiaries, of any equity
Securities of such Subsidiary, or (iii) any direct or indirect
loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital
contribution by Partnership or any of its Subsidiaries to any
other Person, other than any indebtedness or account receivable
or both from that other Person that is a current asset or arose
from sales to that other Person in the ordinary course of busi-
ness. The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such
Investment.
"Issuing Lender" means Agent.
"Joint Venture" means a joint venture, partnership or
other similar arrangement, whether in corporate, partnership or
other legal form; provided that in no event shall any corporate
Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.
"Joint Venture Agreement" means the Circus and
Eldorado Joint Venture Agreement, dated as of March 1, 1994,
between the General Partners as amended by the First Amendment
to Agreement of Joint Venture of Circus and Eldorado Joint
Venture, dated as of July 27, 1994, as amended, supplemented or
otherwise modified from time to time in accordance with the
terms of subsection 7.14B.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement,
together with their successors and permitted assigns pursuant
to subsection 10.1. The term "Lenders" when used without a
modifier or when modified only by "the" means Requisite
Lenders.
"Letter of Credit" or "Letters of Credit" means
Standby Letters of Credit issued or to be issued by Issuing
Lender for the account of Partnership pursuant to
subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that
is or at any time thereafter may become available for drawing
under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit
honored by Issuing Lender and not theretofore reimbursed by
Partnership (reimbursement out of the proceeds of Loans
pursuant to subsection 3.3B shall be considered reimbursement
by Partnership for purposes hereof).
"Leverage Ratio" means, for the purposes of Section
7.6B, (a) as of the last day of each Fiscal Quarter ending
before the termination of the Make-Well in accordance with
Section 2.9, the Make-Well Leverage Ratio, and (b) as of the
last day of each subsequent Fiscal Quarter, the Stand-Alone
Leverage Ratio.
"License Revocation" means the revocation, failure to
renew (other than with respect to particular types of gambling
or gaming activities (e.g. Keno or Pai Gow) that Partnership
has elected no longer to pursue) or suspension of, or the
appointment of a receiver, supervisor or similar official with
respect to, any casino, gambling or gaming license issued by
any Gaming Board covering any casino or gaming facility of
Partnership or any of its Subsidiaries.
"Lien" means any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any agreement to give any security
interest and any mechanic's liens) and any option, trust or
other preferential arrangement having the practical effect of
any of the foregoing.
"Loan Documents" means this Agreement, any Notes, the
Letters of Credit (and any applications for, or reimbursement
agreements or other documents or certificates executed by
Partnership in favor of an Issuing Lender relating to, the
Letters of Credit), the Collateral Documents, the Make-Well
Agreement, the Subordination and Debt Put Agreement the
Environmental Indemnities, and each reaffirmation thereof.
"Loan Exposure" means, with respect to any Lender as
of any date of determination (i) prior to the termination of
the Commitments, that Lender's Commitment and (ii) after the
termination of the Commitments, the sum of (a) the aggregate
outstanding principal amount of the Loans of that Lender plus
(b) in the event that Lender is an Issuing Lender, the
aggregate Letter of Credit Usage in respect of all Letters of
Credit issued by that Lender (in each case net of any
participations purchased by other Lenders in such Letters of
Credit or any unreimbursed drawings thereunder) plus (c) the
aggregate amount of all participations purchased by that Lender
in any drawings under Letters of Credit honored by Issuing
Lender and not theretofore reimbursed by Partnership.
"Loan Party" means any of Partnership, Partnership's
Subsidiaries and General Partners and "Loan Parties" means
Partnership, Partnership's Subsidiaries and General Partners,
collectively.
"Loans" means any loans made by the Lenders to the
Partnership pursuant to Section 2.1
"Make-Well Agreement" means the Amended and Restated
Make-Well Agreement executed and delivered by Circus and Agent
on the Restatement Date, substantially in the form of
Exhibit XII, as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Make-Well Coverage Ratio" means, as of the last day
of each Fiscal Quarter, the ratio of (a) EBITDA minus the sum
(without duplication) of Tax Distributions made pursuant to
subsection 7.5(ii), Other Partnership Distributions made
pursuant to subsection 7.5(iii) or 7.5(iv), and Capital
Expenditures (other than Capital Expenditures for the initial
construction of the Hotel and the improvements to the mezzanine
level of the Hotel described in the proviso to Section 7.8), to
(b) the amount by which the average daily Total Utilization of
the Commitments during the four Fiscal Quarter period then
ended exceeds Maximum Facility Availability as of such date
plus Cash Interest Expense plus Permitted Subordinated Debt
Payments actually paid in Cash plus Other Permitted
Indebtedness Payments actually made in Cash, plus Make-Well
Fees actually paid in Cash, in each case for the four Fiscal
Quarter Period ending on such date, provided that any
contribution of cash to Partnership by Circus in exchange for
equity of Partnership or General Partner Subordinated Debt
shall be included, without duplication, in Net Income for the
Fiscal Quarter in which such contribution is made (or, if made
within 25 calendar days of the end of a Fiscal Quarter, for
such Fiscal Quarter immediately ended if Circus notifies Agent
in writing at the time of such contribution that such
contribution is to be so credited).
"Make-Well Fees" means, for any period, the amount of
fees paid in cash to Circus by Partnership on account of the
Make-Well Agreement during that period pursuant to Section 2.4
of the Joint Venture Agreement.
"Make-Well Leverage Ratio" means, as of the last day
of any Fiscal Quarter, the ratio of (i) the sum of (a) the
average of the daily Total Utilization of Commitments during
the immediately preceding Fiscal Quarter (excluding, for this
purpose, Letters of Credit which are not issued to support
Indebtedness) plus (b) Other Permitted Indebtedness outstanding
as of the last day of such period plus (c) Indebtedness
outstanding in respect of Capital Leases as of the last day of
such period to (ii) EBITDA for the four consecutive Fiscal
Quarter period ending on the date as of which the determination
is being made.
"Make-Well Period" means the period from the
Restatement Date until the Make-Well Agreement is terminated.
"Manager" means the Person elected to manage the
affairs of a limited liability company.
"Managing Agents" has the meaning assigned to that
term in the introduction to this Agreement.
"Managing Partner" means, at any time, Galleon, Inc.,
a Nevada corporation and a wholly-owned subsidiary of Circus,
or its successors or assigns, in the capacity of managing
partner of Partnership under the Joint Venture Agreement, at
such time.
"Margin Stock" has the meaning assigned to that term
in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse
effect upon (a) the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Loan
Party and its Subsidiaries taken as a whole, (b) the validity,
priority or enforceability of any of the Loan Documents or any
Lien created or intended to be created thereby, or (c) the use,
occupancy or operation of all or any material part of the Hotel
or (ii) the impairment of the ability of any Loan Party
materially to perform, or of Agent or Lenders to enforce, the
Obligations.
"Maximum CapEx Amount" has the meaning assigned to
that term in subsection 7.8.
"Maximum Facility Availability" means the aggregate
amount of the Commitments available as of the date of
determination whether or not drawn or outstanding or used as
Loans or for Letters of Credit.
"Multiemployer Plan" means a "multiemployer plan", as
defined in Section 3(37) of ERISA, to which Partnership or any
of its ERISA Affiliates is contributing, or ever has
contributed, or to which Partnership or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"Net Income" means, for any period, the net income (or
loss) of Partnership and its Subsidiaries for such period taken
as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or
loss) of any Person (other than a Subsidiary of Partnership) in
which any other Person (other than Partnership or any of its
Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to
Partnership or any of its Subsidiaries by such Person during
such period, (ii) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of Partnership or is
merged into or consolidated with Partnership or any of its Sub-
sidiaries or that Person's assets are acquired by Partnership
or any of its Subsidiaries, (iii) the income of any Subsidiary
of Partnership to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses
(i) through (iv) above) any net non-cash extraordinary gains or
net non-cash extraordinary losses.
"Notes" means any promissory notes of Partnership
issued pursuant to subsection 2.1E to evidence the Loans made
by Lenders, substantially in the form of Exhibit IV, with
appropriate insertions, as they may be amended, supplemented or
otherwise modified from time to time.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit I delivered by Partnership to Agent
pursuant to subsection 2.1B with respect to a proposed
borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II delivered by
Partnership to Agent pursuant to subsection 2.2D with respect
to a proposed conversion or continuation of the applicable
basis for determining the interest rate with respect to the
Loans specified therein.
"Notice of Issuance of Letter of Credit" means a
notice substantially in the form of Exhibit III delivered by
Partnership to Agent pursuant to subsection 3.1B(i) with
respect to the proposed issuance of a Letter of Credit.
"Obligations" means all obligations of every nature of
any Loan Party, from time to time owed to Agent, Lenders or any
of them under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnification or otherwise and
whether or not the obligation is allowed as a claim in any
proceeding referred to in Section 8.6 or 8.7.
"Officers' Certificate" means, as applied to any
Person a certificate executed by that Person or on behalf of
that Person by an authorized Person; provided that every
Officers' Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall
include (i) a statement that the officer or officers making or
giving such Officers' Certificate have read such condition and
any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such condition
has been complied with, and (iii) a statement as to whether, in
the opinion of the signers, such condition has been complied
with.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property (whether
real, personal or mixed) that is not a Capital Lease other than
any such lease under which that Person is the lessor.
"Other Partnership Distributions" means distributions
to the General Partners pursuant to the terms of the Joint
Venture Agreement other than Tax Distributions and Permitted
Subordinated Debt Payments.
"Other Permitted Indebtedness" means Indebtedness
permitted under subsections 7.1(iii) or 7.1(vi).
"Other Permitted Indebtedness Payments" means payments
of principal and interest on Other Permitted Indebtedness.
"Partnership" has the meaning assigned to that term in
the introduction to this Agreement.
"Partnership Parents" means General Partners, Circus,
Eldorado Hotel, Recreational Enterprises, Hotel-Casino
Management, Inc. and their respective successors and assigns.
"PBGC" means the Pension Benefit Guaranty Corporation
(or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412 of
the Internal Revenue Code or Section 302 of ERISA.
"Percentage Interests" has the meaning assigned to
that term in the Joint Venture Agreement.
"Permitted Encumbrances" means the following types of
Liens (other than any such Lien imposed pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or by
ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the
time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen and
other Liens imposed by law incurred in the ordinary course
of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have
been made therefor;
(iii) easements, rights of tenants, reservations,
covenants, rights-of-way, restrictions, minor defects,
minor encroachments or minor irregularities in title and
other similar immaterial charges or encumbrances that
(i) arise prior to Closing and are approved in writing by
the Agent or (ii) arise after Closing and would not,
individually or in the aggregate, result in a Material
Adverse Effect; and
(iv) Liens arising solely from filing UCC financing
statements relating solely to leases permitted by this
Agreement.
"Permitted Subordinated Debt Payments" means payments
of principal and interest permitted on the General Partner
Subordinated Debt under subsection 7.5(i).
"Person" means and includes natural persons, corpora-
tions, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, limited
liability companies or other organizations, whether or not
legal entities, and governments and agencies and political
subdivisions thereof.
"Potential Event of Default" means a condition or
event that, after notice or lapse of time or both, would
constitute an Event of Default.
"Premises" means the real property situated in Reno,
Nevada, and more particularly described in the Deed of Trust.
"Pre-Opening Expenses" means, with respect to any
fiscal period, the amount of expenses (other than Interest
Expense) incurred with respect to capital projects and properly
deferred and charged to expense as of commencement of
operations, which are classified as "pre-opening expenses" on
the applicable financial statements of Partnership and its
Subsidiaries for such period, prepared in accordance with GAAP.
"Pricing Period" means each of the consecutive
approximately 90 day periods beginning on March 1, June 1,
September 1 and December 1 of each year.
"Prime Rate" means the rate that Wells Fargo announces
from time to time as its prime lending rate, as in effect from
time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged
to any customer. Wells Fargo or any other Lender may make
commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"Pro Rata Share" means, with respect to each Lender,
the percentage obtained by dividing (x) the Loan Exposure of
that Lender by (y) the aggregate Loan Exposure of all Lenders,
as such percentage may be adjusted by assignments permitted
pursuant to subsection 10.1. The Pro Rata Share of each Lender
on the Restatement Date is set forth opposite the name of that
Lender in Schedule 2.1.
"Recreational Enterprises" means Recreational
Enterprises, Inc., a Nevada corporation and member of Eldorado
LLC and general partner of Eldorado Hotel.
"Reduction Date" means March 31, 1997 and each
subsequent June 30, September 30, December 31 and March 31
through the Commitment Termination Date.
"Reference Period" has the meaning assigned to that
term in subsection 7.8.
"Register" has the meaning assigned to that term in
subsection 2.1D.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Reimbursement Date" has the meaning assigned to that
term in subsection 3.3B.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of
Hazardous Material into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of
any barrels, containers or other closed receptacles containing
any Hazardous Material), or into or out of any Facility,
including the movement of any Hazardous Material through the
air, soil, surface water, groundwater or property.
"Requisite Lenders" means Lenders having or holding 66
2/3% or more of the aggregate Loan Exposure of all Lenders.
"Restatement Date" means the date of this Agreement.
"Restricted Junior Payment" means (i) any distribution
of cash or property or other distribution, direct or indirect,
on account of any partnership interest in Partnership now or
hereafter outstanding, except a distribution payable solely in
interests of that class of partnership interest to the holders
of that class, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value,
direct or indirect, of any interests of any class of
partnership interest in Partnership now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights
to acquire any interests of any class of partnership interests
in Partnership now or hereafter outstanding, and (iv) any
payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or
similar payment with respect to, any Subordinated Indebtedness.
"Scheduled Facility Reductions" means reductions to
the Commitments made pursuant to subsection 2.4A.
"Securities" means any stock, shares, partnership
interests, voting trust certificates, certificates of interest
or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or
other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates
of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right
to subscribe to, purchase or acquire, any of the foregoing.
"Security Agreement" means the Amended and Restated
Security Agreement executed and delivered by Partnership and
Agent on the Restatement Date, substantially in the form of
Exhibit XI, as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Senior Officer" means, with respect to any Person,
any Chief Executive Officer, President, Executive Vice
President, Vice President, Chief Financial Officer, Treasurer
or Controller of such Person, or any individual holding an
equivalent position with such Person or any partner or member
of such Person, including, without limitation, in the case of
the Partnership, the General Manager of Silver Legacy Hotel and
Casino and the Director of Finance and Administration of the
Silver Legacy Hotel and Casino.
"Silver Legacy Bridge" means the elevated building
structure that connects the hotel portion of the Hotel with the
casino portion of the Hotel.
"Skyway Easements" means those two certain Bridge
Easements recorded in the Official Records of Washoe County,
Nevada, one by and between Partnership and Eldorado Hotel and
the other by and between Partnership and Circus Circus Casinos,
Inc., pursuant to which, among other things, Partnership was
granted perpetual easements for pedestrian access to and from
the Improvements via the Eldorado Bridge and the Circus Bridge,
respectively.
"Skyways" means the Circus Bridge and the Eldorado
Bridge; the Skyways are owned by Circus and Eldorado Hotel,
respectively, and are subject to the terms and provisions of
the Skyway Easements. The Skyways do not include the Silver
Legacy Bridge.
"Solvent" means, with respect to any Person, that as
of the date of determination both (A) (i) the then fair
saleable value of the property of such Person is (y) greater
than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount
that will be required to pay the probable liabilities on such
Person's then existing debts as they become absolute and
matured considering all financing alternatives and potential
asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and
(iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond
its ability to pay such debts as they become due; and (B) such
Person is "solvent" within the meaning given that term and
similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition,
the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured
liability.
"Stand-Alone Coverage Ratio" means, as of the last day
of each Fiscal Quarter, the ratio of (a) EBITDA (without any
increase by reason of any amounts paid to Partnership under the
Make-Well Agreement) minus the sum (without duplication) of Tax
Distributions made pursuant to subsection 7.5(ii), Other
Partnership Distributions made pursuant to subsection 7.5(iii)
or 7.5(iv) and Capital Expenditures (other than Capital
Expenditures for the initial construction of the Hotel and the
improvements to the mezzanine level of the Hotel described in
the proviso to Section 7.8) to (b) Scheduled Facility
Reductions during that period (whether or not Partnership is
actually required to make any payments to the Lenders to meet
such Scheduled Facility Reductions) plus Cash Interest Expense
plus Permitted Subordinated Debt Payments plus Other Permitted
Indebtedness Payments, in each case for the four Fiscal Quarter
Period ending on such date.
"Stand-Alone Leverage Ratio" means, as of the last day
of any Fiscal Quarter, the ratio of (i) the sum of the average
of the daily Total Utilization of Commitments during the
immediately preceding Fiscal Quarter plus all other
Indebtedness of Partnership for borrowed money outstanding as
of the last day of such period plus Indebtedness outstanding in
respect of Capital Leases as of the last day of such period to
(ii) EBITDA for the four consecutive Fiscal Quarter period
ending on the date as of which the determination is being made.
"Standby Letter of Credit" means any standby letter of
credit or similar instrument issued for the purpose of
supporting (i) Indebtedness of Partnership or any of its
Subsidiaries in respect of industrial revenue or development
bonds or financings, (ii) workers' compensation liabilities of
Partnership or any of its Subsidiaries, (iii) the obligations
of third party insurers of Partnership or any of its
Subsidiaries arising by virtue of the laws of any jurisdiction
requiring third party insurers, and (iv) performance, payment,
deposit or surety obligations of Partnership or any of its
Subsidiaries, in any case if required by law or governmental
rule or regulation or in accordance with custom and practice in
the industry; provided that Standby Letters of Credit may not
be issued for the purpose of supporting (a) trade payables,
(b) any Indebtedness constituting "antecedent debt" (as that
term is used in Section 547 of the Bankruptcy Code), or (c) any
Indebtedness or Contingent Obligation of Partnership or any of
its Subsidiaries if such Indebtedness or Contingent Obligation
is secured by real property of Partnership or such Subsidiary
located in the State of California.
"Subordinated Debt Documents" means the Subordination
and Debt Put Agreement, the Loan Agreement dated as of May 20,
1995 by and between Circus and Partnership, and, to the extent
secured in accordance with the terms of this Agreement and the
Subordination and Debt Put Agreement, the deed of trust by
Partnership as trustor for the benefit of Circus, the
environmental indemnity by and between Partnership and Circus,
the security agreement between Partnership and Circus, UCC-1
fixture filings and financing statements with respect thereto
together with all other documents and instruments evidencing,
securing or pertaining to the General Partner Subordinated
Debt, as they may hereafter be amended, supplemented or
otherwise modified from time to time. As used in any Loan
Document, the phrase "the documentation evidencing the General
Partner Subordinated Debt" or "the documents evidencing the
General Partner Subordinated Debt" shall be deemed a reference
to the Subordinated Debt Documents.
"Subordinated Indebtedness" means (i) the General
Partner Subordinated Debt and (ii) any other Indebtedness of
Partnership subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization
schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance
satisfactory to Agent and Lenders.
"Subordination and Debt Put Agreement" means the
Amended and Restated Subordination and Debt Put Agreement
executed and delivered by Circus, Partnership and Agent on the
Restatement Date, substantially in the form of Exhibit XV, as
it may hereafter be amended, supplemented or otherwise modified
from time to time.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or other
business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors,
managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of
the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination
thereof.
"Supermajority Lenders" means Lenders having or
holding 75% or more of the aggregate Loan Exposure of all
Lenders.
"Tax" or "Taxes" means any present or future tax,
levy, impost, duty, charge, fee, deduction or withholding of
any nature and whatever called, by whomsoever, on whomsoever
and wherever imposed, levied, collected, withheld or assessed;
provided that "Tax on the overall net income" of a Person shall
be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or,
in the case of a Lender, its lending office) is located or in
which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether
worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular
jurisdiction, or otherwise).
"Tax Distributions" means distributions to the General
Partners of cash or property pursuant to subsection 4.1(a) of
the Joint Venture Agreement as in effect on the Restatement
Date made in order to satisfy the General Partners' federal tax
liability accruing in the Fiscal Year with respect to which
such distributions are made assuming each General Partner's tax
liabilities accrue at the maximum marginal federal income tax
rate that applies to such General Partner as set forth in
subsection 4.2 of the Joint Venture Agreement as in effect on
the Restatement Date.
"Title Policy" means the American Land Title
Association extended coverage mortgagee title insurance policy
issued on or about the Closing Date to the Agent and the
Lenders by First American Title Insurance Company, together
with all related coinsurance and reinsurance policies and
subsequent endorsements, including those provided under
subsection 4.1F.
"Total Utilization of Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal
amount of all outstanding Loans (other than Loans made for the
purpose of reimbursing the Issuing Lender for any amount drawn
under any Letter of Credit but not yet so applied) plus
(ii) the Letter of Credit Usage.
"Tunnel" means the tunnel beneath Sierra Street that
connects the casino portion of the Hotel to the hotel portion
of the Hotel.
"Unutilized Amount" has the meaning assigned to that
term in subsection 7.8.
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.
Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with
GAAP. Financial statements and other information required to
be delivered by Partnership to Lenders pursuant to clauses (i),
(ii), (iii) and (xiii) of subsection 6.1 shall be prepared in
accordance with GAAP as in effect at the time of such
preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions
of this Agreement shall utilize accounting principles and
policies in conformity with GAAP as in effect at the time such
calculations are made.
1.3 Other Definitional Provisions.
References to "Sections," "subsections" and "Exhibits"
shall be to Sections and subsections of, and Exhibits to this
Agreement unless otherwise specifically provided. Any of the
terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural,
depending on the reference.
SECTION 2
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Optional
Notes.
A. Commitments. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and
warranties of the Loan Parties set forth in the Loan Documents,
each Lender hereby severally agrees to lend to Partnership from
time to time during the period on and after the Restatement
Date to but excluding the Commitment Termination Date an
aggregate amount not exceeding its Pro Rata Share of the aggre-
gate amount of the Commitments, provided that, notwithstanding
any other provision of this Agreement, the Total Utilization of
Commitments shall not at any time exceed the Commitments then
in effect. Each Lender's commitment to make Loans pursuant to
this subsection 2.1A is herein called its "Commitment," and
such commitments of all Lenders in the aggregate are herein
called the "Commitments". The amount of each Lender's
Commitment shall be as set forth on Schedule 2.1; provided that
(i) the Commitments of Lenders shall be adjusted to give effect
to any assignments of the Commitments pursuant to
subsection 10.1, and (ii) the amount of the Commitments shall
be reduced from time to time by the amount of any reductions
thereto made pursuant to subsections 2.4A, 2.4B(ii) and
2.4B(iii) or terminated as set forth in Section 8. Each
Lender's Commitment shall expire on the Commitment Termination
Date and all Loans and all other amounts owed hereunder with
respect to the Loans and the Commitments shall be paid in full
no later than that date. Amounts borrowed under this
subsection 2.1A may be repaid and reborrowed at any time prior
to the Commitment Termination Date.
B. Borrowing Mechanics. Loans made on any Funding Date
(other than Loans made pursuant to subsection 3.3B for the
purpose of reimbursing Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it) shall be in an
aggregate minimum amount of $1,000,000 and integral multiples
of $100,000 in excess of that amount; provided that Loans made
on any Funding Date as Eurodollar Rate Loans with a particular
Interest Period shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $100,000 in excess of that
amount. Subject to the next following paragraph, whenever
Partnership desires that Lenders make Loans it shall deliver to
Agent a Notice of Borrowing no later than 10:00 A.M. (Pacific
time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at
least one Business Day in advance of the proposed Funding Date
(in the case of a Base Rate Loan). The Notice of Borrowing
shall specify (i) the proposed Funding Date (which shall be a
Business Day), (ii) the amount of Loans requested,
(iii) whether such Loans shall be Base Rate Loans or Eurodollar
Rate Loans, and (iv) in the case of any Loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Loans may be continued as or converted
into Base Rate Loans and Eurodollar Rate Loans in the manner
provided in subsection 2.2D.
Unless Agent, in its sole and absolute discretion, has
notified Partnership to the contrary, a Loan may be requested
by telephone by a duly authorized officer or other Person
authorized to borrow on behalf of Partnership, in which case
Partnership shall confirm such request by delivering promptly a
Notice of Borrowing with respect to such Loan in person or by
telecopier to Agent. Partnership and Lenders may enter a
memorandum of understanding that sets forth specific procedures
for such telephonic requests; if Lenders comply with the
procedures set forth in such memorandum (or if no such
memorandum is entered), neither Agent nor any Lender shall
incur any liability to any Loan Party in acting upon any such
telephonic notice that Agent believes in good faith to have
been given by a duly authorized officer or other person
authorized to borrow on behalf of Partnership or for otherwise
acting in good faith under this subsection 2.1B, and upon
funding of Loans by Lenders in accordance with this Agreement
pursuant to any such telephonic notice Partnership shall have
effected Loans hereunder.
Partnership shall notify Agent prior to the funding of
any Loans in the event that any of the matters to which
Partnership is required to certify in the applicable Notice of
Borrowing is no longer true and correct as of the applicable
Funding Date, and the acceptance by Partnership of the proceeds
of any Loans shall constitute a re-certification by
Partnership, as of the applicable Funding Date, as to the
matters to which Partnership is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C
and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and
Partnership shall be bound to make a borrowing in accordance
therewith.
C. Disbursement of Funds. All Loans under this Agreement
shall be made by Lenders severally and simultaneously and in
proportion to their respective Pro Rata Shares, it being
understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make a
Loan requested hereunder nor shall the Commitment of any Lender
be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt by Agent of a
Notice of Borrowing pursuant to subsection 2.1B (or telephonic
notice in lieu thereof), Agent shall notify each Lender of the
proposed borrowing. Each Lender shall make the amount of its
Loan available to Agent, in same day funds in Dollars, at the
Funding and Payment Office, not later than 1:00 P.M. (Pacific
time) on the applicable Funding Date. Except as provided in
subsection 3.3B with respect to Loans used to reimburse Issuing
Lender for the amount of a drawing under a Letter of Credit
issued by it, upon satisfaction or waiver of the conditions
precedent specified in subsections 4.1 (in the case of the
initial Loans made on the Restatement Date) and 4.2 (in the
case of all Loans), Agent shall make the proceeds of such Loans
available to Partnership on the applicable Funding Date by
causing an amount of same day funds in Dollars equal to the
proceeds of all such Loans received by Agent from Lenders to be
credited to the account of Partnership at the Funding and
Payment Office.
Unless Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does
not intend to make available to Agent the amount of such
Lender's Loan requested on such Funding Date, Agent may assume
that such Lender has made such amount available to Agent on
such Funding Date and Agent may, in its sole discretion, but
shall not be obligated to, make available to Partnership a
corresponding amount on such Funding Date. If such corre-
sponding amount is not in fact made available to Agent by such
Lender, Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date
such amount is paid to Agent, at the Federal Funds Effective
Rate for three Business Days and thereafter at the Base Rate.
If such Lender does not pay such corresponding amount forthwith
upon Agent's demand therefor, Agent shall promptly notify
Partnership and Partnership shall immediately pay such
corresponding amount to Agent together with interest thereon,
for each day from such Funding Date until the date such amount
is paid to Agent, at the rate payable under this Agreement for
Base Rate Loans. Nothing in this subsection 2.1C shall be
deemed to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that
Partnership may have against any Lender as a result of any
default by such Lender hereunder.
D. The Register.
(i) Agent shall
maintain, at its address referred to in subsection 10.8, a
register for the recordation of the names and addresses of
Lenders and the Commitment and Loans of each Lender from
time to time (the "Register"). The Register shall be
available for inspection by Partnership, any Lender or any
Gaming Board and their respective agents at any reasonable
time and from time to time upon reasonable prior notice.
(ii) Agent shall record
in the Register the Commitment and the Loans from time to
time of each Lender and each repayment or prepayment in
respect of the principal amount of the Loans of each
Lender. Any such recordation shall be presumed to be
correct; provided that failure to make any such
recordation, or any error in such recordation, shall not
affect Partnership's Obligations in respect of the
applicable Loans.
(iii) Each Lender shall
record on its internal records (including, without
limitation, any Note held by such Lender) the amount of
each Loan made by it and each payment in respect thereof.
Any such recordation shall be presumed to be correct;
provided that failure to make any such recordation, or any
error in such recordation, shall not affect Partnership's
Obligations in respect of the applicable Loans; and
provided, further that in the event of any inconsistency
between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Partnership, Agent
and Lenders shall deem and treat the Persons listed as
Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case unless
and until an Assignment Agreement effecting the assignment
or transfer thereof shall have been accepted by Agent and
recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or
Loan shall be owed to the Lender listed in the Register as
the owner thereof, and any request, authority or consent
of any Person who, at the time of making such request or
giving such authority or consent, is listed in the
Register as a Lender shall be conclusive and binding on
any subsequent holder, assignee or transferee of the
corresponding Commitment or Loans.
(v) Partnership hereby
designates Wells Fargo to serve as Partnership's agent
solely for purposes of maintaining the Register as
provided in this subsection 2.1D, and Partnership hereby
agrees that, to the extent Wells Fargo serves in such
capacity, Wells Fargo and its officers, directors,
employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. Optional Notes. If so requested by any Lender,
Partnership shall execute and deliver a Note to such Lender.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of
subsections 2.6 and 2.7, each Loan shall bear interest on the
unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted
Eurodollar Rate, as the case may be. The applicable basis for
determining the rate of interest with respect to any Loan shall
be selected by Partnership initially at the time a Notice of
Borrowing is given with respect to such Loan pursuant to
subsection 2.1B. The basis for determining the interest rate
with respect to any Loan may be changed from time to time
pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered
to Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of
interest, then for that day that Loan shall bear interest
determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.6,
the Loans shall bear interest through maturity as follows:
(i) if a Eurodollar
Rate Loan, then at the sum of the Adjusted Eurodollar Rate
plus the Applicable Eurodollar Rate Margin.
(ii) if a Base Rate
Loan, then at the sum of the Base Rate plus the Applicable
Base Rate Margin.
B. Interest Periods. In connection with each
Eurodollar Rate Loan, Partnership may, pursuant to the
applicable Notice of Borrowing or Notice of Conversion/
Continuation, as the case may be, select an interest
period (each an "Interest Period") to be applicable to
such Loan, which Interest Period shall be, at
Partnership's option, either a one, two, three or six
month period; provided that:
(i) the initial
Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in
the case of a Loan initially made as a Eurodollar Rate
Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted
to a Eurodollar Rate Loan;
(ii) in the case of
immediately successive Interest Periods applicable to a
Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive
Interest Period shall commence on the day on which the
immediately preceding Interest Period expires;
(iii) if an Interest
Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any
Interest Period would otherwise expire on a day that is
not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period
that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (v) of this
subsection 2.2B, end on the last Business Day of a
calendar month;
(v) no Interest Period
with respect to any portion of the Loans shall extend
beyond the Commitment Termination Date;
(vi) no Interest Period
with respect to any portion of the Loans shall extend
beyond the date on which a permanent reduction of the
Commitments is scheduled to occur unless the sum of
(a) the aggregate principal amount of Loans that are Base
Rate Loans plus (b) the aggregate principal amount of
Loans that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date plus (c) the excess of the
Commitments then in effect over the Total Utilization of
Commitments as of such date equals or exceeds the
permanent reduction of the Commitments that is scheduled
to occur on such date;
(vii) there shall be no
more than ten Interest Periods outstanding at any time;
and
(viii) in the event
Partnership fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Notice of Borrowing
or Notice of Conversion/Continuation, Partnership shall be
deemed to have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that
Loan, upon any prepayment of that Loan (to the extent accrued
on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Loans that are Base
Rate Loans are prepaid pursuant to subsection 2.4B(i), interest
accrued on such Loans through the date of such prepayment shall
be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final
maturity).
D. Conversion or Continuation. Subject to the provisions
of subsection 2.6, Partnership shall have the option at any
time (i) to convert all or any part of its outstanding Loans
equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest
at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a
Eurodollar Rate Loan, to continue all or any portion of such
Loan equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount as a Eurodollar Rate Loan; provided,
however, that a Eurodollar Rate Loan may only be converted into
a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.
Subject to the next following paragraph, Partnership
shall deliver a Notice of Conversion/Continuation to Agent no
later than 10:00 A.M. (Pacific time) at least one Business Day
in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business
Days in advance of the proposed conversion/continuation date
(in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date
(which shall be a Business Day), (ii) the amount and type of
the Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan,
the requested Interest Period, and (v) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has
occurred and is continuing.
Unless Agent, in its sole and absolute discretion, has
notified Partnership to the contrary, a Loan may be requested
by telephone by a duly authorized officer or other Person
authorized to borrow on behalf of Partnership, in which case
Partnership shall confirm such request by delivering promptly a
Notice of Borrowing with respect to such Loan in person or by
telecopier to Agent. Partnership and Lenders may enter a
memorandum of understanding that sets forth specific procedures
for such telephonic requests; if Lenders comply with the
procedures set forth in such memorandum (or if no such
memorandum is entered), neither Agent nor any Lender shall
incur any liability to Partnership in acting upon any such
telephonic notice that Agent believes in good faith to have
been given by a duly authorized officer or other person
authorized to act on behalf of Partnership or for otherwise
acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for
determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic
notice Partnership shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C
and 2.6G, a Notice of Conversion/Continuation for conversion
to, or continuation of, a Eurodollar Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and Partnership shall
be bound to effect a conversion or continuation in accordance
therewith.
E. Post-Maturity Interest. Any principal payments on the
Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Loans or any fees
or other amounts owed hereunder not paid when due, in each case
whether at stated maturity, by notice of prepayment (which may
be revoked by Partnership to the extent such revocation will
not result in the incurrence of costs by Agent or any Lender
or, if incurred, such costs are reimbursed by Partnership), by
acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable on
demand at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement with
respect to the applicable Loans (or, in the case of any such
fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this
Agreement for Base Rate Loans); provided that, in the case of
Eurodollar Rate Loans, upon the expiration of the Interest
Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement for Base
Rate Loans. Payment or acceptance of the increased rates of
interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Agent or any
Lender.
F. Computation of Interest. Interest on the Loans shall
be computed (i) in the case of Base Rate Loans, on the basis of
a 365-day or 366-day year, as the case may be, and (ii) in the
case of Eurodollar Rate Loans, on the basis of a 360-day year,
in each case for the actual number of days elapsed in the
period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of
an Interest Period applicable to such Loan or, with respect to
a Base Rate Loan being converted from a Eurodollar Rate Loan,
the date of conversion of such Eurodollar Rate Loan to such
Base Rate Loan, as the case may be, shall be included, and the
date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a
Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar
Rate Loan, as the case may be, shall be excluded; provided that
if a Loan is repaid on the same day on which it is made, one
day's interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Partnership agrees to pay to Agent,
for distribution to each Lender in proportion to that Lender's
Pro Rata Share, commitment fees for the period from and
including the Restatement Date to and excluding the Commitment
Termination Date equal to: (i) the average of the daily excess
of the Maximum Facility Availability over the Total Utilization
of Commitments multiplied by (ii) 0.50% per annum, such
commitment fees to be calculated on the basis of a 365-day or
366-day year, as the case may be, and the actual number of days
elapsed and to be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing
on the first such date to occur after the Restatement Date, and
on the Commitment Termination Date.
B. Upfront Fee. Partnership agrees to pay to Agent, on
the Restatement Date, a non-refundable one-time upfront fee in
an amount set forth in the Fee Letter for distribution to each
Lender in the amount set forth in a letter from Agent to such
Lender.
C. Arrangement Fee and Servicing Fee. Partnership agrees
to pay to Agent a non-refundable arrangement fee and a non-
refundable servicing fee, payable in amounts set forth in the
Fee Letter.
2.4 Prepayments and Reductions in Commitments; General
Provisions Regarding Payments.
A. Scheduled Reductions of Commitments. The Commitments
shall be permanently reduced on each Reduction Date occurring
during a period set forth below in the amount set forth
opposite that period:
Reduction Dates During Amount
March 31, 1997 through
December 31, 1997 $2,500,000
March 31, 1998 through
December 31, 2000 $3,750,000
March 31, 2001 through
the Reduction Date prior to
the Commitment Termination Date $5,000,000
Commitment Termination Date Remaining
Commitment;
provided that the scheduled reductions of the Commitments set
forth above shall be (i) reduced in connection with any
voluntary or mandatory reductions of the Commitments in
accordance with subsection 2.4B(iv) and (ii) accelerated to the
extent acceleration of the Loans occurs pursuant to
subsection 8.20B.
B. Prepayments and Unscheduled Reductions in Commitments.
(i) Voluntary
Prepayments. Partnership may, upon not less than one
Business Day's prior written or telephonic notice, in the
case of Base Rate Loans, and three Business Days' prior
written or telephonic notice, in the case of Eurodollar
Rate Loans, in each case given to Agent by 10:00 A.M.
(Pacific time) on the date required and, if given by
telephone, promptly confirmed in writing to Agent (which
original written or telephonic notice Agent will promptly
transmit by telefacsimile or telephone to each Lender), at
any time and from time to time prepay any Loans on any
Business Day in whole or in part in an aggregate minimum
amount of $1,000,000 and integral multiples of $100,000 in
excess of that amount; provided, however, that the payment
of any Eurodollar Rate Loan on a date other than the last
day of the related Interest Period shall be subject to
Section 2.6D. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in
such notice shall become due and payable on the prepayment
date specified therein; provided that such notice may be
revoked by Partnership to the extent such revocation will
not result in the incurrence of costs by Agent or any
Lender or, if incurred, such costs are reimbursed by
Partnership. Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iv).
(ii) Voluntary
Reductions of Commitments. Partnership may, upon not less
than three Business Days' prior written or telephonic
notice confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit
by telefacsimile or telephone to each Lender), at any time
and from time to time terminate in whole or permanently
reduce in part, without premium or penalty, the
Commitments in an amount up to the amount by which the
Commitments exceed the Total Utilization of Commitments at
the time of such proposed termination or reduction;
provided that any such partial reduction of the
Commitments shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $100,000 in excess of
that amount. Partnership's notice to Agent shall
designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial
reduction, and such termination or reduction of the
Commitments shall be effective on the date specified in
Partnership's notice and shall reduce the Commitment of
each Lender proportionately to its Pro Rata Share. Any
such voluntary reduction of the Commitments shall be
applied as specified in subsection 2.4B(iv).
(iii) Mandatory
Prepayments and Mandatory Reductions of Commitments.
(a) Prepayments and Reductions Due to
Reversion of Surplus Assets of Pension Plans. On the
date of return to Partnership or any of its
Subsidiaries of any surplus assets of any pension plan
(as defined in Section 3(2) of ERISA) of Partnership
or any of its Subsidiaries, Partnership shall prepay
the Loans, and the Commitments shall be permanently
reduced, in an amount equal to 100% of such returned
surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including
incremental taxes payable as a result thereof. Any
such mandatory prepayments or reductions of the
Commitments shall be applied as specified in
subsection 2.4B(iv).
(b) Prepayments Due to Reductions or
Restrictions of Commitments. Partnership shall prepay
the Loans to the extent necessary so that the Total
Utilization of Commitments shall not at any time
exceed the Commitments then in effect. Partnership
shall make any prepayment required under this
subsection 2.4B(iii)(b) within three (3) Business Days
of the earlier of (x) the date on which any Senior
Officer of the Partnership learns that such excess
exists or (y) the date on which Partnership receives
written notice from any Lender that a payment is due
under this subsection 2.4B(iii)(b). Any such manda-
tory prepayments shall be applied as specified in
subsection 2.4B(iv).
(iv) Application of Prepayments and Unscheduled
Reductions of Commitments.
(a) Application of Prepayments to Base Rate
Loans and Eurodollar Rate Loans. Any prepayment of
the Loans shall be applied first to Base Rate Loans to
the full extent thereof before application to
Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be
made by Partnership pursuant to subsection 2.6D.
(b) Application of Unscheduled Reductions
of Commitments. Any voluntary or mandatory reduction
of the Commitments pursuant to subsection 2.4B(ii) or
2.4B(iii) shall be applied to ratably reduce the then
remaining Scheduled Facility Reductions.
C. General Provisions Regarding Payments.
(i) Manner and Time of
Payment. All payments by Partnership of principal,
interest, fees and other Obligations hereunder and under
the Notes shall be made in Dollars in same day funds,
without defense, set-off or counterclaim, free of any
restriction or condition, and delivered to Agent not later
than 12:00 Noon (Pacific time) on the date due at the
Funding and Payment Office for the account of Lenders;
funds received by Agent after that time on such due date
shall be deemed to have been paid by Partnership on the
next succeeding Business Day. Partnership hereby
authorizes Agent to charge its accounts with Agent upon
the occurrence and during the continuance of an Event of
Default, in order to cause timely payment to be made to
Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in
its accounts for that purpose) and after such a charge is
made on sufficient funds available, payment of principal,
interest and fees under this subsection 2.4C shall be
deemed to have been made; provided however that until such
occurrence and continuance of an Event of Default Agent
shall not charge Partnership's accounts with Agent until
receipt by Agent of written authorization from Partnership
in accordance with the provisions of subsection 10.8.
(ii) Application of
Payments to Principal and Interest. All payments in
respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being
repaid or prepaid, and all such payments shall be applied
to the payment of interest before application to
principal.
(iii) Apportionment of
Payments. Aggregate principal and interest payments shall
be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly
distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page
hereof or at such other address as such Lender may
request, its Pro Rata Share of all such payments received
by Agent and the commitment fees of such Lender when
received by Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this
subsection 2.4C(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected
Lender makes Base Rate Loans in lieu of its Pro Rata Share
of any Eurodollar Rate Loans, Agent shall give effect
thereto in apportioning payments received thereafter.
(iv) Payments on
Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or
of the commitment fees hereunder, as the case may be.
(v) Notation of
Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a
notation thereon of all Loans evidenced by that Note and
all principal payments previously made thereon and of the
date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a
notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of any Loan Party
hereunder or under such Note with respect to any Loan or
any payments of principal or interest on such Note.
2.5 Use of Proceeds.
A. The proceeds of the Loans, together with other funds
available to Partnership, shall be applied by Partnership for
general business purposes, including, without limitation,
working capital purposes.
B. Margin Regulations. No portion of the proceeds of any
borrowing under this Agreement shall be used by Partnership or
any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the
Board of Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in
each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with
respect to Eurodollar Rate Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as
practicable after 8:30 A.M. (Pacific time) on each Interest
Rate Determination Date, Agent shall determine (which
determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest
rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to Partnership and each Lender.
B. Inability to Determine Applicable Interest Rate. In
the event that Agent shall have determined (which determination
shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect
to any Eurodollar Rate Loans, that by reason of circumstances
affecting the interbank Eurodollar market adequate and fair
means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the
definition of Adjusted Eurodollar Rate, Agent shall on such
date give notice (by telefacsimile or by telephone confirmed in
writing) to Partnership and each Lender of such determination,
whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Agent notifies
Partnership and Lenders that the circumstances giving rise to
such notice no longer exist and (ii) any Notice of Borrowing or
Notice of Conversion/Continuation given by Partnership with
respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by Partnership.
C. Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive
and binding upon all parties hereto but shall be made only
after consultation with Partnership and Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such
Lender in good faith with any law, treaty, governmental rule,
central bank directive, regulation, guideline or order (or
would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even
though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after
the date of this Agreement which materially and adversely
affect the interbank Eurodollar market or the position of such
Lender in that market, then, and in any such event, such Lender
shall be an "Affected Lender" and it shall on that day give
notice (by telefacsimile or by telephone confirmed in writing)
to Partnership and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender).
Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall
be suspended until such notice shall be withdrawn by the
Affected Lender, (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being
requested by Partnership pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be)
a Base Rate Loan, (c) the Affected Lender's obligation to
maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect
to the Affected Loans or when required by law, and (d) the
Affected Loans shall automatically convert into Base Rate Loans
on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender
as described above relates to a Eurodollar Rate Loan then being
requested by Partnership pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, Partnership shall have the
option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/
Continuation as to all Lenders by giving notice (by
telefacsimile or by telephone confirmed in writing) to Agent of
such rescission on the date on which the Affected Lender gives
notice of its determination as described above (which notice of
rescission Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence,
nothing in this subsection 2.6C shall affect the obligation of
any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of
Interest Periods. Partnership shall compensate each Lender,
upon written request by that Lender (which request shall set
forth the basis for requesting such amounts), for all reason-
able losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans
and any loss, expense or liability sustained by that Lender in
connection with the liquidation or re-employment of such funds)
which that Lender may sustain: (i) if for any reason (other
than a default by that Lender) a borrowing of any Eurodollar
Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a
conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion
or continuation, (ii) if any prepayment or other principal
payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Partnership, or (iv) as a
consequence of any other default by Partnership in the
repayment of its Eurodollar Rate Loans when required by the
terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for
the account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under
this subsection 2.6 and under subsection 2.7A shall be made as
though that Lender had actually funded each of its relevant
Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to
clause (i) of the definition of Adjusted Eurodollar Rate in an
amount equal to the amount of such Eurodollar Rate Loan and
having a maturity comparable to the relevant Interest Period
and through the transfer of such Eurodollar deposit from an
offshore office of that Lender to a domestic office of that
Lender in the United States of America; provided, however, that
each Lender may fund each of its Eurodollar Rate Loans in any
manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable
under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occur-
rence of and during the continuation of a Potential Event of
Default or an Event of Default, (i) Partnership may not elect
to have a Loan be made or maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest
Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation given by Partnership with
respect to a requested borrowing or conversion/continuation
that has not yet occurred shall be deemed to be rescinded by
Partnership.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject
to the provisions of subsection 2.7B, in the event that any
Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the
interpretation, administration or application thereof
(including the introduction of any new law, treaty or govern-
mental rule, regulation or order), or any determination of a
court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender
with any guideline, request or directive issued or made after
the date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the force
of law):
(i) subjects such
Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net
income of such Lender) with respect to this Agreement or
any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any
reserve (including without limitation any marginal,
emergency, supplemental, special or other reserve),
special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or
loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other
than any such reserve or other requirements with respect
to Eurodollar Rate Loans that are reflected in the
definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting such Lender (or
its applicable lending office) or its obligations
hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost
to such Lender of agreeing to make, making or maintaining Loans
hereunder or to reduce any amount received or receivable by
such Lender (or its applicable lending office) with respect
thereto; then, in any such case, Partnership shall promptly pay
to such Lender, upon receipt of the statement referred to in
the next sentence, such additional amount or amounts (in the
form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole
discretion shall determine) as may be necessary to compensate
such Lender for any such increased cost or reduction in amounts
received or receivable hereunder. Such Lender shall deliver to
Partnership (with a copy to Agent) a written statement, setting
forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free
and Clear. All sums payable by Partnership under this
Agreement and the other Loan Documents shall be paid free
and clear of and (except to the extent required by law)
without any deduction or withholding on account of any Tax
(other than a Tax on the overall net income of any Lender)
imposed, levied, collected, withheld or assessed by or
within the United States of America or any political
subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by
or on behalf of Partnership or by any federation or
organization of which the United States of America or any
such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Partnership or
any other Person is required by law to make any deduction
or withholding on account of any such Tax (other than a
Tax on the overall net income of any Lender) from any sum
paid or payable by Partnership to Agent or any Lender
under any of the Loan Documents:
(a) Partnership shall notify Agent of any
such requirement or any change in any such requirement
as soon as Partnership becomes aware of it;
(b) Partnership shall pay any such Tax
(other than a Tax on the overall net income of any
Lender) before the date on which penalties attach
thereto, such payment to be made (if the liability to
pay is imposed on Partnership) for its own account or
(if that liability is imposed on Agent or such Lender,
as the case may be) on behalf of and in the name of
Agent or such Lender;
(c) the sum payable by Partnership in
respect of which the relevant deduction, withholding
or payment is required shall be increased to the
extent necessary to ensure that, after the making of
that deduction, withholding or payment, Agent or such
Lender, as the case may be, receives on the due date a
net sum equal to what it would have received had no
such deduction, withholding or payment been required
or made; and
(d) within 30 days after paying any sum
from which it is required by law to make any deduction
or withholding, and within 30 days after the due date
of payment of any Tax which it is required by
clause (b) above to pay, Partnership shall deliver to
Agent evidence satisfactory to the other affected
parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or
other authority;
(iii) Evidence of Exemption from U.S. Withholding
Tax.
(a) Each Lender that is organized under the
laws of any jurisdiction other than the United States
or any state or other political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "Non-US
Lender") shall deliver to Agent for transmission to
Partnership, on or prior to the Restatement Date (in
the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be
necessary in the determination of Partnership or Agent
(each in the reasonable exercise of its discretion),
(1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), properly
completed and duly executed by such Lender, together
with any other certificate or statement of exemption
required under the Internal Revenue Code or the
regulations issued thereunder to establish that such
Lender is not subject to deduction or withholding of
United States federal income tax with respect to any
payments to such Lender of principal, interest, fees
or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the
Internal Revenue Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together
with any other certificate or statement of exemption
required under the Internal Revenue Code or the
regulations issued thereunder to establish that such
Lender is not subject to deduction or withholding of
United States federal income tax with respect to any
payments to such Lender of interest payable under any
of the Loan Documents.
(b) Each Lender required to deliver any
forms, certificates or other evidence with respect to
United States federal income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such
Lender of such forms, certificates or other evidence,
whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, such
Lender shall (1) deliver to Agent for transmission to
Partnership two new original copies of Internal
Revenue Service Form 1001 or 4224, or a Certificate re
Non-Bank Status and two original copies of Internal
Revenue Service Form W-8, as the case may be, properly
completed and duly executed by such Lender, together
with any other certificate or statement of exemption
required in order to confirm or establish that such
Lender is not subject to deduction or withholding of
United States federal income tax with respect to
payments to such Lender under the Loan Documents or
(2) immediately notify Agent and Partnership of its
inability to deliver any such forms, certificates or
other evidence.
(c) Partnership shall not be required to
pay any additional amount to any Non-US Lender under
clause (c) of subsection 2.7B(ii) if such Lender shall
have failed to satisfy the requirements of
subsection 2.7B(iii)(a); provided that if such Lender
shall have satisfied such requirements on the
Restatement Date (in the case of each Lender listed on
the signature pages hereof) or on the date of the
Assignment Agreement pursuant to which it became a
Lender (in the case of each other Lender), nothing in
this subsection 2.7B(iii)(c) shall relieve Partnership
of its obligation to pay any additional amounts
pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change in any
applicable law, treaty or governmental rule,
regulation or order, or any change in the
interpretation, administration or application thereof,
such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent
date establishing the fact that such Lender is not
subject to withholding as described in
subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have
determined that the adoption, effectiveness, phase-in or
applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its
applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank
or comparable agency, has or would have the effect of reducing
the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or
with reference to, such Lender's Loans or Commitment or Letters
of Credit or participations therein or other obligations here-
under with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corpora-
tion could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Partnership
from such Lender of the statement referred to in the next
sentence, Partnership shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such
reduction. Such Lender shall deliver to Partnership (with a
copy to Agent) a written statement, setting forth in reasonable
detail the basis of the calculation of such additional amounts,
which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
2.8 Obligation of Lenders and Issuing Lender to Mitigate.
Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or
Issuing Lender responsible for administering the Loans or
Letters of Credit of such Lender or Issuing Lender, as the case
may be, becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become
an Affected Lender or that would entitle such Lender or Issuing
Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with
the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, use reasonable
efforts (i) to make, issue, fund or maintain the Commitment of
such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, or (ii) take
such other measures as such Lender or Issuing Lender may deem
reasonable, if as a result thereof the circumstances which
would cause such Lender to be an Affected Lender would cease to
exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant
to subsection 2.7 or subsection 3.6 would be materially reduced
and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of
such Commitment or Loans or Letters of Credit through such
other lending or letter of credit office or in accordance with
such other measures, as the case may be, would not otherwise
materially adversely affect such Commitment or Loans or Letters
of Credit or the interests of such Lender or Issuing Lender;
provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit
office pursuant to this subsection 2.8 unless Partnership
agrees to pay all incremental expenses incurred by such Lender
or Issuing Lender as a result of utilizing such other lending
or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by
Partnership pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount)
submitted by such Lender or Issuing Lender to Partnership (with
a copy to Agent) shall be conclusive absent manifest error.
2.9 Termination of Make-Well Agreement. It is acknowledged
that, during the period from December 31, 2000 through December
31, 2001, Circus shall have the option to elect to terminate
the Make-Well Agreement pursuant to Section 2.14 thereof if all
the following conditions have been satisfied:
(i) on the last day of each of the two most
recent Fiscal Quarters for which financial statements
of Partnership have been delivered pursuant to
subsection 5.1, the Stand-Alone Leverage Ratio shall
be 3.00:1.00 or less;
(ii) for each of the two most recent Fiscal
Quarters for which financial statements of Partnership
have been delivered pursuant to subsection 5.1, the
Stand-Alone Coverage Ratio for the four consecutive
Fiscal Quarters then ended shall be not less than
1.25:1.00;
(iii) no Event of Default or Potential
Event of Default shall have occurred and be
continuing; and
(iv) Circus shall not be in default in any
of its monetary agreements under the Make-Well
Agreement.
Borrower acknowledges that termination of the Make-Well
Agreement under such circumstances shall be at the option of
Circus, and that any such termination will result in higher
interest rates and more restrictive covenants hereunder, as set
forth herein.
SECTION 3
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein.
A. Letters of Credit. In addition to Partnership
requesting that Lenders make Loans pursuant to subsection 2.1A,
Partnership may request, in accordance with the provisions of
this subsection 3.1, from time to time during the period from
the Restatement Date to but excluding the Commitment
Termination Date, that Issuing Lender issue Letters of Credit
for the account of Partnership for the purposes specified in
the definition of Standby Letters of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon the
representations and warranties of the Loan Parties set forth in
the Loan Documents, Issuing Lender shall be obligated, as
provided in subsection 3.1B(ii), to issue such Letters of
Credit in accordance with the provisions of this
subsection 3.1; provided that Partnership shall not request
that Issuing Lender issue (and Issuing Lender shall not issue):
(i) any Letter of
Credit if, after giving effect to such issuance, the Total
Utilization of Commitments would exceed the Commitments
then in effect;
(ii) any Letter of
Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $5,000,000;
(iii) any Standby Letter
of Credit having an expiration date later than the earlier
of (a) the Commitment Termination Date and (b) the date
that is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding
clause (b) shall not prevent Issuing Lender from agreeing
that a Standby Letter of Credit will automatically be
extended for one or more successive periods not to exceed
one year each unless Issuing Lender elects not to extend
for any such additional period; provided, further that
Issuing Lender shall deliver a written notice to Agent
setting forth the last day on which Issuing Lender may
give notice that it will not extend such Standby Letter of
Credit (the "Notification Date" with respect to such
Standby Letter of Credit) at least ten Business Days prior
to such Notification Date; and provided, further that,
unless Lenders otherwise consent, Issuing Lender shall
give notice that it will not extend such Standby Letter of
Credit if it has knowledge that an Event of Default has
occurred and is continuing on such Notification Date; or
(iv) any Letter of
Credit denominated in a currency other than Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance.
Whenever Partnership desires the issuance of a Letter of
Credit, it shall deliver to Agent a Notice of Issuance of
Letter of Credit no later than 10:00 A.M. (Pacific time)
at least 5 Business Days, or such shorter period as may be
agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance.
The Notice of Issuance of Letter of Credit shall specify
(a) the proposed date of issuance (which shall be a
Business Day), (b) the face amount of the Letter of
Credit, (c) the expiration date of the Letter of Credit,
(d) the name and address of the beneficiary, and (e) the
verbatim text of the proposed Letter of Credit or the
proposed terms and conditions thereof, including a precise
description of any documents and the verbatim text of any
certificates to be presented by the beneficiary that, if
presented by the beneficiary prior to the expiration date
of the Letter of Credit, would require the Issuing Lender
to make payment under the Letter of Credit; provided that
the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of
Credit or any such documents or certificates; and
provided, further that no Letter of Credit shall require
payment against a conforming draft to be made thereunder
on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to
which such draft is required to be presented is located)
that such draft is presented if such presentation is made
after 10:00 A.M. (Pacific time) on such business day.
Partnership shall notify the Issuing Lender
prior to the issuance of any Letter of Credit in the event
that any of the matters to which Partnership is required
to certify in the applicable Notice of Issuance of Letter
of Credit is no longer true and correct as of the proposed
date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Partnership shall be
deemed to have re-certified, as of the date of such
issuance, as to the matters to which Partnership is
required to certify in the applicable Notice of Issuance
of Letter of Credit.
(ii) Issuing Lender.
Subject to the terms and conditions hereof, upon receipt
by Agent of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of
a Letter of Credit, Agent shall be the Issuing Lender with
respect thereto. Agent shall be obligated to issue such
Letter of Credit and shall be the Issuing Lender with
respect thereto, notwithstanding the fact that the Letter
of Credit Usage with respect to such Letter of Credit and
with respect to all other Letters of Credit issued by
Agent, when aggregated with Agent's outstanding Loans, may
exceed Agent's Commitment then in effect.
(iii) Issuance of Letter
of Credit. Upon satisfaction or waiver (in accordance
with subsection 10.6) of the conditions set forth in
subsection 4.5, the Issuing Lender shall issue the
requested Letter of Credit in accordance with the Issuing
Lender's standard operating procedures.
(iv) Notification to
Lenders. Upon the issuance of any Letter of Credit the
Issuing Lender shall promptly notify each other Lender of
such issuance, which notice shall be accompanied by a copy
of such Letter of Credit. Promptly after receipt of such
notice, Agent shall notify each Lender of the amount of
such Lender's respective participation in such Letter of
Credit, determined in accordance with subsection 3.1C.
(v) Reports to Lenders.
Within 15 days after the end of each calendar quarter
ending after the Restatement Date, so long as any Letter
of Credit shall have been outstanding during such calendar
quarter, Issuing Lender shall deliver to each other Lender
a report setting forth the average for such calendar
quarter of the daily maximum amount available to be drawn
under the Letters of Credit issued by Issuing Lender that
were outstanding during calendar quarter.
C. Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of
Credit, each Lender (including the Lender that acts as Issuing
Lender) shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Issuing Lender a participation
in such Letter of Credit and drawings thereunder in an amount
equal to such Lender's Pro Rata Share of the maximum amount
which is or at any time may become available to be drawn
thereunder.
3.2 Letter of Credit Fees.
Partnership agrees to pay the following amounts to
Issuing Lender with respect to Letters of Credit issued by it:
(A) with respect to each Standby Letter of Credit, a
letter of credit fee (calculated, in the case of
clause (i), on the basis of a 360-day year and the actual
number of days elapsed) in an amount equal to the greater
of (i) the product of the maximum aggregate amount that
is, or at any time, may become available for drawing with
respect to such Letter of Credit multiplied by the
Applicable Eurodollar Rate Margin and (ii) $500; which
amount shall be payable in advance upon issuance for the
term of such Letter of Credit.
(B) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder (in addition to the fees payable under
clause (i) above), documentary and processing charges in
accordance with Issuing Lender's standard schedule for
such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be.
Promptly upon receipt by Issuing Lender of any amount described
in clause (A) of this subsection 3.2, Issuing Lender shall
distribute to each other Lender its Pro Rata Share of such
amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters
of Credit.
A. Responsibility of Issuing Lender With Respect to
Drawings. In determining whether to honor any drawing under
any Letter of Credit by the beneficiary thereof, the Issuing
Lender shall be responsible only to determine that the
documents and certificates required to be delivered under such
Letter of Credit have been delivered and that they comply on
their face with the requirements of such Letter of Credit.
B. Reimbursement by Partnership of Amounts Drawn Under
Letters of Credit. In the event Issuing Lender has determined
to honor a drawing under a Letter of Credit issued by it,
Issuing Lender shall immediately notify Partnership and Agent,
and Partnership shall reimburse Issuing Lender on or before the
Business Day immediately following the date on which such
drawing is honored (the "Reimbursement Date") in an amount in
Dollars and in same day funds equal to the amount of such
drawing; provided that, anything contained in this Agreement to
the contrary notwithstanding, (i) unless Partnership shall have
notified Agent and Issuing Lender prior to 8:30 A.M. (Pacific
time) on the date of such drawing that Partnership intends to
reimburse Issuing Lender for the amount of such drawing with
funds other than the proceeds of Loans, Partnership shall be
deemed to have given a timely Notice of Borrowing to Agent
requesting Lenders to make Loans that are Base Rate Loans on
the Reimbursement Date in an amount in Dollars equal to the
amount of such drawing and (ii) subject only to satisfaction or
waiver of the conditions specified in subsection 4.5B, Lenders
shall, on the Reimbursement Date, make Loans that are Base Rate
Loans in the amount of such drawing, the proceeds of which
shall be applied directly by Agent to reimburse Issuing Lender
for the amount of such drawing; and provided, further that if
for any reason proceeds of Loans are not received by Issuing
Lender on the Reimbursement Date in an amount equal to the
amount of such drawing, Partnership shall reimburse Issuing
Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such drawing over the aggregate amount
of such Loans, if any, that are so received. Nothing in this
subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Loans on the terms and conditions set forth
in this Agreement, and Partnership shall retain any and all
rights it may have against any Lender resulting from the
failure of such Lender to make such Loans under this
subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under
Letters of Credit.
(i) Payment by Lenders.
In the event that Partnership shall fail for any reason to
reimburse Issuing Lender as provided in subsection 3.3B in
an amount equal to the amount of any drawing honored by
Issuing Lender under a Letter of Credit issued by it,
Issuing Lender shall promptly notify each other Lender of
the unreimbursed amount of such drawing and of such other
Lender's respective participation therein based on such
Lender's Pro Rata Share. Each Lender shall make available
to Issuing Lender an amount equal to its respective pro
rata participation, in Dollars and in same day funds, at
the office of Issuing Lender specified in such notice, not
later than 1:30 P.M. (Pacific time) on the first business
day (under the laws of the jurisdiction in which such
office of Issuing Lender is located) after the date
notified by Issuing Lender. In the event that any Lender
fails to make available to Issuing Lender on such business
day the amount of such Lender's participation in such
Letter of Credit as provided in this subsection 3.3C,
Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at
the Federal Funds Effective Rate for three Business Days
and thereafter at the Base Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of
any Lender to recover from Issuing Lender any amounts made
available by such Lender to Issuing Lender pursuant to
this subsection 3.3C in the event that it is determined by
the final judgment of a court of competent jurisdiction
that the payment with respect to a Letter of Credit by
Issuing Lender in respect of which payment was made by
such Lender constituted gross negligence or willful
misconduct on the part of Issuing Lender.
(ii) Distribution to
Lenders of Reimbursements Received From Partnership. In
the event Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or
any portion of any drawing honored by Issuing Lender under
a Letter of Credit issued by it, Issuing Lender shall
distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to
such drawing such other Lender's Pro Rata Share of all
payments subsequently received by Issuing Lender from
Partnership in reimbursement of such drawing within five
(5) Business Days of the date when such payments are
received by Issuing Lender. Any such distribution shall
be made to a Lender at its primary address set forth below
its name on the appropriate signature page hereof or at
such other address as such Lender may request.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest
by Partnership. Partnership agrees to pay to Issuing
Lender, with respect to drawings made under any Letters of
Credit issued by it, interest on the amount paid by
Issuing Lender in respect of each such drawing from and
including the date of such drawing to but excluding the
date such amount is reimbursed by Partnership (including
any such reimbursement out of the proceeds of Loans
pursuant to subsection 3.3B) at a rate equal to (a) for
the period from the date of such drawing to but excluding
the Reimbursement Date, the rate then in effect under this
Agreement with respect to Loans that are Base Rate Loans
and (b) thereafter, a rate which is 2% per annum in excess
of the rate of interest otherwise payable under this
Agreement with respect to Loans that are Base Rate Loans;
provided that in no event shall interest accrue for two
days when a drawing and the reimbursement of amounts paid
in respect of such drawing occur on consecutive days.
Interest payable pursuant to this subsection 3.3D(i) shall
be computed on the basis of a 360-day year for the actual
number of days elapsed in the period during which it
accrues and shall be payable on demand or, if no demand is
made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full.
(ii) Distribution of
Interest Payments by Issuing Lender. Promptly upon
receipt by Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing
under a Letter of Credit issued by it, in the event
Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of
such drawing, Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it
under subsection 3.3C(i) with respect to such drawing such
other Lender's proportionate share (based on the amount
reimbursed to the Issuing Lender pursuant to
subsection 3.3C(i)) of any interest received by Issuing
Lender in respect of that portion of such drawing so
reimbursed by other Lenders for the period from the date
on which Issuing Lender was so reimbursed by other Lenders
to and including the date on which such portion of such
drawing is reimbursed by Partnership. Any such distri-
bution shall be made by Issuing Lender within five (5)
Business Days of its receipt of such payment from
Partnership to a Lender at its primary address set forth
below its name on the appropriate signature page hereof or
at such other address as such Lender may request.
3.4 Obligations Absolute.
The obligation of Partnership to reimburse Issuing
Lender for drawings made under the Letters of Credit issued by
it and to repay any Loans made by Lenders pursuant to
subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of
validity or enforceability of any Letter of Credit;
(ii) the existence of
any claim, set-off, defense or other right which
Partnership or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or
any Persons for whom any such transferee may be acting),
Issuing Lender or other Lender or any other Person or, in
the case of a Lender, against Partnership, whether in
connection with this Agreement, the transactions
contemplated herein or any unrelated transaction
(including any underlying transaction between Partnership
or one of its Subsidiaries and the beneficiary for which
any Letter of Credit was procured);
(iii) any draft, demand,
certificate or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by the
Issuing Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other
document which does not comply with the terms of such
Letter of Credit;
(v) any adverse change
in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Partnership or
any of its Subsidiaries;
(vi) any breach of this
Agreement or any other Loan Document by any party thereto;
(vii) any other
circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an
Event of Default or a Potential Event of Default shall
have occurred and be continuing;
provided, in each case, that payment by the Issuing Lender
under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of Issuing
Lender under the circumstances in question (as determined by a
final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as
provided in subsection 3.6, Partnership hereby agrees to
protect, indemnify, pay and save harmless Issuing Lender from
and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of
internal counsel) which Issuing Lender may incur or be subject
to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit by Issuing Lender, other than as a result
of (a) the gross negligence or willful misconduct of Issuing
Lender as determined by a final judgment of a court of
competent jurisdiction or (b) subject to the following
clause (ii), the wrongful dishonor by Issuing Lender of a
proper demand for payment made under any Letter of Credit
issued by it or (ii) the failure of Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority
(all such acts or omissions herein called "Governmental Acts").
B. Nature of Issuing Lender's Duties. As between
Partnership and Issuing Lender, Partnership assumes all risks
of the acts and omissions of, or misuse of the Letters of
Credit issued by Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, but subject to the last
paragraph of this subsection 3.5, Issuing Lender shall not be
responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted
by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter
of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation
of technical terms; (vi) any loss or delay in the transmission
or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or (viii) any consequences arising from
causes beyond the control of Issuing Lender, including without
limitation any Governmental Acts, and none of the above shall
affect or impair, or prevent the vesting of, any of Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of
the specific provisions set forth in the first paragraph of
this subsection 3.5B, any action taken or omitted by Issuing
Lender under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put Issuing Lender
under any resulting liability to Partnership.
Notwithstanding anything to the contrary contained in
this subsection 3.5, Partnership shall retain any and all
rights it may have against Issuing Lender for any liability
arising solely out of the gross negligence or willful
misconduct of Issuing Lender, as determined by a final judgment
of a court of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that Issuing Lender or any Lender shall
determine (which determination shall be presumed to be correct)
that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration
or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any
determination of a court or governmental authority, in each
case that becomes effective after the date hereof, or
compliance by Issuing Lender or any Lender with any guideline,
request or directive issued or made after the date hereof by
any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such
Issuing Lender or Lender (or its applicable lending or
letter of credit office) to any additional Tax (other than
any Tax on the overall net income of such Issuing Lender
or Lender) with respect to the issuing or maintaining of
any Letters of Credit or the purchasing or maintaining of
any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed
on or suffered by Issuing Lender;
(ii) imposes, modifies
or holds applicable any reserve (including without
limitation any marginal, emergency, supplemental, special
or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters
of Credit issued by Issuing Lender or participations
therein purchased by any Lender; or
(iii) imposes any other
condition (other than with respect to a Tax matter) on or
affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this
Section 3 or any Letter of Credit or any participation
therein;
and the result of any of the foregoing is to increase the cost
to such Issuing Lender or Lender of agreeing to issue, issuing
or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to
reduce any amount received or receivable by such Issuing Lender
or Lender (or its applicable lending or letter of credit
office) with respect thereto; then, in any case, Partnership
shall promptly pay to such Issuing Lender or Lender, upon
receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate
such Issuing Lender or Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such
Issuing Lender or Lender shall deliver to Partnership a written
statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Issuing Lender
or Lender under this subsection 3.6, which statement shall be
conclusive and binding upon all parties hereto absent manifest
error.
SECTION 4
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the
issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions.
4.1 Conditions to Initial Loans.
The obligations of Lenders to make any Loans to be
made on the Restatement Date are, in addition to satisfaction
of the conditions precedent specified in subsection 4.2,
subject to prior or concurrent satisfaction of the following
conditions:
A. Partnership Documents. On or before the Restatement
Date, Partnership shall deliver or cause to be delivered to
Lenders (or one originally executed copy to Agent and, in the
case of the Credit Agreement, sufficient originally executed
copies for each Lender to Agent) the following, each, unless
otherwise noted, dated the Restatement Date and in form
reasonably satisfactory to the Lenders:
(i) Copies of the Joint
Venture Agreement certified by an Executive Committee
Signatory;
(ii) Resolutions of the
Board of Directors of each General Partner, in each case,
in its capacity as a general partner of Partnership, and
of the Executive Committee, each approving and authorizing
the execution, delivery and performance of this Agreement
and the other Loan Documents to which Partnership is a
party;
(iii) Executed originals
of this Agreement, any Notes, the Security Agreement, the
Deed of Trust, the Assignment of Rents and Revenues, the
Collateral Account Agreement, the Subordination and Debt
Put Agreement and the other Loan Documents to which
Partnership is a party; and
(iv) Such other
documents as Agent may reasonably request.
B. Certain Partnership Parents' Documents. On or before
the Restatement Date, each of Circus, Eldorado Hotel and
General Partners shall deliver or cause to be delivered to
Lenders (or to Agent for Lenders) the following, each, unless
otherwise noted, dated the Restatement Date:
(i) Certificates as to the absence of any changes in the certified
copies of its Articles of Incorporation or Organization or
charter documents delivered on the Closing Date, together
with, as applicable, a good standing certificate from the
Secretary of State of the state of its incorporation or
organization, each dated a recent date prior to the
Restatement Date;
(ii) Certificates as to the absence of any changes in the certified
copies of its Bylaws or Operating Agreement, certified as
of the Restatement Date by its or its managing general
partner's secretary or an assistant secretary;
(iii) Resolutions of its
or its managing general partner's Board of Directors,
approving and authorizing the execution, delivery and
performance of the Environmental Indemnities and each
other Loan Document to which it is a party, certified as
of the Restatement Date by its or its managing general
partner's secretary or an assistant secretary as being in
full force and effect without modification or amendment;
(iv) Executed originals of the Restated Make-Well Agreement and/or
the other Loan Documents to which it is a party; and
(v) An Officers'
Certificate from Circus dated as of the Restatement Date
attesting that attached thereto are true, correct and
complete copies of the Circus Loan Agreement and all
amendments thereto, supplements thereto or modifications
thereof.
C. Opinions of Loan Parties' Counsel. Lenders and their
respective counsel shall have received (i) originally executed
copies of one or more favorable written opinions of Wolf,
Block, Schorr & Solis-Cohen, special counsel for Partnership
and Circus, and Jones, Jones, Close & Brown, Chartered, Nevada
counsel for Partnership and Circus, dated as of the Restatement
Date and setting forth substantially the matters in the
opinions designated in Exhibit VI and as to such other matters
as Agent acting on behalf of Lenders may reasonably request and
(ii) evidence satisfactory to Agent that Partnership has
requested such counsel to deliver such opinions to Lenders.
D. Opinions of Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable
written opinions of Sheppard, Mullin, Richter & Hampton LLP,
counsel to Agent, dated as of the Restatement Date, substan-
tially in the form of Exhibit VII and as to such other matters
as Agent acting on behalf of Lenders may reasonably request.
E. Perfection of Security Interests. Partnership shall
have taken or caused to be taken such actions in such a manner
so that Agent, for the benefit of Lenders, has a valid and
perfected first priority security interest in all Collateral in
which a Lien is purported to be granted by the Collateral
Documents or any of them, executed as of the Restatement Date.
Such actions shall include, without limitation: (i) the
delivery to Agent of Uniform Commercial Code financing
statements, executed by Partnership as to the Collateral
granted by Partnership for all jurisdictions as may be
necessary or desirable to perfect Agent's security interest in
such collateral; (ii) evidence that counterparts of the Deed of
Trust and Assignment of Rents and Revenues were recorded in all
locations to the extent necessary or desirable, in the
reasonable judgment of Agent, effectively to create a valid and
enforceable first priority Lien (subject only to Permitted
Encumbrances) on the Premises in favor of Agent for the benefit
of Lenders and (iii) evidence reasonably satisfactory to Agent
that all other filings, recordings and other actions Agent
deems necessary or advisable to establish, preserve and perfect
the first priority Liens (subject to the Liens permitted under
subsection 7.2) granted to Agent, for the benefit of Lenders,
in the Collateral shall have been made.
F. Title Policy. Agent and Lenders shall have received a
modification endorsement to the Title Policy and a policy down-
date in form and substance acceptable to the Agent.
G. Insurance. Agent shall have received evidence,
satisfactory to Agent, of insurance required to be procured and
maintained pursuant to subsection 6.4 hereof and Section 8 of
the Security Agreement and subsection 6 of the Deed of Trust
indicating that, with respect to casualty insurance, such
policies of insurance have been endorsed to name Agent, on
behalf of Lenders, as loss payee pursuant to a standard
mortgagee clause and, with respect to liability insurance, such
policies of insurance name Agent, on behalf of Lenders, as an
additional insured.
H. Necessary Consents. On or before the Restatement
Date, each Loan Party shall have obtained all consents to the
transactions contemplated under this Agreement and the other
Loan Documents, of any Person required under any Contractual
Obligation of any Loan Party, including, without limitation,
approval of the terms of the Loans by the Executive Committee
pursuant to subsection 5.9(c) of the Joint Venture Agreement
and by the General Partners, all of the foregoing in form and
substance satisfactory to Agent.
I. Environmental Indemnities. Lenders shall have
received reaffirmations of the Environmental Indemnities in
form, scope and substance satisfactory to Lenders.
J. Fees. Partnership shall have paid to Agent, for
distribution (as appropriate) to Agent and Lenders, the fees
payable on the Restatement Date referred to in subsection 2.3.
K. No Material Adverse Effect. Since December 31, 1995,
no Material Adverse Effect (in the sole discretion of Agent and
Lenders) shall have occurred.
L. Representations and Warranties; Performance of
Agreements. Partnership shall have delivered to Agent an
Officers' Certificate from each General Partner and Executive
Committee Signatories, in form and substance satisfactory to
Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete on and as of
the Restatement Date to the same extent as though made on and
as of that date and that Partnership shall have performed all
agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the
Restatement Date except as otherwise disclosed to and agreed to
in writing by Agent and Lenders.
M. Interbank Arrangements. Any Lender under the Original
Agreement which will not continue as a Lender under this
Agreement shall have assigned its rights under the Original
Agreement to one or more Lenders under this Agreement, with
such assignment to become effective concurrently with the
effectiveness hereof.
N. Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental
thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Agent and such counsel, and Agent and
such counsel shall have received all such counterpart originals
or certified copies of such documents as Agent may reasonably
request.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each
Funding Date are subject to the following further conditions
precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by
the Director of Finance and Administration or the General
Manager of Partnership, or the chief executive officer, the
chief financial officer or the treasurer of Managing Partner on
behalf of Partnership or by any executive officer of Managing
Partner on behalf of Partnership designated in writing by the
Executive Committee or by two Executive Committee Signatories.
B. As of that Funding Date:
(i) The representations
and warranties contained herein and in the other Loan
Documents shall be true, correct and complete on and as of
that Funding Date to the same extent as though made on and
as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have
been true, correct and complete in all material respects
on and as of such earlier date;
(ii) No event shall have
occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Notice
of Borrowing that would constitute an Event of Default or
a Potential Event of Default;
(iii) Each Loan Party
shall have performed in all material respects all
agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it
on or before that Funding Date;
(iv) No order, judgment
or decree of any court, arbitrator or governmental
authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding
Date;
(v) The making of the
Loans requested on such Funding Date shall not violate any
law including, without limitation, Regulation G, Regula-
tion T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System; and
(vi) There shall not be
pending or, to the knowledge of any Senior Officer of
Partnership or Executive Committee Signatory, threatened,
any action, suit, proceeding, governmental investigation
or arbitration against or affecting any Loan Party or any
of its Subsidiaries or any property of any Loan Party or
any of its Subsidiaries that is required to be disclosed
but has not been disclosed by Partnership in writing
pursuant to subsection 5.6 or 6.1(x) prior to the making
of the last preceding Loans (or, in the case of the
initial Loans, prior to the execution of this Agreement),
and there shall have occurred no development in any such
action, suit, proceeding, governmental investigation or
arbitration so disclosed by Partnership in writing
pursuant to subsection 5.6 or 6.1(x) prior to the making
of the last preceding Loans (or in the case of the initial
Loans, prior to the execution of this Agreement), that, in
either event, in the opinion of such Senior Officer or
Executive Committee Signatory could reasonably be expected
to have a Material Adverse Effect; and no injunction or
other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order
to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or other-
wise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans
hereunder.
C. Since December 31, 1995, no Material Adverse Effect
(as determined in the reasonable discretion of Agent and
Lenders) shall have occurred.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder
(whether or not the Issuing Lender is obligated to issue such
Letter of Credit) is subject to the following conditions
precedent:
A. On or before the date of issuance of the initial
Letter of Credit pursuant to this Agreement, the initial Loans
shall have been made.
B. On or before the date of issuance of such Letter of
Credit, Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Notice
of Issuance of Letter of Credit, in each case signed by the
chief executive officer, the chief financial officer or the
treasurer of Managing Partner on behalf of Partnership or by
any executive officer of Managing Partner on behalf of
Partnership designated by any of the above-described officers
or by two Executive Committee Signatories in a writing
delivered to Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or
information as the Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. Since December 31, 1995, no Material Adverse Effect
(as determined in the reasonable discretion of Agent and
Lenders) shall have occurred.
<PAGE>
D. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be
satisfied to the same extent as if the issuance of such Letter
of Credit were the making of a Loan and the date of issuance of
such Letter of Credit were a Funding Date.
SECTION 5
PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agree-
ment and to make the Loans, to induce Issuing Lender to issue
Letters of Credit and to induce other Lenders to purchase
participations therein, Partnership represents and warrants to
each Lender, on the date of this Agreement, on each Funding
Date and on the date of issuance of each Letter of Credit, that
the following statements are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.
A. Organization and Powers. Partnership is a general
partnership duly organized, validly existing under the laws of
the State of Nevada. Partnership has all requisite partnership
power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out
the transactions contemplated thereby.
B. Qualification and Good Standing. Partnership is
qualified to do business in every jurisdiction where its assets
are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be
so qualified or in good standing has not had and will not have
a Material Adverse Effect.
C. Conduct of Business. Partnership and its Subsidiaries
are engaged only in the businesses permitted to be engaged in
pursuant to subsection 7.13.
D. Subsidiaries. All of the Subsidiaries of Partnership
are identified in Schedule 5.1, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of
subsection 6.1(xvii). The capital stock of each of the
Subsidiaries of Partnership identified in Schedule 5.1 (as so
supplemented) is duly authorized, validly issued, fully paid
and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Partnership
identified in Schedule 5.1 (as so supplemented) is a
corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate
power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority has
not had and will not have a Material Adverse Effect.
Schedule 5.1 (as so supplemented) correctly sets forth the
ownership interest of Partnership and each of its Subsidiaries
in each of the Subsidiaries of Partnership identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery
and performance of the Loan Documents have been duly authorized
by all necessary partnership action on the part of Partnership.
B. No Conflict. The execution, delivery and performance
by Partnership of the Loan Documents to which it is a party and
the consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to
Partnership or any of its Subsidiaries which violation or
violations, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect, (ii) violate the Certificate
or Articles of Incorporation or charter documents or Bylaws or
partnership agreement of Partnership or any of its Subsidiaries
or any order, judgment or decree of any court or other agency
of government binding on Partnership or any of its
Subsidiaries, (iii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Partnership or any of its
Subsidiaries, (iv) result in or require the creation or
imposition of any Lien upon any of the properties or assets of
Partnership or any of its Subsidiaries (other than any Liens
created under any of the Loan Documents in favor of Agent on
behalf of Lenders), or (v) require any approval of stockholders
or any approval or consent of any Person under any Contractual
Obligation of Partnership or any of its Subsidiaries, except
for such approvals or consents which will be obtained on or
before the Restatement Date and disclosed in writing to
Lenders.
C. Governmental Consents. The execution, delivery and
performance by Partnership of the Loan Documents to which it is
a party and the consummation of the transactions contemplated
hereby and thereby do not and will not require any registration
with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority
or regulatory body except (i) those that have been obtained and
copies of which have been delivered to Agent pursuant to
subsection 4.1I or the absence of which Agent has deemed
satisfactory pursuant to subsection 4.1I, (ii) those notices or
informational filings or both that will be required to be given
to the Securities and Exchange Commission or any Gaming Board
but that are not yet due and (iii) any right of any Gaming
Board to object to any Lender or participant in the Loans at
any future date.
D. Binding Obligation. Each of the Loan Documents and to
which it is a party has been duly executed and delivered by
Partnership and General Partners, assuming due execution and
delivery by the other parties thereto, and is the legally valid
and binding obligation of Partnership, enforceable against
Partnership in accordance with its respective terms, except as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to
enforceability.
E. Valid Issuance of General Partner Subordinated Debt.
As of the Restatement Date, the outstanding principal amount of
the General Partner Subordinated Debt is $35,068,696. The
General Partner Subordinated Debt constitutes the legally valid
and binding obligation of Partnership, enforceable against
Partnership in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to
enforceability. The subordination provisions of the General
Partner Subordinated Debt are enforceable against the holders
thereof and the Loans, Letter of Credit reimbursement
obligations pursuant to subsection 3.3 and all other monetary
Obligations hereunder are within the definition of "Senior
Indebtedness" included in such provisions. The General Partner
Subordinated Debt is exempt from registration under all
applicable federal and state securities laws.
5.3 Financial Condition.
Partnership has heretofore delivered to Lenders an
audited balance sheet of Partnership as at December 31, 1995.
Such balance sheet was prepared in conformity with GAAP and
fairly presents the financial position of the entities
described in such financial statements as at the date thereof.
Partnership does not (and will not as a result of the funding
of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected
in the foregoing balance sheet and which in any such case is
material in relation to the business, operations, properties,
assets, condition (financial or otherwise) or prospects of
Partnership and its Subsidiaries taken as a whole.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since December 31, 1995, no event or change has
occurred that has caused or evidences, either in any case or in
the aggregate, a Material Adverse Effect. Neither Partnership
nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so
except as permitted by subsection 7.5.
5.5 Title to Properties; Liens; All Collateral.
Partnership and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in
real property and easement interests in the Skyway Easements),
(ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to
(in the case of all other personal property), all of their
respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such
financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. Except as permitted
or required by this Agreement, all such properties and assets
are free and clear of Liens. The Collateral constitutes all of
the assets of Partnership related to those portions of the
Hotel owned by or under the control of Partnership.
5.6 Litigation; Adverse Facts.
There are no actions, suits, proceedings, arbitrations
or governmental investigations (whether or not purportedly on
behalf of Partnership or any of its Subsidiaries) at law or in
equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the
knowledge of any Senior Officer of Partnership, threatened
against or affecting Partnership or any of its Subsidiaries or
any property of Partnership or any of its Subsidiaries that,
individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect. Neither Partnership
nor any of its Subsidiaries is (i) in violation of any
applicable laws that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect
or (ii) subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of
any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in
the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all
tax returns and reports of Partnership and its Subsidiaries
required to be filed by any of them have been timely filed, and
all taxes, assessments, fees and other governmental charges
upon Partnership and its Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are
due and payable have been paid when due and payable.
Partnership knows of no proposed tax assessment against
Partnership or any of its Subsidiaries which is not being
actively contested by Partnership or such Subsidiary in good
faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or
provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Partnership nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any of
its Contractual Obligations, and no condition exists that, with
the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences,
direct or indirect, of such default or defaults, if any, would
not have a Material Adverse Effect.
B. Neither Partnership nor any of its Subsidiaries is a
party to or is otherwise subject to any agreements or
instruments or any charter or other internal restrictions
which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
5.9 Governmental Regulation.
Neither Partnership nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its
ability to incur Indebtedness (other than Gaming Laws) or which
may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities. Neither Partnership nor any
of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock, and
none of the proceeds of the Loans will be used to purchase or
carry Margin Stock in violation of Regulations G, U or X of the
Board of Governors of the Federal Reserve System.
5.11 Employee Benefit Plans.
A. Partnership and each of its ERISA Affiliates are in
compliance with all applicable provisions and requirements of
ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit
Plan.
B. No ERISA Event has occurred or is reasonably expected
to occur with respect to Partnership or any or its ERISA
Affiliates.
C. Except to the extent required under Section 4980B of
the Internal Revenue Code, no Employee Benefit Plan provides
health or welfare benefits (through the purchase of insurance
or otherwise) for any retired or former employees of
Partnership or any of its ERISA Affiliates.
D. As of the most recent valuation date for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate
for all Pension Plans (excluding for purposes of such
computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $5,000,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be
payable with respect to this Agreement or any of the
transactions contemplated hereby, and Partnership hereby
indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred in
connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising
in connection with any such claim, demand or liability.
5.13 Environmental Protection.
Except as set forth in Schedule 5.13, in each
particular instance, with respect to the particular clause of
this subsection 5.13 to which such exception is taken:
(i) to the best
knowledge of Partnership, the operations of Partnership
and of each of its Subsidiaries and Partnership Parents
(including, without limitation, all operations and
conditions at or in the Facilities) related to the Hotel
or Facilities comply in all material respects with all
Environmental Laws;
(ii) to the best
knowledge of Partnership, each of Partnership, its
Subsidiaries and Partnership Parents has obtained all
Governmental Authorizations under Environmental Laws
necessary to its operations related to the Hotel or
Facilities, and all such Governmental Authorizations are
in good standing, and Partnership and each of its
Subsidiaries and Partnership Parents are in compliance
with all material terms and conditions of such
Governmental Authorizations;
(iii) neither Partnership
nor any of its Subsidiaries nor, to the best knowledge of
Partnership, Partnership Parents has received (a) any
notice or claim to the effect that it is or may be liable
to any Person as a result of or in connection with any
Hazardous Material related to the Hotel or Facilities or
(b) any letter or request for information under
Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. sec. 9604) or
comparable state laws, with respect to that portion of the
Hotel or Facilities which are owned or controlled by
Partnership and, to the best of Partnership's Senior
Officers' knowledge, none of the operations of Partnership
or any of its Subsidiaries or any Partnership Parent is
the subject of any federal or state investigation relating
to or in connection with any Hazardous Material at any
Facility or any Hazardous Material in any other manner
related to the Hotel;
(iv) neither of
Partnership or any of its Subsidiaries nor, to the best
knowledge of Partnership, Partnership Parents is a party
to any judicial or administrative proceeding alleging the
violation of or liability under any Environmental Laws
which if adversely determined could reasonably be expected
to have a Material Adverse Effect;
(v) none of
Partnership, any of its Subsidiaries, any of their
respective Facilities or operations or, to the best
knowledge of Partnership with respect to such Facilities
or operations, Partnership Parents is subject to any
outstanding written order or agreement with any
governmental authority or private party relating to
(a) any Environmental Laws or (b) any Environmental
Claims;
(vi) to the best
knowledge of Partnership, none of Partnership, any of its
Subsidiaries and Partnership Parents has any contingent
liability in connection with any Release of any Hazardous
Material related to the Hotel or Facilities which could
reasonably be expected to have a Material Adverse Effect;
(vii) none of Partnership
or any of its Subsidiaries, and, to the best knowledge of
Partnership, none of Partnership Parents and, to the best
knowledge of Senior Officers of Partnership none of their
respective predecessors has filed any notice under any
Environmental Law indicating past or present treatment or
Release of Hazardous Material at any Facility and none of
Partnership's or any of its Subsidiaries' operations
involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under
40 C.F.R. Parts 260-270 or any state equivalent;
(viii) no Hazardous
Material exists on, under or about any Facility in a
manner that has a reasonable possibility of giving rise to
an Environmental Claim having a Material Adverse Effect,
and neither Partnership nor any of its Subsidiaries nor,
to the best knowledge of Partnership, any of Partnership
Parents has filed any notice or report of a Release of any
Hazardous Material that has a reasonable possibility of
giving rise to an Environmental Claim having a Material
Adverse Effect;
(ix) to the best
knowledge of Partnership, none of Partnership, any of its
Subsidiaries, Partnership Parents and, to the best
knowledge of Senior Officers of Partnership, any of their
respective predecessors has disposed of any Hazardous
Material in a manner that has a reasonable possibility of
giving rise to an Environmental Claim having a Material
Adverse Effect;
(x) to the best
knowledge of Partnership, no underground storage tanks or
surface impoundments are on or at any Facility; and
(xi) no Lien in favor of
any Person (including, to the best knowledge of
Partnership, Partnership Parents) relating to or in
connection with any Environmental Claim has been filed or
has been attached to any Facility.
5.14 Employee Matters.
There is no strike or work stoppage in existence or,
to the best knowledge of Senior Officers of Partnership,
threatened involving Partnership or any of its Subsidiaries
that could reasonably be expected to have a Material Adverse
Effect.
5.15 Solvency.
Partnership is and, upon the incurrence of any
Obligations by Partnership on any date on which this
representation is made, will be, Solvent.
5.16 Disclosure.
No representation or warranty of Partnership or any of
its Subsidiaries contained in any Loan Document or in any other
document, certificate or written statement furnished to Lenders
by or on behalf of Partnership or any of its Subsidiaries for
use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or
omits to state a material fact (known to Partnership, in the
case of any document not furnished by it) necessary in order to
make the statements contained herein or therein not misleading
in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in
such materials are based upon good faith estimates and
assumptions believed by Partnership to be reasonable at the
time made, it being recognized by Lenders that such projections
as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such
projections may differ from the projected results.
5.17 Representations and Warranties Incorporated
From the General Partner Subordinated
Debt.
Each of the representations and warranties given by
Partnership in the documentation governing the General Partner
Subordinated Debt is true and correct in all material respects
as of the Restatement Date, except for those specifically
relating to another time or times which were or will be true
and correct in all material respects as such time or times.
5.18 Compliance With Laws; Licenses, Permits and
Authorizations.
Each of Partnership and its Subsidiaries is in
compliance with the requirements of all applicable laws, rules,
regulations, ordinances and orders (including, without
limitation, Gaming Laws), noncompliance with which would,
individually or in the aggregate, materially adversely affect
the ability of any such party to complete or operate those
portions of the Hotel owned by or under the control of
Partnership or would, individually or in the aggregate,
materially adversely affect the ability of any of Partnership
and its Subsidiaries to perform its obligations under the Loan
Documents to which it is a party. The planned use of those
portions of the Hotel owned by or under the control of
Partnership complies with applicable zoning ordinances,
regulations and restrictive covenants affecting the Premises as
well as all ecological, landmark, and other applicable laws and
regulations (including, without limitation, Gaming Laws),
noncompliance with which would, individually or in the
aggregate, materially adversely affect the ability of any of
Partnership and its Subsidiaries to operate those portions of
the Hotel owned by or under the control of Partnership or
would, individually or in the aggregate, materially adversely
affect the ability of any of Partnership and its Subsidiaries
to perform its obligations under the Loan Documents to which it
is a party; and all requirements for such use have been
satisfied. Those portions of the Hotel owned by or under the
control of Partnership are in compliance and will comply with
all applicable laws, ordinances, regulations, restrictive
covenants and agreements and requirements of Governmental
Authorities (including, without limitation, Gaming Laws, zoning
laws and environmental regulations), noncompliance with which
would, individually or in the aggregate, materially adversely
affect the ability of any of Partnership and its Subsidiaries
to complete or operate those portions of the Hotel owned by or
under the control of Partnership or would, individually or in
the aggregate, materially adversely affect the ability of any
of Partnership and its Subsidiaries to perform its obligations
under the Loan Documents to which it is a party. All
authorizations, plot plan approval, subdivision approval, sewer
permits and zoning variances, if any, building and other
material permits and Governmental Authorizations required by
any Governmental Authority for the use, occupancy and operation
of the Premises and/or those portions of the Hotel owned by or
under the control of Partnership for the purposes contemplated
herein have been obtained; and all requirements for such use
have been satisfied. There are no violations of any permits,
approvals, licenses or other requirements of any Governmental
Authority with respect to (a) those portions of the Hotel owned
by or under the control of Partnership or (b) the Premises, in
each case to the extent that any such violation could be
reasonably likely to result in a Material Adverse Effect.
5.19 Intangible Property.
Each of Partnership and its Subsidiaries is the sole
and exclusive owner or licensee, or has the right to use in the
conduct of its business as presently conducted, all trade
names, unregistered trademarks and service marks, brand names,
patents, registered and unregistered copyrights, registered
trademarks and service marks, and all applications for any of
the foregoing, and all permits, grants and licenses or other
rights with respect thereto, the absence of which would
materially adversely affect its business, operations,
properties or financial condition or the use, occupancy or
operation of those portions of the Hotel owned by or under the
control of Partnership. Neither Partnership nor its
Subsidiaries owns, or has applied for, any service marks and
registered trademarks except as set forth on Schedule 5.19.
None of Partnership and its Subsidiaries has been charged with
any material infringement of any intangible property of the
character described above or been notified or advised of any
material claim of any other Person relating to any of the
intangible property.
5.20 Rights to Hotel Agreements, Permits and
Licenses.
From and after the Closing Date, Partnership will be
the true owner of all rights in and to all existing agreements,
permits and licenses relating to the Hotel (other than rights
of third parties under leases and agreements permitted
hereunder), and will be the true owner of all rights in and to
all future agreements, permits and licenses relating to the
Hotel (other than rights of third parties under leases and
agreements permitted hereunder). Partnership's interest in all
such agreements, permits, and licenses will not be subject to
any matured claim (other than under the Loan Documents), setoff
or deduction other than in the ordinary course of business.
SECTION 6
PARTNERSHIP'S AFFIRMATIVE COVENANTS
Partnership covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until payment
in full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless
Lenders shall otherwise give prior written consent, Partnership
shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Partnership will maintain, and cause each of its
Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with
GAAP. Partnership will deliver to Agent and Lenders:
(i) Monthly Financials:
as soon as available and in any event within 45 days after
the end of each month ending after the Restatement Date,
(a) the balance sheet of Partnership as at the end of such
month and the related statements of income, partners'
equity and cash flows of Partnership for such month and
for the period from the beginning of the then current
Fiscal Year to the end of such month, setting forth in
each case in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the plan and financial
forecast for the current Fiscal Year delivered pursuant to
subsection 6.1(xiii), to the extent prepared on a monthly
basis, all in reasonable detail and certified by the chief
financial officer of Managing Partner on behalf of
Partnership that they fairly present the financial condi-
tion of Partnership as at the dates indicated and the
results of its operations and its cash flows for the
periods indicated, subject to changes resulting from audit
and normal year-end adjustments, and (b) a narrative
report, if any is prepared for presentation to senior
management, describing the operations of Partnership in
the form so prepared for such month and for the period
from the beginning of the then current Fiscal Year to the
end of such month;
(ii) Quarterly
Financials: as soon as available and in any event within
60 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year and, with respect to the
fourth Fiscal Quarter of each Fiscal Year, concurrently
with the delivery of financial statements pursuant to
subdivision (iii) below, (a) the balance sheet of
Partnership as at the end of such Fiscal Quarter and the
related statements of income, partners' equity and cash
flows of Partnership for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year
to the end of such Fiscal Quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the
corresponding figures from the plan and financial forecast
for the current Fiscal Year delivered pursuant to
subsection 6.1(xiii), all in reasonable detail and
certified by the chief financial officer of Managing
Partner on behalf of Partnership that they fairly present
the financial condition of Partnership as at the dates
indicated and the results of its operations and its cash
flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and
(b) a narrative report, if any is prepared for
presentation to senior management, describing the
operations of Partnership in the form so prepared for such
Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal
Quarter;
(iii) Year-End
Financials: as soon as available and in any event within
100 days after the end of each Fiscal Year, (a) the
balance sheet of Partnership as at the end of such Fiscal
Year and the related statements of income, partners'
equity and cash flows of Partnership for such Fiscal Year,
setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and,
when available, the corresponding figures from the plan
and financial forecast delivered pursuant to
subsection 6.1(xiii) for the Fiscal Year covered by such
financial statements, all in reasonable detail and certi-
fied by the chief financial officer of Managing Partner on
behalf of Partnership that they fairly present the finan-
cial condition of Partnership as at the dates indicated
and the results of its operations and its cash flows for
the periods indicated, (b) a narrative report, if any is
prepared for presentation to senior management, describing
the operations of Partnership in the form so prepared for
such Fiscal Year, and (c) in the case of such financial
statements, a report thereon of Arthur Andersen LLP or
other independent certified public accountants of recog-
nized national standing selected by Partnership and satis-
factory to Agent, which report shall be without
qualification as to the scope of the audit, shall express
no doubts about the ability of Partnership to continue as
a going concern, and shall state that financial statements
fairly present the financial position of Partnership as at
the dates indicated and the results of its operations and
its cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial
statements) and that the examination by such accountants
in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
(iv) Officers' and
Compliance Certificates: (a) together with each delivery
of financial statements of Partnership pursuant to
subdivisions (ii) and (iii) above, an Officers' Certifi-
cate of Partnership stating that the signers have reviewed
the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable
detail of the transactions and condition of Partnership
during the accounting period covered by such financial
statements and that such review has not disclosed the
existence during or at the end of such accounting period,
and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of
Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the
nature and period of existence thereof and what action
Partnership has taken, is taking and proposes to take with
respect thereto; and (b) together with each delivery of
financial statements of Partnership pursuant to
subdivision (ii) above, a Compliance Certificate
demonstrating in reasonable detail compliance during and
at the end of the applicable accounting periods with the
restrictions contained in Subsections 7.6 and 7.8;
(v) Reconciliation
Statements: if, as a result of any change in accounting
principles and policies from those used in the preparation
of the audited financial statements referred to in
subsection 5.3, the financial statements of Partnership
delivered pursuant to subdivisions (i), (ii), (iii) or
(xiii) of this subsection 6.1 will differ in any material
respect from the financial statements that would have been
delivered pursuant to such subdivisions had no such change
in accounting principles and policies been made, then
(a) together with the first delivery of financial
statements pursuant to subdivision (i), (ii), (iii) or
(xiii) of this subsection 6.1 following such change,
financial statements of Partnership for (y) the current
Fiscal Year to the effective date of such change and
(z) the two full Fiscal Years immediately preceding the
Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been
in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiii) of this subsection 6.1
following such change, a written statement of the chief
accounting officer or chief financial officer of Managing
Partner on behalf of Partnership setting forth the
differences which would have resulted if such financial
statements had been prepared without giving effect to such
change;
(vi) Accountants'
Certification: together with each delivery of financial
statements of Partnership pursuant to subdivision (iii)
above, a written statement by the independent certified
public accountants giving the report thereon (a) stating
that their audit has included a review of the terms of
this Agreement and the other Loan Documents as they relate
to accounting matters, (b) stating whether, in connection
with their audit, any condition or event that constitutes
an Event of Default or Potential Event of Default has come
to their attention and, if such a condition or event has
come to their attention, specifying the nature and period
of existence thereof; provided that such accountants shall
not be liable by reason of any failure to obtain knowledge
of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit
and their report may state that their audit was not
directed toward obtaining such knowledge, and (c) stating
that based on their audit nothing has come to their
attention that causes them to believe either or both that
the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not
correct or that the matters set forth in the Compliance
Certificates delivered therewith pursuant to clause (b) of
subdivision (iv) above for the applicable Fiscal Year are
not stated in accordance with the terms of this Agreement;
(vii) Accountants'
Reports: promptly upon receipt thereof, but in no case
later than concurrently with each delivery of financial
statements of Partnership pursuant to subdivisions (ii)
and (iii) above (unless restricted by applicable
professional standards), copies of all reports submitted
to Partnership by independent certified public accountants
in connection with each annual, interim or special audit
of the financial statements of Partnership made by such
accountants, including, without limitation, any comment
letter submitted by such accountants to management in
connection with their annual audit;
(viii) SEC Filings and
Press Releases: promptly upon their becoming available,
and, with respect to (a) and (b) below, at and after the
time Partnership or a Subsidiary of Partnership becomes
subject to the reporting requirements under Section 13 or
Section 15(d) of the Securities Exchange Act of 1934,
copies of (a) all financial statements, reports, notices
and proxy statements sent or made available generally by
Partnership to its security holders or by any Subsidiary
of Partnership to its security holders other than
Partnership or another Subsidiary of Partnership, (b) all
regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Partnership or any of
Partnership's Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all
press releases and other statements made available
generally by or on behalf of Partnership or any of
Partnership's Subsidiaries to the public concerning
material developments in the business of Partnership or
any of Partnership's Subsidiaries;
(ix) Events of Default,
etc.: promptly upon any Senior Officer of any General
Partner or any Executive Committee member obtaining
knowledge, but in no case later than concurrently with
each delivery of financial statements of Partnership
pursuant to subdivisions (ii) and (iii) above, (a) of any
condition or event that constitutes an Event of Default or
Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Agent) or taken
any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person
has given any notice to Partnership or any of its
Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred
to in subsection 8.2, (c) of the occurrence of any event
or change that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect, or
(d) that any Gaming Board has indicated its intent to
consider or act upon a License Revocation or a fine or
penalty of $1,000,000 or more with respect to Partnership
or any of its Subsidiaries, an Officers' Certificate
specifying the nature and period of existence of such
condition, event or change, or specifying the notice given
or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Partnership
has taken, is taking and proposes to take with respect
thereto;
(x) Litigation or Other
Proceedings: (a) promptly upon any officer of Partnership
obtaining knowledge of, but in no case later than
concurrently with each delivery of financial statements of
Partnership pursuant to subdivisions (ii) and (iii) above,
(X) the institution of any action, suit, proceeding
(whether administrative, judicial or otherwise),
governmental investigation or arbitration against or
affecting Partnership or any of its Subsidiaries or any
property of Partnership or any of its Subsidiaries
(collectively, "Proceedings") not previously disclosed in
writing by Partnership to Lenders or (Y) any material
development in any Proceeding that, in any case:
(1) if adversely determined, has a
reasonable possibility of giving rise to a Material
Adverse Effect; or
(2) seeks to enjoin or otherwise prevent
the consummation of, or to recover any damages or
obtain relief as a result of, the transactions
contemplated hereby;
written notice thereof together with such other
information as may be reasonably available to Partnership
to enable Lenders and their counsel to evaluate such
matters; and (b) together with each delivery of financial
statements pursuant to subdivision (ii) above, a schedule
of all Proceedings involving an alleged liability of, or
claims against or affecting, Partnership or any of its
Subsidiaries equal to or greater than $5,000,000, and
promptly after request by Agent such other information as
may be reasonably requested by Agent to enable Agent and
its counsel to evaluate any of such Proceedings;
(xi) ERISA Events:
promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event with respect to
Partnership or any of its ERISA Affiliates, but in no case
later than concurrently with each delivery of financial
statements of Partnership pursuant to subdivisions (ii)
and (iii) above, a written notice specifying the nature
thereof, what action Partnership or any of its ERISA
Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto;
(xii) ERISA Notices:
together with each delivery of financial statements of
Partnership pursuant to subdivision (ii) above, copies of
(a) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by Partnership or any of
its ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan since the last such
delivery of financial statements; (b) all notices received
by Partnership or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event since
the last such delivery of financial statements; and
(c) such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Agent
shall reasonably request;
(xiii) Financial Plans:
concurrent with delivery thereof pursuant to
subsection 5.2 (or any successor provision) of the Joint
Venture Agreement, and in any event no later than 90 days
after the end of each Fiscal Year, a copy of the "Annual
Business Plan" (as such term is defined in subsection 5.2
(or any successor provision) of the Joint Venture
Agreement) as approved by the Executive Committee pursuant
to such subsection 5.2;
(xiv) Insurance: as soon
as practicable and in any event no later than 90 days
after the end of each Fiscal Year, a report in form and
substance satisfactory to Agent outlining all material
insurance coverage maintained as of the date of such
report by Partnership and its Subsidiaries and all
material insurance coverage planned to be maintained by
Partnership and its Subsidiaries in the immediately
succeeding Fiscal Year to the extent not included in the
information delivered pursuant to subsection 6.1(xiii);
(xv) Environmental
Audits and Reports: promptly upon receipt thereof, but in
no case later than concurrently with each delivery of
financial statements of Partnership pursuant to
subdivisions (ii) and (iii) above, copies of all environ-
mental audits and reports, whether prepared by personnel
of Partnership or its Subsidiaries or by independent
consultants, with respect to significant environmental
matters at any Facility, that could result in a Material
Adverse Effect;
(xvi) Certain Changes
Within Partnership; Events of Bankruptcy: with reasonable
promptness, but in no case later than concurrently with
each delivery of financial statements of Partnership
pursuant to Subdivision (ii) and (iii) above, written
notice of (a) any change or proposed change in Managing
Partner or any change in "General Manager" (as such term
is used in the Joint Venture Agreement) or (b) the
occurrence of any event or action that, with the passage
of time, would become an "Event of Bankruptcy" (as such
term is defined in subsection 14.1 of the Joint Venture
Agreement as in effect as of the Restatement Date);
(xvii) Formation of
Subsidiary; Circus Loan Agreement: together with each
delivery of financial statements of Partnership pursuant
to subdivision (ii) and (iii) above, (a) a written notice
with respect to any Person that has become a Subsidiary of
Partnership since the last such delivery of financial
statements, setting forth (1) the date on which such
Person became a Subsidiary of Partnership and (2) all of
the data required to be set forth in Schedule 5.1 with
respect to all Subsidiaries of Partnership (it being
understood that such written notice shall be deemed to
supplement Schedule 5.1 for all purposes of this
Agreement) and (b) copies of any amendment, supplement or
modification of the Circus Loan Agreement since the
Restatement Date that have not previously been delivered;
(xviii) Other Information:
with reasonable promptness, such other information and
data with respect to Partnership or any of its Subsidi-
aries as from time to time may be reasonably requested by
any Lender; and
(xix) Regulation 6.090
Reports: Promptly after the same are available, but in no
case later than concurrently with each delivery of the
financial statements of Partnership pursuant to
subdivisions (ii) and (iii) above, copies of the Nevada
"Regulation 6.090 Report" and "6-A Report" and copies of
any written communication to Partnership or any of its
Subsidiaries from any Gaming Board advising it of a
violation of or non-compliance with, any Gaming Law by
Partnership or any of its Subsidiaries.
6.2 Partnership or Corporate Existence, etc.
Except as permitted under subsection 7.7, Partnership
will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its partnership or
corporate existence, as applicable, and all rights and
franchises material to its business.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Partnership will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties
or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services,
materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of
its properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no
such charge or claim need be paid if being contested in good
faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. Partnership will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than
Partnership or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
Partnership will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear
excepted, all material properties used or owned by Partnership
and useful in the business of Partnership and its Subsidiaries
(including, without limitation, maintenance of Intellectual
Property) and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof and
will comply fully with the terms and conditions of the
subsection 4 of the Deed of Trust. Partnership will maintain
or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business
and the properties and businesses of its Subsidiaries against
loss or damage of the kinds customarily carried or maintained
under similar circumstances by Persons of established
reputation engaged in similar businesses and will otherwise
comply fully with the terms and conditions of subsection 6 of
the Deed of Trust. Each such policy of insurance shall name
Agent for the benefit of Lenders as the loss payee thereunder
for amounts in excess of $1,000,000 and shall provide for at
least 30 days prior written notice to Agent of any modification
or cancellation of such policy.
6.5 Inspection; Lender Meeting.
To the extent not prohibited by applicable law,
Partnership shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Partnership or
any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public
accountants (provided that Partnership may, if it so chooses,
be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested.
Without in any way limiting the foregoing, Partnership will,
upon the request of Agent or Lenders, participate in a meeting
of Agent and Lenders once during each Fiscal Year to be held at
Partnership's principal offices (or such other location as may
be agreed to by Partnership and Agent) at such time as may be
agreed to by Partnership and Agent.
6.6 Compliance with Laws, etc.
Partnership shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental
authority, including, without limitation, all Gaming Laws, and
to obtain and keep in full force and effect each permit,
license, consent, or approval required to permit the operation
of the Hotel, except where the failure to be in compliance or
to obtain and keep in full force and effect could not
reasonably be expected to cause a Material Adverse Effect.
Partnership shall and shall cause each of its Subsidiaries to
comply with the requirements of all Gaming Laws applicable to
such Person.
6.7 Environmental Disclosure and Inspection.
A. Partnership shall, and shall cause each of its
Subsidiaries to, exercise due diligence in order to comply and
use its best efforts to cause (i) all tenants under any leases
or occupancy agreements affecting any portion of the Facilities
and (ii) all other Persons on or occupying such property, to
comply with all Environmental Laws.
B. Partnership agrees that Agent may, from time to time
and in its sole and absolute discretion, retain, at
Partnership's expense, an independent professional consultant
to review any report relating to Hazardous Material prepared by
or for Partnership and, whether or not any such report exists,
upon reasonable notice to Partnership, to conduct its own
investigation of any Facility currently or previously owned,
leased, operated or used by Partnership or any of its
Subsidiaries, and Partnership agrees to use its best efforts to
obtain permission for Agent's professional consultant to
conduct its own investigation of any Facility previously owned,
leased, operated or used by Partnership or any of its
Subsidiaries. Partnership hereby grants to Agent and its
agents, employees, consultants and contractors the right to
enter into or on to the Facilities currently owned, leased,
operated or used by Partnership or any of its Subsidiaries to
perform such tests on such property as are reasonably necessary
to conduct such a review and/or investigation. Any such
investigation of any Facility shall be conducted, unless
otherwise agreed to by Partnership and Agent, during normal
business hours and, to the extent reasonably practicable, shall
be conducted with prior notice and so as not to interfere with
the ongoing operations at any such Facility or to cause any
damage or loss to any property at such Facility. Partnership
and Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Agent pursuant to
this subsection 6.7B will be obtained and shall be used by
Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect
Lenders' security interests, if any, created by the Loan
Documents. Agent agrees to deliver a copy of any such report
to Partnership promptly after its completion, and Partnership
acknowledges and agrees that (i) it will indemnify and hold
harmless Agent and each Lender from any costs, losses or
liabilities relating to Partnership's use of or reliance on any
such report, (ii) neither Agent nor any Lender makes any
representation or warranty with respect to any such report, and
(iii) by delivering such report to Partnership, neither Agent
nor any Lender is requiring or recommending the implementation
of any suggestions or recommendations contained in any such
report; provided, however, that Agent shall not be required by
this subsection 6.7B to deliver any such report to Partnership
that is protected by the attorney-client privilege or other
privilege if and to the extent that to do so could reasonably
be expected to result in the waiver or loss of that privilege.
C. Partnership shall promptly advise Lenders in writing
and in reasonable detail of (i) any Release of any Hazardous
Material required to be reported to any federal, state or local
governmental or regulatory agency under any applicable
Environmental Laws, (ii) any and all written communications
with respect to any Environmental Claims that have a reasonable
possibility of giving rise to a Material Adverse Effect or with
respect to any Release of Hazardous Material required to be
reported to any federal, state or local governmental or
regulatory agency, (provided, however, that Partnership shall
not be required by this subsection 6.7C to advise Lenders of
the contents of any written communication that is protected by
the attorney-client or other privilege if and to the extent
that to do so could reasonably be expected to result in the
waiver or loss of that privilege), (iii) any remedial action
taken by Partnership or any other Person in response to (x) any
Hazardous Material on, under or about any Facility, the
existence of which has a reasonable possibility of resulting in
an Environmental Claim having a Material Adverse Effect, or
(y) any Environmental Claim that reasonably could have a
Material Adverse Effect, (iv) Partnership's discovery of any
occurrence or condition on any real property adjoining or in
the vicinity of any Facility that reasonably could cause such
Facility or any part thereof to be subject to (x) any
restrictions on the ownership or transferability thereof or
(y) any material restriction on the occupancy or use thereof
under any Environmental Laws which restriction on occupancy or
use could reasonably be expected to result in a Material
Adverse Effect, and (v) any request for information from any
governmental agency that indicates such agency is investigating
whether Partnership or any of its Subsidiaries may be
potentially responsible for a Release of Hazardous Material.
D. Partnership shall promptly notify Lenders of (i) any
proposed acquisition of stock, assets, or property by
Partnership or any of its Subsidiaries that could reasonably be
expected to expose Partnership or any of its Subsidiaries to,
or result in, Environmental Claims that could have a Material
Adverse Effect or that could reasonably be expected to have a
material adverse effect on any Governmental Authorization then
held by Partnership or any of its Subsidiaries and (ii) any
action that Partnership or any of its Subsidiaries proposes to
take to commence manufacturing, industrial or other operations
that reasonably could be expected to subject Partnership or any
of its Subsidiaries to laws, rules or regulations (including,
without limitation, laws, rules and regulations requiring
additional environmental permits or licenses) not theretofore
applicable to the Hotel, Facilities or operations of
Partnership or any of its Subsidiaries.
E. Partnership shall, at its own expense, provide copies
of such documents or information as Agent may reasonably
request in relation to any matters disclosed pursuant to this
subsection 6.7 (provided, however, that Partnership shall not
be required by the provisions of this subsection 6.7E to
provide documents or information that is protected by the
attorney-client or other privilege if and to the extent that to
do so could reasonably be expected to result in the waiver or
loss of that privilege).
6.8 Partnership's Remedial Action Regarding Hazardous
Material.
Partnership shall promptly take, and shall cause each
of its Subsidiaries promptly to take, any and all necessary
remedial action in connection with the presence, storage, use,
disposal, transportation or Release of any Hazardous Material
on, under or about any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations.
In the event Partnership or any of its Subsidiaries undertakes
any remedial action with respect to any Hazardous Material on,
under or about any Facility, Partnership or such Subsidiary
shall conduct and complete such remedial action in compliance
with all applicable Environmental Laws and other applicable
legal requirements (including lawful policies, orders and
directives of federal, state and local governmental
authorities).
SECTION 7
PARTNERSHIP'S NEGATIVE COVENANTS
Partnership covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until payment
in full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless
Lenders shall otherwise give prior written consent, Partnership
shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 Indebtedness.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume
or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except
that Partnership may become and remain liable with respect to:
(i) the Obligations;
(ii) Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Indebtedness in respect of Capital Leases in an aggregate
principal amount not to exceed $15,000,000 at any one time
outstanding; provided that such Capital Leases are not
prohibited under the terms of subsection 7.8; provided,
further that all such Indebtedness incurred pursuant to in
this clause (iii) of this subsection 7.1 shall reduce the
Other Permitted Indebtedness permitted in clause (vi) of
this subsection 7.1;
(iv) Indebtedness to any of its wholly-owned Subsidiaries, and any
wholly-owned Subsidiary of Partnership may become and
remain liable with respect to Indebtedness to Partnership
incurred in the ordinary course of the business of
Partnership and that Subsidiary; provided that (a) all
such intercompany Indebtedness shall be evidenced by
promissory notes, (b) all such intercompany Indebtedness
owed by Partnership to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of
the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination
agreement, and (c) any payment by any Subsidiary of
Partnership under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by such Subsidiary to
Partnership or to any of its Subsidiaries for whose
benefit such payment is made;
(v) the General Partner Subordinated Debt in the aggregate principal
amount of $35,068,696 plus the amount of General Partner
Subordinated Debt required to be contributed from time to
time to Partnership in accordance with the terms of the
Make-Well Agreement; and
(vi) other Indebtedness
in an aggregate principal amount not to exceed $15,000,000
at any time outstanding minus the amount of Indebtedness
outstanding under clause (iii) above.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Partnership shall not, and
shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien
on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or
accounts receivable) of Partnership or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or
profits therefrom, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, except:
(i) Permitted
Encumbrances;
(ii) Liens described in
Schedule 7.2;
(iii) Liens granted
pursuant to the Collateral Documents;
(iv) Liens securing
Indebtedness permitted under subsection 7.1(iii); provided
that such Liens relate solely to the property financed
with such Indebtedness;
(v) Liens securing
Indebtedness permitted under subsection 7.1(vi); provided
that such Liens relate solely to the property financed
with such Indebtedness;
(vi) Liens created by or
resulting from litigation or a legal proceeding against
Partnership or any of its Subsidiaries or both in the
ordinary course of business which litigation or legal
proceeding currently is being contested in good faith by
appropriate proceedings and which litigation or legal
proceeding does not result in an Event of Default under
subsection 8.8; provided that such Lien shall be bonded or
foreclosure of such Lien stayed by order of a court of
competent jurisdiction and; provided further, that any
such Lien shall cease to be a permitted exception to this
subsection 7.2 if any attempt to foreclose thereon could
reasonably be expected to occur within the next 60 days;
(vii) Liens granted to
any Lender that becomes a counterparty to any Contingent
Obligation permitted under subsection 7.4(ii) to the
extent of such Contingent Obligation; provided that such
Liens shall rank pari passu with the Liens that secure the
Obligations; provided further that prior to the incurrence
of such Indebtedness creditors holding such Liens shall
enter into intercreditor agreements pursuant to which such
creditors agree that their right with respect to the
Collateral shall be limited to the right to receive a
share of the proceeds of the Collateral and that Lenders
shall have the right to make all determinations with
respect to the exercise of remedies with respect to the
Collateral until payment in full of all of the Loans and
other Obligations and the cancellation or expiration of
all Letters of Credit; and
(viii) Liens securing the
General Partner Subordinated Debt pursuant to the
Subordinated Loan Documents.
B. Equitable Lien in Favor of Lenders. If Partnership or
any of its Subsidiaries shall create or assume any Lien upon
any of its properties or assets, whether now owned or hereafter
acquired, other than Liens excepted by the provisions of
subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured;
provided that, notwithstanding the foregoing, this covenant
shall not be construed as a consent by Lenders to the creation
or assumption of any such Lien not permitted by the provisions
of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to
(i) specific property encumbered pursuant to
subsection 7.2A(iv) or (v) to secure payment of particular
Indebtedness, (ii) specific property to be sold pursuant to an
executed agreement with respect to an Asset Sale or (iii) a
Lien created in favor of Agent pursuant to the Collateral
Documents, neither Partnership nor any of its Subsidiaries
shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its respective properties or
assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to
Partnership or Other Subsidiaries. Except as provided herein,
Partnership will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such
Subsidiary's capital stock owned by Partnership or any other
Subsidiary of Partnership, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Partnership or any
other Subsidiary of Partnership, (iii) make loans or advances
to Partnership or any other Subsidiary of Partnership, or
(iv) transfer any of its property or assets to Partnership or
any other Subsidiary of Partnership.
7.3 Investments.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, except:
(i) Partnership and its
Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Partnership and its
wholly-owned Subsidiaries may create, and make and own
Investments in, wholly-owned Subsidiaries engaged in
operations reasonably necessary for the business of
Partnership with respect to the Hotel; provided, however,
that (a) the aggregate of all such Investments (without
duplication in the case of Investments through multiple
tiers of Subsidiaries) may not exceed $10,000,000, (b) no
such Subsidiary may (1) create, incur, assume or
guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (other
than Indebtedness permitted under clause (iv) of
subsection 7.1), (2) create, incur, assume or permit to
exist any Lien on or with respect to any property or asset
of any kind of such Subsidiary (other than Permitted
Encumbrances and Liens granted pursuant to the Collateral
Documents), or (3) create or become or remain liable with
respect to any Contingent Obligation (other than
Contingent Obligations under any guarantee of the
Obligations);
(iii) Partnership and its
Subsidiaries may make Capital Expenditures permitted by
subsection 7.8; and
(iv) Partnership and its
Subsidiaries may make advances to customers in the
ordinary course of business substantially consistent with
the practice of other gaming institutions in connection
with their gaming operations in the State of Nevada.
7.4 Contingent Obligations.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or
remain liable with respect to any Contingent Obligation, except
that Partnership may become and remain liable with respect to:
(i) Contingent Obligations in respect of Letters of Credit;
(ii) Interest Rate
Agreements; provided that the aggregate notional amount
with respect to such Interest Rate Obligations shall not
exceed at any time the aggregate amount, without
duplication, of the Commitments and the Loans then in
effect or outstanding;
(iii) Contingent Obligations pursuant to indemnity obligations with
respect to taxes of Partnership, the Environmental
Indemnity, workers compensation for Partnership's
employees, a title policy and other indemnity obligations
incurred in the ordinary course of business.
7.5 Restricted Junior Payments.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order or pay
any sum for any Restricted Junior Payment; provided that so
long as no Event of Default or Potential Event of Default shall
have occurred and be continuing or occurs as a result thereof
Partnership may make the following Restricted Junior Payments:
(i) Scheduled principal
and interest payments made with respect to General Partner
Subordinated Debt in an amount which does not exceed,
during any Fiscal Quarter, Available Cash Flow during the
immediately preceding Fiscal Quarter; provided that (a)
any such interest payments are paid at a rate less than or
equal to 10% per annum, (b) any such principal payments
shall be in quarterly installments which are not in excess
of the amount required to amortize the General Partner
Subordinated Debt during a period of ten years, and (c) no
such principal payments shall be made if the Make-Well
Leverage Ratio (as of the then most recent Fiscal Quarter
and on a pro forma basis giving effect to such payment)
would be in excess of 4.75:1.00;
(ii) Tax Distributions to General Partners in proportion to their
Percentage Interests;
(iii) In addition to the foregoing, during the Make-Well Period,
Other
Partnership Distributions which do not exceed 45% of
Available Cash Flow for the period beginning with the
first full fiscal quarter after the Restatement Date and
ending with the then most recently ended fiscal quarter
(calculated without reduction for such Other Partnership
Distribution), provided that no such Partnership
Distributions shall be made if the Make-Well Leverage
Ratio (as of the then most recent Fiscal Quarter and on a
pro forma basis giving effect to such payment) would be in
excess of 4.75:1.00;
(iv) In addition to the foregoing, following
the Make-Well Period, Other Partnership Distributions
which do not exceed 25% of Available Cash Flow for the
period beginning with the first day of the fiscal quarter
during which the Make-Well Period ended and ending with
the then most recently ended fiscal quarter (calculated
without reduction for such Other Partnership
Distribution);
(v) In addition to the Restricted Junior
Payments described above, Restricted Junior Payments in an
aggregate amount not to exceed $15,000,000 made
concurrently with the incurrence of Capital Lease
obligations in the same amount or more pursuant to Section
7.1(iii); and
(vi) In addition to the Restricted Junior
Payments described above, Restricted Junior Payments made
to Circus to concurrently and permanently reduce the
General Partner Subordinated Debt owed to Circus in an
aggregate amount not to exceed $1,000,000, which payments
do not exceed the cash proceeds received by Partnership
from settlements of construction claims entered into with
contractors and subcontractors for the Hotel following the
Restatement Date.
Neither Partnership nor any of its Subsidiaries may directly or
indirectly declare, order, pay or make, or set apart any sum or
property for, any Restricted Junior Payment or agree to do so
except as permitted by this subsection 7.5.
7.6 Financial Covenants.
A. Minimum Coverage Ratio. Partnership shall not permit
the Coverage Ratio:
(a) As of the last day of any Fiscal Quarter which
ends during the Make-Well Period, to be less than
1.05:1.00, provided that Partnership shall be deemed not
to be in default under this subsection 7.6A if Circus or
its Affiliates make a timely Additional Contribution (as
that term is defined in the Make-Well Agreement) pursuant
to the terms of the Make-Well Agreement; or
(b) As of the last day of any Fiscal Quarter which
ends after the Make-Well Period, to be less than
1.25:1.00.
B. Maximum Leverage Ratios. Partnership shall not permit
the Leverage Ratio as of the last day of any Fiscal Quarter
described below to exceed the ratio set forth opposite that
Fiscal Quarter:
Quarters Ending Maximum Leverage Ratio
Restatement Date through
December 31, 1996 5.50:1.00
March 31, 1997 5.25:1.00
June 30, 1997 and
September 30, 1997 5.00:1.00
December 31, 1997 4.75:1.00
March 31, 1998 and
June 30, 1998 4.50:1.00
September 30, 1998 and
December 31, 1998 4.25:1.00
March 31, 1999 through
December 31, 1999 4.00:1.00
March 31, 2000 through
September 30, 2000 3.50:1.00
December 31, 2000 through
September 30, 2001 3.00:1.00
Thereafter through the Commitment
Termination Date 2.50:1.00
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions.
Partnership shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, partnership, capital or
legal structure of Partnership or any of its Subsidiaries, or
enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, sublease,
transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business,
property or fixed assets, whether now owned or hereafter
acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person
or any division or line of business of any Person, except:
(i) any Subsidiary of
Partnership may be merged with or into Partnership or any
wholly-owned Subsidiary of Partnership, or be liquidated,
wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction
or a series of transactions, to Partnership or any wholly-
owned Subsidiary of Partnership; provided that, in the
case of such a merger, Partnership or such wholly-owned
Subsidiary shall be the continuing or surviving Person;
(ii) Partnership and its
Subsidiaries may make Capital Expenditures permitted under
subsection 7.8;
(iii) Partnership and its
Subsidiaries may sell or otherwise dispose of assets in
transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be
in an amount at least equal to the fair market value
thereof;
(iv) Partnership and its
Subsidiaries may, in the ordinary course of business, sell
for cash, equipment that is obsolete or in need of
replacement and no longer used or useful in its business;
(v) Partnership may
dispose of personal property to customers or potential
customers in connection with promotions in the ordinary
course of business substantially consistent with the
practice of other gaming institutions in connection with
their gaming operations in the State of Nevada; and
(vi) Partnership and its
wholly-owned Subsidiaries may make Investments permitted
by subsection 7.3(ii).
7.8 Capital Expenditures. Partnership shall not, and shall not
permit its Subsidiaries to, make or incur Capital Expenditures,
in any calendar year indicated below, in an aggregate amount in
excess of the corresponding amount (the "Maximum CapEx Amount")
set forth below opposite such calendar year.
Maximum
Calendar Year Capital Expenditures
Calendar 1996 $5,000,000
Calendar 1997 5,000,000
Each calendar year thereafter 7,000,000;
provided that if any portion of the Maximum CapEx Amount for
any calendar year (the "Reference Period") has not been
incurred within such Reference Period (the unutilized portion
of such Maximum CapEx Amount being referred to as the
"Unutilized Amount"), Partnership and its Subsidiaries may, in
the calendar year immediately following the Reference Period,
make additional Capital Expenditures in an amount not to exceed
the lesser of (i) the Unutilized Amount and (ii) an amount that
will not cause the aggregate Capital Expenditures for such
calendar year to exceed $10,000,000. In determining any amount
pursuant to the foregoing clauses (i) or (ii) permitted to be
carried forward as Capital Expenditures to be made in a
succeeding calendar year, such amount shall be determined
solely on the basis of the Maximum CapEx Amount permitted for
that Reference Period and shall not include any Unutilized
Amount from any prior period. Notwithstanding the foregoing,
in addition to such Maximum CapEx Amount and additional Capital
Expenditures, Partnership and its Subsidiaries may make
additional Capital Expenditures of up to $7,500,000 for
purposes of initial construction of (but not subsequent
improvement of) a restaurant, retail or entertainment
attraction to be constructed on the mezzanine level of the
Hotel.
7.9 Sales and Lease-Backs.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect
to any lease, whether an Operating Lease or a Capital Lease, of
any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) which Partnership or any of
its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than Partnership or any of
its Subsidiaries) or (ii) which Partnership or any of its
Subsidiaries intends to use for substantially the same purpose
as any other property which has been or is to be sold or
transferred by Partnership or any of its Subsidiaries to any
Person (other than Partnership or any of its Subsidiaries) in
connection with such lease, other than as contemplated by
subsections 7.1(iii) and 7.1(vi).
7.10 Sale or Discount of Receivables.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value
thereof, any of its notes or accounts receivable (other than
settlements in the ordinary course of business and
substantially consistent with the practice at other gaming
institutions in connection with their gaming operations in the
State of Nevada with payors of such notes or accounts
receivable reached to facilitate collection from such payor of
such notes or accounts receivable).
7.11 Transactions with Shareholders and Affiliates.
Partnership shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any
class of equity Securities of Partnership or with any Affiliate
of Partnership or of any such holder; provided that the
foregoing restriction shall not apply to (i) any transaction
between Partnership and any of its wholly-owned Subsidiaries or
between any of its wholly-owned Subsidiaries, (ii) reasonable
and customary management fees and reimbursements of expenses
paid to Managing Partner pursuant to the terms of the Joint
Venture Agreement, (iii) other payments permitted by the Joint
Venture Agreement as in effect at the Restatement Date and not
otherwise prohibited or restricted by the terms of this
Agreement, (iv) the General Partner Subordinated Debt, (v) the
Make-Well Agreement, or (vi) transactions between Partnership
and its Affiliates necessary to the operation of the Hotel that
the Executive Committee has determined in good faith are
conducted on terms no less favorable than could be obtained
from a third party in an arm's-length transaction.
7.12 Disposal of Subsidiary Stock.
Partnership shall not:
(i) directly or
indirectly sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify
directors if required by applicable law; or
(ii) permit any of its
Subsidiaries directly or indirectly to sell, assign,
pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its
Subsidiaries (including such Subsidiary), except to
Partnership, another Subsidiary of Partnership, or to
qualify directors if required by applicable law.
7.13 Conduct of Business.
From and after the Restatement Date, Partnership shall
not, and shall not permit any of its Subsidiaries to, engage in
any business other than (i) the operation of the hotel and
casino business of the Hotel and other businesses reasonably
incidental thereto and located on or adjacent to the Premises,
and (ii) such other lines of business as may be consented to by
Lenders.
7.14 Amendments of Related Documents.
A. Partnership shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any
Subordinated Indebtedness, or make any payment consistent with
an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates
upon which payments of principal or interest are due thereon,
change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of
default), change the redemption, prepayment or defeasance
provisions thereof, change the subordination provisions thereof
(or of any guaranty thereof), or change any collateral therefor
(other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the
obligor thereunder or to confer any additional rights on the
holders of such Subordinated Indebtedness (or a trustee or
other representative on their behalf) which would be materially
adverse to Partnership or adverse to Lenders.
B. Partnership shall not amend or otherwise change the
terms of the Joint Venture Agreement if the effect of such
amendment or change, together with all other amendments or
changes made, is to increase the obligations of the Partnership
thereunder or to confer any additional rights on the other
parties thereto that in either case would be materially adverse
to Partnership or adverse to Lenders.
7.15 Fiscal Year.
Partnership shall not change its Fiscal Year-end from
December 31 without giving notice to Agent at least 30 days in
advance of such change.
7.16 Transfer of Partnership Interests.
No General Partner shall transfer all or any portion
of its interest in Partnership or any rights therein except as
permitted pursuant to subsection 12.4 of the Joint Venture
Agreement as in effect as of the Restatement Date; provided
that the provisions of this subsection shall not limit the
operation of subsection 8.12.
SECTION 8
EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur:
8.1 Failure to Make Payments When Due.
(a) Failure by Partnership to pay any
installment of principal of any Loan when due, whether at
stated maturity, by acceleration, by notice of voluntary
prepayment (unless such notice is revoked by Partnership and
would not result in the incurrence of any costs by Agent or any
Lender or, if incurred, such costs are reimbursed by
Partnership) by mandatory prepayment or otherwise;
(b) Failure by Partnership to pay when due any
amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or
(c) Failure by Partnership to pay any interest
on any Loan or any fee or any other amount due under this
Agreement or the other Loan Documents within five days after
the date due; or
8.2 Default in Other Agreements.
A. Partnership's Agreements.
(i) Failure of Partnership or any of its
Subsidiaries to pay when due (a) any principal of or
interest on any Indebtedness (other than Indebtedness
referred to in subsection 8.1) in an individual principal
amount of $2,500,000 or more or any items of Indebtedness
with an aggregate principal amount of $5,000,000 or more
or (b) any Contingent Obligation in an individual
principal amount of $2,500,000 or more or any Contingent
Obligations with an aggregate principal amount of
$5,000,000 or more, in each case beyond the end of any
grace period provided therefor; or (ii) breach or default
by Partnership or any of its Subsidiaries with respect to
any other material term of (a) any evidence of any
Indebtedness in an individual principal amount of
$2,500,000 or more or any items of Indebtedness with an
aggregate principal amount of $5,000,000 or more or any
Contingent Obligation in an individual principal amount of
$2,500,000 or more or any Contingent Obligations with an
aggregate amount of $5,000,000 or more or (b) any loan
agreement, mortgage, indenture or other agreement relating
to such Indebtedness or Contingent Obligations(s), if the
effect of such breach or default is to cause, or to permit
the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or
holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable
prior to its stated maturity or the stated maturity or any
underlying obligation, as the case may be (upon the giving
or receiving of notice, lapse of time, both, or
otherwise); or
B. Circus Loan Agreement.
If the Make-Well Agreement is then in effect, the
occurrence of (i) any default (or in the case of
amendment, supplementation, other modification or
termination of the Circus Loan Agreement after the
Restatement Date, the occurrence of any event that would
have been a default had such amendment, supplementation,
modification or termination not occurred) under
subsections 6.3, 9.1(a), 9.1(b), 9.1(c), 9.1(g), 9.1(k) or
9.1(o) of the Circus Loan Agreement, whether or not such
default is later cured or waived or (ii) any default under
the Circus Loan Agreement if, as a result thereof, the
lenders thereunder elect the remedies described in
subsection 9.2(a)(2) thereof.
8.3 Breach of Certain Covenants.
Failure of Partnership or its Subsidiaries to perform
or comply with any term or condition contained in
subsection 2.4A, 2.4B(iii), 2.5, 6.1(ix), 6.2, 6.6 or Section 7
of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other
statement made by any Loan Party or by any of Partnership
Parents in any Loan Document or in any statement or certificate
at any time given by any of them in writing pursuant hereto or
thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party or Circus or Eldorado Hotel shall
default in the performance of or compliance with any term
contained in this Agreement or any of the other Loan Documents
to be complied with by such Person, other than any such term
referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 15 days
after receipt by Partnership of notice from Agent or any Lender
of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of any Loan
Party in an involuntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now
or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be
commenced against any Loan Party under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Loan Party, or over all
or a substantial part of its property, shall have been entered;
or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of any Loan Party
for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued
against any substantial part of the property of any Loan Party,
and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Any Loan Party shall have an order for
relief entered with respect to it or commence a voluntary case
under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in
an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its
property; or any Loan Party shall make any assignment for the
benefit of creditors; or (ii) any Loan Party shall be unable,
or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the
Board of Directors of any Loan Party (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above or
this clause (ii); or
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount
in excess of $2,500,000 or (ii) in the aggregate at any time an
amount in excess of $5,000,000 (in either case not adequately
covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered
or filed against any Loan Party or any of their respective
assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days (or in any event later than
five days prior to the date of any proposed sale thereunder);
or
8.9 Dissolution.
(i) Any order, judgment
or decree shall be entered against any Loan Party
decreeing the dissolution or split up of such Loan Party
and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
(ii) the occurrence of
any "Liquidating Event" (as such term is defined in
subsection 13.1 (or any successor provision) of the Joint
Venture Agreement).
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably
be expected to result in liability of Partnership or any of its
ERISA Affiliates in excess of $5,000,000 during the term of
this Agreement; or there shall exist an amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans
sponsored by Partnership or any of its ERISA Affiliates
(excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which
exceeds $5,000,000; or
8.11 Material Adverse Effect.
Any event or change shall occur that has caused or
evidences, either in any case or in the aggregate, a Material
Adverse Effect; or
8.12 Change in Control.
General Partners or their Affiliates on the
Restatement Date shall cease to beneficially own and control
all of the partnership interests in Partnership or Circus and
its Affiliates shall cease to beneficially own and control at
least 50% of the partnership interests in the Partnership; or
8.13 Invalidity of Environmental Indemnities or
Guaranties.
Any Environmental Indemnity or any guaranty of the
Obligations, including, without limitation, the Make-Well
Agreement for any reason, other than the satisfaction in full
of all Obligations, ceases to be in full force and effect or is
declared to be null and void, or any guarantor or indemnitor,
including Circus and Eldorado Hotel, denies that it has any
further liability, including, without limitation, with respect
to future advances by Lenders, under any indemnity or guaranty
or under any make-well agreement, including the Make-Well
Agreement, or under any Environmental Indemnity or gives notice
to such effect, in each case, to the extent it relates to the
Obligations; or
8.14 Impairment of Collateral.
(A) A judgment creditor of any Loan Party or any of
their respective Subsidiaries shall obtain possession of any
material portion of the Collateral under the Collateral
Documents by any means, including, without limitation, levy,
distraint, replevin or self-help, (B) any substantial portion
of the Collateral shall be taken by eminent domain or
condemnation, (C) any of the Collateral Documents shall cease
for any reason to be in full force and effect, or any party
thereto shall purport to disavow its obligations thereunder or
shall declare that it does not have any further obligations
thereunder or shall contest the validity or enforceability
thereof or Lenders shall cease to have a valid and perfected
first priority security interest in any material Collateral
therein except as permitted under the terms of such Collateral
Document, or (D) Agent's security interests or Liens, in each
case on behalf of Lenders, on any material portion of the
Collateral under the Collateral Documents shall become
otherwise impaired or unenforceable; or
8.15 Loss of Governmental Authorizations.
Any Governmental Authorization that is material to the
ownership, use or operation of the Hotel ceases to be valid and
in full force or effect or to be held by the Person required to
hold such Governmental Authorization for more than five (5)
calendar days; or
8.16 Gaming License.
The occurrence of a License Revocation that continues
for at least five (5) calendar days;
8.17 Remedies.
THEN
at any time, (i) upon the occurrence of any Event of
Default described in subsection 8.6 or 8.7, each of (a) the
unpaid principal amount of and accrued interest on the Loans,
(b) an amount equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding (whether
or not any beneficiary under any such Letter of Credit shall
have presented, or shall be entitled at such time to present,
the drafts or other documents or certificates required to draw
under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by Partnership, and
the obligation of each Lender to make any Loan, the obligation
of Agent to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon
automatically terminate, and (ii) upon the occurrence and
during the continuation of any other Event of Default, Agent
shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to Partnership, declare
all or any portion of the amounts described in clauses (a)
through (c) above to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Lender
to make any Loan, the obligation of Agent to issue any Letter
of Credit and the right of any Lender to issue any Letter of
Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of
Lenders under subsection 3.3C(i). No remedy conferred in this
Agreement upon any Lender is intended to be exclusive of any
other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in
equity or by statute or otherwise.
Any amounts described in clause (b) of
subsection 8.17, when received by Agent, shall be held by Agent
pursuant to the terms of the Collateral Account Agreement and
shall be applied as therein provided.
Notwithstanding anything contained in the second
preceding paragraph, if at any time within 60 days after an
acceleration of the Loans pursuant to such paragraph
Partnership shall pay all arrears of interest and all payments
on account of principal which shall have become due otherwise
than as a result of such acceleration (with interest on
principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the
Loans, in each case which is due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to
subsection 10.6, then Supermajority Lenders, by written notice
to Partnership, may at their option rescind and annul such
acceleration and its consequences; but such action shall not
affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions
of this paragraph are intended to bind all Lenders to a
decision that may be made at the election of Supermajority
Lenders and are not intended to benefit Partnership and do not
grant Partnership the right to require Lenders to rescind or
annul any acceleration hereunder, even if the conditions set
forth herein are met.
SECTION 9
AGENT
9.1 Appointment.
Wells Fargo is hereby appointed Agent hereunder and
under the other Loan Documents and each Lender hereby
authorizes Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Agent
agrees to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of
Agent, Managing Agents and Lenders and Partnership shall have
no rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties under this
Agreement, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or
for Partnership or any of its Subsidiaries other than as set
forth in subsection 2.1D(v).
9.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes
Agent to take such action on such Lender's behalf and to
exercise such powers hereunder and under the other Loan
Documents as are specifically delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably
incidental thereto. Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement
and the other Loan Documents and it may perform such duties by
or through its agents or employees. No Managing Agent shall
have any duty or responsibility under this Agreement or any
Loan Document in its capacity as Managing Agent. Neither Agent
nor Managing Agents shall have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to
or shall be so construed as to impose upon Agent or Managing
Agents any obligations in respect of this Agreement or any of
the other Loan Documents except, with respect to Agent, as
expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Agent shall
not be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals
or statements made herein or therein or made in any written or
oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents
furnished or made by Agent to Lenders or by or on behalf of
Partnership to Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Partnership or any
other Person liable for the payment of any Obligations, nor
shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the
Loan Documents or as to the use of the proceeds of the Loans or
the use of the Letters of Credit or as to the existence or
possible existence of any Event of Default or Potential Event
of Default. Anything contained in this Agreement to the
contrary notwithstanding, Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans
or the Letter of Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to
Lenders for any action taken or omitted by Agent under or in
connection with any of the Loan Documents except to the extent
caused by Agent's gross negligence or willful misconduct. If
Agent shall request instructions from Lenders with respect to
any act or action (including the failure to take an action) in
connection with this Agreement or any of the other Loan
Documents, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Supermajority Lenders or
all Lenders if unanimity is required hereunder. Without
prejudice to the generality of the foregoing, (i) Agent shall
be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document reasonably
believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions
and judgments of attorneys (who may be attorneys for
Partnership and its Subsidiaries), accountants, experts and
other professional advisors reasonably selected by it; and
(ii) no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or (where so
instructed) refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions
of Requisite Lenders or all Lenders as required or permitted by
this Agreement. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it
under this Agreement or any of the other Loan Documents unless
and until it has obtained the instructions of Requisite
Lenders.
D. Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, Agent in
its individual capacity as a Lender hereunder. With respect to
its participation in the Loans and the Letters of Credit, Agent
shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder,
and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent
in its individual capacity. Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business
with Partnership or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and
other consideration from Partnership for services in connection
with this Agreement and otherwise without having to account for
the same to Lenders.
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness.
Each Lender represents and warrants that it has made
its own independent investigation of the financial condition
and affairs of Partnership and its Subsidiaries in connection
with the making of the Loans and the issuance of Letters of
Credit hereunder and that it has made and shall continue to
make its own appraisal of the creditworthiness of Partnership
and its Subsidiaries. Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of
Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or
times thereafter, and Agent shall not have any responsibility
with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify Agent, to the extent that Agent
shall not have been reimbursed by Partnership, or Partnership
Parents or another Loan Party, for and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder
or under the other Loan Documents or otherwise in its capacity
as Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender
shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's
gross negligence or willful misconduct; provided, further, that
if Agent is subsequently reimbursed by Partnership, or
Partnership Parents or any other Loan Party for any such
liabilities, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements in an amount that,
together with amounts paid to Agent by Lenders under this
subsection 9.4, exceeds the amount actually expended by Agent
therefor, Agent shall promptly disburse such excess amount to
those Lenders that made payments under this subsection 9.4 in
proportion to their payments hereunder. If any indemnity
furnished to Agent for any purpose shall, in the opinion of
Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is
furnished.
9.5 Successor Agent.
Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Partnership, and Agent
may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to
Partnership and Agent and signed by Requisite Lenders
(determined without giving effect to Agent's Loan Exposure).
Upon any such notice of resignation or any such removal,
Lenders shall have the right, with the consent of Partnership
(which consent shall not be withheld unreasonably), to appoint
a successor Agent provided that such Requisite Lenders may
proceed without Partnership's consent if Partnership refuses to
consent to one of two successive nominees for successor Agent
who are Lenders on the Restatement Date. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent,
that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring or removed Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation
or removal hereunder as Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
9.6 Collateral Documents.
Each Lender hereby further authorizes Agent to enter
into the Collateral Documents as secured party on behalf of and
for the benefit of each Lender and agrees to be bound by the
terms of the Collateral Documents; provided that Agent shall
not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in the
Collateral Documents except as set forth in subsection 10.6.
Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Lender agrees that no Lender shall have
any right individually to realize upon any of the collateral
under the Collateral Documents, it being understood and agreed
that all rights and remedies under the Collateral Documents may
be exercised solely by Agent for the benefit of Lenders in
accordance with the terms thereof.
SECTION 10
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters
of Credit.
A. General. Each Lender shall have the right at any time
to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of
its Commitment or any Loan or Loans made by it or its Letters
of Credit or participations therein or any other interest
herein or in any other Obligations owed to it; provided that no
such sale, assignment, transfer or participation shall, without
the consent of Partnership, require Partnership to file a
registration statement with the Securities and Exchange Commis-
sion or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided,
further that no such sale, assignment or transfer described in
clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or
transfer shall have been accepted by Agent and recorded in the
Register as provided in subsection 10.1B(ii); provided, further
that no such sale, assignment, transfer or participation of any
Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation
of a corresponding interest in the Commitment and the Loans of
the Lender effecting such sale, assignment, transfer or
participation; and provided further that no such sale,
assignment, transfer or participation of any Letter of Credit
or any participation therein shall be required to the extent it
would be prohibited by any Gaming Law. Except as otherwise
provided in this subsection 10.1, no Lender shall, as between
Partnership and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or
transfer of, or any granting of participations in, all or any
part of its Commitment or the Loans, the Letters of Credit or
participations therein, or the other Obligations owed to such
Lender.
B. Assignments.
(i) Amounts and Terms
of Assignments. Each Lender may assign its interests in
the Commitment, Loan, Letter of Credit or participation
therein, or other Obligation, provided that each such
assignment (i) shall be subject to the written consent of
Partnership and the Agent (which consents shall not be
unreasonably withheld, provided that when an Event of
Default exists, no such consent will be required from the
Partnership), (ii) which is not to another Lender or to an
Affiliate of the assigning Lender shall be in an amount
not less than $10,000,000 (or such lesser amount as shall
constitute the aggregate amount of the Commitment, Loans,
Letters of Credit and participations therein, and other
Obligations of the assigning Lender) and shall be to an
Eligible Assignee described in clause (A) of the
definition of "Eligible Assignee", and (iii) shall effect
a pro rata assignment of the Loans, Letters of Credit (or
participations therein) and commitment of the assigning
Lender. The parties to each such assignment shall execute
and deliver to Agent, for its acceptance and recording in
the Register, an Assignment Agreement, together with a
processing and recordation fee of $2,500 and such forms,
certificates or other evidence, if any, with respect to
United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be
required to deliver to Agent pursuant to
subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation, from and after the effective
date specified in such Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement,
shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall,
to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement,
relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment
of such assigning Lender and, if any such assignment
occurs after the issuance of any Notes hereunder, the
assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable,
surrender its Note, if any, to Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee
and/or the assigning Lender in accordance with
subsection 2.1E, be issued to the assignee and/or to the
assigning Lender to reflect the new Commitments of the
assignee and/or the assigning Lender.
(ii) Acceptance by
Agent; Recordation in Register. Upon its receipt of an
Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee,
together with the processing and recordation fee referred
to in subsection 10.1B(i) and any forms, certificates or
other evidence with respect to United States federal
income tax withholding matters that such assignee may be
required to deliver to Agent pursuant to
subsection 2.7B(iii)(a), Agent shall, if such Assignment
Agreement has been completed, (a) accept such Assignment
Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required
consent of Agent to such assignment), (b) record the
information contained therein in the Register, and
(c) give prompt notice thereof to Partnership. Agent
shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. Participations. The holder of any participation shall
not be entitled to require such Lender to take or omit to take
any action hereunder except action directly affecting (i) the
extension of the scheduled final maturity date of any Loan
allocated to such participation or (ii) a reduction of the
principal amount of or the rate of interest payable on any Loan
allocated to such participation, and all amounts payable by
Partnership hereunder (including without limitation amounts
payable to such Lender pursuant to subsections 2.6D, 2.7 and
3.6) shall be determined as if such Lender had not sold such
participation. Partnership and each Lender hereby acknowledge
and agree that, solely for purposes of subsections 10.4 and
10.5, (a) any participation will give rise to a direct
obligation of Partnership to the participant and (b) the
participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to
the assignments and participations permitted under the
foregoing provisions of this subsection 10.1, any Lender may
assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Note to any Federal
Reserve Bank as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve Bank;
provided that (i) no Lender shall, as between Partnership and
such Lender, be relieved of any of its obligations hereunder as
a result of any such assignment and pledge and (ii) in no event
shall such Federal Reserve Bank be considered to be a "Lender"
or be entitled to require the assigning Lender to take or omit
to take any action hereunder.
E. Information. Each Lender may furnish any information
concerning Partnership and its Subsidiaries in the possession
of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to
subsection 10.19.
10.2 Expenses.
Whether or not the transactions contemplated hereby
shall be consummated, Partnership agrees to pay promptly
(i) all the actual and reasonable costs and expenses of
preparation of the Loan Documents; (ii) all the costs of
furnishing all opinions by counsel for Partnership and any
other Loan Party (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder)
and of each Loan Party's performance of and compliance with all
agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming
compliance with environmental and insurance requirements;
(iii) the reasonable fees, expenses and disbursements of
counsel to Agent in connection with the negotiation,
preparation, execution and administration of the Loan Documents
and the Loans and any consents, amendments, waivers or other
modifications hereto or thereto and any other documents or
matters requested by Partnership or any other Loan Party;
(iv) all other actual and reasonable costs and expenses
incurred by Agent in connection with the syndication of the
Commitments prior to the Restatement Date and the negotiation,
preparation and execution of the Loan Documents and the
transactions contemplated hereby and thereby; and (v) after the
occurrence of an Event of Default, all costs and expenses,
including reasonable attorneys' fees (including allocated costs
of internal counsel) and costs of settlement, incurred by Agent
and Lenders in enforcing any Obligations of or in collecting
any payments due from Partnership or any other Loan Party
hereunder or under the other Loan Documents by reason of such
Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated
hereby shall be consummated, Partnership agrees to defend,
indemnify, pay and hold harmless Agent, each Co-Agent, and each
Lender, and the officers, directors, employees, agents and
affiliates thereof (collectively called the "Indemnitees") from
and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever
(including without limitation the reasonable fees and disburse-
ments of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced
or threatened by any Person, whether or not any such Indemnitee
shall be designated as a party or a potential party thereto),
whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and
commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or
asserted against any such Indemnitee, in any manner relating to
or arising out of this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby (including
without limitation Lenders' agreement to make the Loans
hereunder or the use or intended use of the proceeds of any of
the Loans or the issuance of Letters of Credit hereunder or the
use or intended use of any of the Letters of Credit) or the
statements contained in the commitment letter delivered by any
Lender to Partnership with respect thereto (collectively called
the "Indemnified Liabilities"); provided that Partnership shall
not have any obligation to an Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment
of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, Partnership shall
contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any
of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default each Lender
(with the consent of Requisite Lenders) is hereby authorized by
Partnership at any time or from time to time, without notice to
Partnership or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including, but
not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of
Partnership against and on account of the obligations and
liabilities of Partnership to that Lender under this Agreement,
the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or
any other Loan Document, irrespective of whether or not
(i) that Lender shall have made any demand hereunder or
(ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other
amounts due hereunder shall have become due and payable
pursuant to Section 8 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
Partnership hereby further grants to Agent and each Lender a
security interest in all deposits and accounts maintained with
Agent or such Lender as security for the Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of
them shall, whether by voluntary payment, by realization upon
security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or
reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees
and other amounts then due and owing to that Lender hereunder
or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the
proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify
Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations
(which it shall be deemed to have purchased from each seller of
a participation simultaneously upon the receipt by such seller
of its portion of such payment) in the Aggregate Amounts Due to
the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of
such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Partnership or otherwise,
those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to such purchasing
Lender ratably to the extent of such recovery. Partnership
expressly consents to the foregoing arrangement and agrees that
any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Partnership to that
holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 Amendments and Waivers; Release of Collateral.
A. No amendment, modification, termination or waiver of
any provision of this Agreement, the Notes or any other Loan
Documents, or consent to any departure by Partnership
therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such
amendment, modification, termination, waiver or consent which:
increases the amount of any of the Commitments or reduces the
principal amount of any of the Loans; increases the maximum
amount of Letters of Credit; changes any Lender's Pro Rata
Share; changes in any manner the definition of "Lenders",
"Requisite Lenders" or "Supermajority Lenders"; changes in any
manner any provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of all Lenders;
postpones the scheduled final maturity date of any of the
Loans; postpones the date or reduces the amount of any
scheduled reduction of the Commitments; postpones the date on
which any interest or any fees are payable; decreases the
interest rate borne by any of the Loans (other than any waiver
of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees
payable hereunder; increases the maximum duration of Interest
Periods permitted hereunder; reduces the amount or postpones
the due date of any amount payable in respect of, or extends
the required expiration date of, any Letter of Credit; changes
in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; or changes in
any manner the provisions contained in subsection 8.1(a) or
(b) or this subsection 10.6; or changes any of the terms of or
releases the Make-Well Agreement (except in accordance with
Section 2.14 thereof) or the Environmental Indemnities shall be
effective only if evidenced by a writing signed by or on behalf
of all Lenders and; provided, further, that no provision of
this Agreement that, by its terms, expressly requires approval
or action of Supermajority Lenders, may be amended, modified or
waived except with the consent of Supermajority Lenders;
provided further that if there has been a change in Managing
Partner, no amendment to the performance standard required of
Partnership under subsection 7.6A that would increase the
amount required to be paid to fulfill the "Make-Well
Obligations" under and as defined in the Make-Well Agreement,
shall be effective to cause such increase unless Circus shall
have received prior notice of such change. In addition,
(i) any material amendment, modification, termination or waiver
of any of the provisions contained in Section 4 shall be
effective only if evidenced by a writing signed by or on behalf
of Agent and Requisite Lenders, (ii) no amendment, modifica-
tion, termination or waiver of any provision of any Note shall
be effective without the written concurrence of the Lender
which is the holder of that Note, and (iii) no amendment,
modification, termination or waiver of any provision of
Section 3 or Section 9 or of any other provision of this
Agreement which, by its terms, expressly requires the approval
or concurrence of Agent shall be effective without the written
concurrence of Agent. Agent may, but shall have no obligation
to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
No notice to or demand on Partnership in any case shall entitle
Partnership to any other or further notice or demand in similar
or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Partnership,
on Partnership. No amendment, modification, termination or
waiver of subsection 7.6A shall be effective without the
written consent of Circus or its successors and assigns under
the Make-Well Agreement.
B. Agent may release personal property Collateral without
the consent of any Lender to the extent sold or disposed of by
Partnership in a transaction or series of transactions that do
not constitute Asset Sales. In addition: (i) Agent may
release personal property Collateral subject to the Security
Agreement having a fair market less than $100,000 with the
consent of Requisite Lenders; and (ii) Agent shall not release
any personal property Collateral having a fair market value in
excess of $100,000 or any other Collateral without the consent
of all Lenders.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence
of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 Notices.
Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to
be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of
telefacsimile or telex prior to 5:00 p.m. (Pacific time) on a
Business Day or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed;
provided that notices to Agent and the Lenders from Partnership
shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or (i) as
to Partnership and Agent, such other address as shall be
designated by such Person in a written notice delivered to the
other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written
notice delivered to Agent.
10.9 Survival of Representations, Warranties and
Agreements.
A. All representations, warranties and agreements made
herein shall survive the execution and delivery of this
Agreement and the making of the Loans and the issuance of the
Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of Partnership set forth
in subsections 2.6D, 2.7, 3.5A, 3.6, 10.2 and 10.3 and the
agreements of Lenders set forth in subsections 9.2C, 9.4 and
10.5 shall survive the payment of the Loans, the cancellation
or expiration of the Letters of Credit and the reimbursement of
any amounts drawn thereunder, and the termination of this
Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Agent or any Lender
in the exercise of any power, right or privilege hereunder or
under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement and the
other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Partnership or any
other party or against or in payment of any or all of the
Obligations. To the extent that Partnership makes a payment or
payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or
exercise their rights of set-off, and such payment or payments
or the proceeds of such enforcement or set-off or any part
thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law,
any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall
be revived and continued in full force and effect as if such
payment or payments had not been made or such enforcement or
set-off had not occurred.
10.12 Severability.
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or un-
enforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders'
Rights.
The obligations of Lenders hereunder are several and
no Lender shall be responsible for the obligations or Commit-
ment of any other Lender hereunder. Nothing contained herein
or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce
its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be
given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors
and assigns of Lenders (it being understood that Lenders'
rights of assignment are subject to subsection 10.1). Neither
Partnership's rights or obligations hereunder nor any interest
therein may be assigned or delegated by Partnership without the
prior written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PARTNERSHIP
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION May BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEVADA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PARTNERSHIP
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER
LOAN DOCUMENT OR SUCH OBLIGATION. Partnership hereby agrees
that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return
receipt requested, to Partnership at its address provided in
subsection 10.8, such service being hereby acknowledged by
Partnership to be sufficient for personal jurisdiction in any
action against Partnership in any such court and to be
otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any
other manner permitted by law.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT RELATES HERETO. The scope of
this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement
to enter into a business relationship, that each has already
relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related
future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT May NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement which
has been identified as confidential by Partnership in
accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with
safe and sound banking practices, it being understood and
agreed by Partnership that in any event a Lender may make
disclosures reasonably required by any bona fide assignee,
transferee or participant in connection with the contemplated
assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any
governmental agency or representative thereof or pursuant to
legal process; provided that, unless specifically prohibited by
applicable law or court order, each Lender shall notify
Partnership of any request by any governmental agency or repre-
sentative thereof (other than any such request in connection
with any examination of the financial condition of such Lender
by such governmental agency) for disclosure of any such non-
public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by
Partnership or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed
in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto
and receipt by Partnership and Agent of written or telephonic
notification of such execution and authorization of delivery
thereof.
10.21 Non-Recourse to General Partners.
Notwithstanding any term or provision of the Loan
Documents or of applicable law to the contrary, the holders of
the Obligations shall not have recourse to the General Partners
(or either of them) for payment thereof, provided that this
subsection 10.21 shall not limit or impair (i) recourse to the
General Partners (or either of them) by the holders of the
Obligations for any fraud, gross negligence, or willful
misconduct of the General Partners (or either of them),
(ii) any cause of action such holders may have other than an
action to collect the Obligations, (iii) the exercise or
enforcement of rights and remedies in respect of any Collateral
granted under the Loan Documents, including, without
limitation, any collateral rights granted to Lenders in any
claims or causes of action of Partnership against the General
Partners (or either of them), (iv) the terms and provisions of
any Subordinated Indebtedness issued to General Partners (or
either of them) and (v) the terms of the Environmental
Indemnities to which the General Partners are party.
10.22 Cooperation With Gaming Boards.
Agent and each Lender agree to cooperate with all
Gaming Boards in connection with the administration of their
regulatory jurisdiction over any Loan Party, including the
provision of such documents or other information as may be
requested by any such Gaming Board relating to any Loan Party
or to the Loan Documents.
10.23 Principles of Restatement. This Agreement amends and
restates the Original Agreement referred to in the recitals in
its entirety, and constitutes the integrated agreement of the
parties hereto, provided that this Agreement shall not result
in the release of any collateral security or guarantees given
in support of the Original Credit Agreement, the benefits of
which are hereby reserved by the Lenders and regranted by
Partnership. Without limitation on the foregoing provisions of
this Section, it is acknowledged and agreed that the Agent and
the Lenders shall have the continuing benefit of the Assignment
of General Contractor's Contract and all assurances provided by
the Architect and the Auditors in connection with this
Agreement and the other Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
PARTNERSHIP:
CIRCUS AND ELDORADO JOINT VENTURE
By: GALLEON, INC.
Its: Managing Partner
By: CLYDE T. TURNER
Title:President
Notice Address:
c/o Circus Circus Enterprises, Inc.
2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
By: ELDORADO LIMITED LIABILITY COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC
Its: Manager
By: DON CARANO
Title:
Notice Address:
c/o Eldorado Resorts LLC
345 N. Virginia Street
P.O. Box 3399
Reno, Nevada 89508
Attention: General Counsel
EXECUTIVE COMMITTEE
By: DON CARANO
Title:
By: ROBERT JONES
Title:
LENDERS:
WELLS FARGO BANK, N.A., individually,
as Agent, as a Managing Agent and as a
Lender
By: STEVE BYRNE
Title: Vice President
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as a
Managing Agent and as a Lender
By: PAUL B. CLIFFORD
Title: Deputy General Manager
Notice Address:
444 South Flower Street, Suite 3700
Los Angeles, CA 90071
Attention: Paul B. Clifford
SOCIETE GENERALE, as a Managing Agent
and as a Lender
By: DONALD L. SCHUBERT
Title: Vice President
Notice Address:
2029 Century Park East, Suite 2900
Los Angeles, CA 90067
Attention: Don Schubert
CIBC INC., as a Co-Agent and as a
Lender
By: PAUL J. CHAKMAK
Title: Agent
Notice Address:
350 S. Grand Avenue, Suite 2600
Los Angeles, CA 90071
Attention: Paul J. Chakmak
CREDIT LYONNAIS LOS ANGELES BRANCH, as
a Co-Agent and a Lender
By: ROBERT J. IVOSEVICH
Title: Senior Vice President
Notice Address:
Credit Lyonnais Los Angeles Branch
515 South Flower Street
Los Angeles, CA 90071
Attention: Glenn Harvey
THE SUMITOMO BANK, LIMITED, as Lender
By: BRADFORD E. CHAMBERS
Title: Vice President
By: DAVID M. LAWRENCE
Title: Vice President & Manager
Notice Address:
800 West Sixth Street, Suite 950
Los Angeles, CA 90017
Attention: David Lawrence
FIRST SECURITY BANK, N.A.,
as Lender
By: DAVID P. WILLIAMS
Title: Vice President
Notice Address:
Second Floor
15 East One Hundred South
Salt Lake City, Utah 84111
Attn: David Williams
PNC BANK, NATIONAL ASSOCIATION
(successor to Midlantic Bank, N.A.),
as Lender
By: LORI A. OSMULSKI
Title: Corporate Banking Officer
Notice Address:
Two Tower Center
East Brunswick, New Jersey 08816
Attention: Denise D. Killen
THE NIPPON CREDIT BANK, LTD.,
Los Angeles Agency, as Lender
By: JAY SCHWARTZ
Title: Vice President & Manager
Notice Address:
550 S. Hope Street, Suite 2500
Los Angeles, CA 90071
Attention: Jay Schwartz
U.S. BANK OF NEVADA, as Lender
By: KURT IMERMAN
Title: Vice President
Notice Address:
1 East Liberty Street, 2nd Floor
Reno, NV 89501
Attention: Kurt Imerman
SCHEDULE 2.1
LENDERS' COMMITMENTS
Bank Amount of
Commitment
Wells Fargo Bank, N.A. $ 41,000,000
The Long-Term Credit Bank of Japan, Ltd., 41,000,000
Los Angeles Agency
Societe Generale 41,000,000
Credit Lyonnais, Los Angeles Branch 17,000,000
CIBC Inc. 17,000,000
The Sumitomo Bank, Limited 15,000,000
U.S. Bank of Nevada 15,000,000
First Security Bank, N.A. 11,000,000
PNC Bank, National Association 11,000,000
The Nippon Credit Bank, Ltd., Los
Angeles Agency 11,000,000
_________________________________________________________
Total $220,000,000
SCHEDULE 5.1
SUBSIDIARIES
Partnership has no Subsidiaries
SCHEDULE 5.13
ENVIRONMENTAL MATTERS
SCHEDULE 5.19
INTELLECTUAL PROPERTY
SCHEDULE 7.2
CERTAIN EXISTING LIENS
None
EXHIBIT IV
[FORM OF NOTE]
PROMISSORY NOTE
$________________ _________________, 1996
Reno, Nevada
FOR VALUE RECEIVED, CIRCUS AND ELDORADO JOINT
VENTURE, a Nevada general partnership ("Partnership"), promises
to pay to the order of ____________________ ("Payee") or its
registered assigns, on or before the Commitment Termination
Date, the lesser of (x)________________________________________
($__________) and (y) the unpaid principal amount of all
advances made by Payee to Partnership as Loans under the Credit
Agreement referred to below.
Partnership also promises to pay interest on the
unpaid principal amount hereof, from the date hereof until paid
in full, at the rates and at the times which shall be
determined in accordance with the provisions of that certain
Amended and Restated Credit Agreement (as amended, supplemented
or otherwise modified from time to time, the "Credit
Agreement"), dated as of September 9, 1996 by and among
Partnership, WELLS FARGO BANK, N.A., as arranger and
administrative agent ("Agent"), the financial institutions
listed therein as Lenders, WELLS FARGO BANK, N.A., THE LONG-
TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY and SOCIETE
GENERALE, collectively, as managing agents, and CIBC INC. and
CREDIT LYONNAIS, LOS ANGELES BRANCH, collectively, as co-
agents. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Credit
Agreement.
This Note is one of Partnership's "Notes" in the
aggregate principal amount of $220,000,000 and is issued
pursuant to, and entitled to the benefits of, the Credit
Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the
Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of
this Note shall be made in lawful money of the United States of
America in same day funds at the Funding and Payment Office or
at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement.
Unless and until and Assignment Agreement effecting the
assignment or transfer of this Note shall have been accepted by
the Agent and recorded in the Register as provided in
subsection 10.1B(ii) of the Credit Agreement, Partnership and
Agent shall be entitled to deem and treat Payee as the owner
and holder of this Note and the Loans evidenced hereby. Payee
shall use its best efforts to keep a record of Loans made by it
and payments received by it with respect to this Note, and,
absent manifest error, such record shall be presumptive
evidence of the amounts owing under this Note.
Whenever any payment on this Note shall be stated to
be due on a day that is not a Business Day, such payment shall
be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the payment of
interest on this Note; provided, however, that if the day on
which any payment relating to a Eurodollar Rate Loan is due is
not a Business Day but is a day of the month after which no
further Business Day occurs in such month, then the due date
thereof shall be the next preceding Business Day.
The holders of the Obligations do not have recourse
to the General Partners (or either of them) for payment thereof
other than as specifically set forth in the Credit Agreement.
This Note is subject to mandatory prepayment as
provided in subsection 2.4B(iii) of the Credit Agreement and to
prepayment at the option of Partnership as provided in
subsection 2.4B(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
Upon the occurrence of an Event of Default, the
unpaid balance of the principal amount of this Note, together
with all accrued and unpaid interest thereon, may become, or
may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only
in the manner provided in the Credit Agreement.
No reference herein to the Credit Agreement and no
provision of this Note or the Credit Agreement shall alter or
impair the obligations of Partnership, which are absolute and
unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency
herein prescribed.
Partnership promises to pay all costs and expenses,
including reasonable attorneys' fees, all as provided in
subsection 10.2 of the Credit Agreement, incurred in the
collection and enforcement of this Note. Partnership and any
endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, Partnership has caused this Note
to he duly executed and delivered by an officer of its Managing
Partner duly authorized as of the date and at the place first
written above.
CIRCUS AND ELDORADO JOINT VENTURE
By: GALLEON, INC.
Its: Managing Partner
By: CLYDE T. TURNER
Title: President
By: ELDORADO LIMITED LIABILITY
COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC, a
Nevada limited liability
company
Its: Manager
By: DON CARANO
Title:
By: EXECUTIVE COMMITTEE
By: DON CARANO
Title:
By: ROBERT JONES
Title:
EXHIBIT XII
AMENDED AND RESTATED MAKE-WELL AGREEMENT
This AMENDED AND RESTATED MAKE-WELL AGREEMENT is
entered into as of September 9, 1996 by CIRCUS CIRCUS
ENTERPRISES, INC., a Nevada corporation ("Circus"), in favor of
WELLS FARGO BANK, N.A., in its capacity as agent for and
representative of (in such capacity herein called "Agent") the
financial institutions ("Lenders") party to the Credit
Agreement (as hereinafter defined), for the benefit of Agent
and Lenders, and CIRCUS AND ELDORADO JOINT VENTURE, a Nevada
general partnership ("Partnership") (as an express third-party
beneficiary of this Make-Well Agreement), and amends and
restates the Original Make-Well Agreement referred to below in
its entirety.
RECITALS
A. Partnership (the general partners of which are
Galleon, Inc., a Nevada corporation ("Galleon") and a wholly-
owned subsidiary of Circus, and Eldorado Limited Liability
Company, a Nevada limited liability company of which Eldorado
Resorts LLC, a Nevada limited liability company is the manager,
entered into a Credit Agreement dated as of May 30, 1995 with
the Lenders referred to therein and FIRST INTERSTATE BANK OF
NEVADA, N.A. (the "Original Credit Agreement").
B. Pursuant to the Original Credit Agreement,
Circus delivered a Make-Well Agreement dated May 30, 1995 to
the Lenders under the Original Credit Agreement (the "Original
Make-Well Agreement").
C. Concurrently with the execution hereof,
Partnership has entered into that certain Amended and Restated
Credit Agreement of even date herewith with Lenders, Agent, as
arranger and administrative agent, WELLS FARGO BANK, N.A., THE
LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY and
SOCIETE GENERALE, as managing agents and CIBC INC. and CREDIT
LYONNAIS, LOS ANGELES BRANCH, collectively, as co-agents ("Co-
Agents") (said Amended and Restated Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement"; capitalized terms
defined therein and not otherwise defined herein being used
herein as therein defined).
D. It is a condition precedent to execution and
delivery of the Amended and Restated Credit Agreement that the
Original Make-Well Agreement be amended as set forth herein and
that Circus provide assurance to the Lenders of Partnership's
ability to perform certain of its obligations thereunder.
E Circus is irrevocably and unconditionally
willing to provide such assurance, subject to the right of
Circus to terminate this Agreement in the manner, and upon the
fulfillment of the conditions, set forth in Section 2.14
hereof.
NOW, THEREFORE, based upon the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to induce Lenders,
Managing Agents, Co-Agents and Agent to enter into the Credit
Agreement and to make the Loans thereunder, Circus hereby
agrees as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Make-
Well Agreement, the following terms shall have the following
meanings unless the context otherwise requires:
"Additional Contributions" has the meaning assigned
to that term in subsection 2.1.
"Make-Well Agreement" means, as of any date, this
Amended and Restated Make-Well Agreement as it may be
amended, supplemented or otherwise modified from time to
time through such date.
"Make-Well Coverage Ratio" has the meaning set forth
for that term in the Credit Agreement; provided that any
contribution of cash to Partnership by Circus in exchange
for equity of Partnership or General Partner Subordinated
Debt shall be included, without duplication, in Net Income
for the Fiscal Quarter in which such contribution is made
(or, if made within 25 calendar days of the end of a
Fiscal Quarter, for such Fiscal Quarter immediately ended
if Circus notifies Agent in writing at the time of such
contribution that such contribution is to be so credited).
"Make-Well Obligations" has the meaning assigned to
that term in subsection 2.1.
"Minimum Coverage Ratio" has the meaning assigned to
that term in subsection 2.1.
"Obligations" has the meaning assigned such term in
the Credit Agreement and shall also include, without
limitation, Partnership's performance obligations
thereunder, including without limitation, its obligation
to perform subsection 7.6A thereof.
"payment in full", "paid in full" or any similar term
means the indefeasible payment in full of the Obligations
or the Make-Well Obligations, as the case may be,
including, without limitation, all principal, interest,
costs, fees, expenses and indemnities (including, without
limitation, legal fees and expenses) of Lenders, Managing
Agents, Co-Agents and Agent as required under the Loan
Documents.
1.2 Interpretation.
(a) References to "Sections" and "subsections"
shall be to Sections and subsections, respectively, of
this Make-Well Agreement unless otherwise specifically
provided.
(b) In the event of any conflict or
inconsistency between the terms, conditions and provisions
of this Make-Well Agreement and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions
and provisions of this Make-Well Agreement shall prevail.
SECTION 2. MAKE-WELL
2.1 Obligation of Circus. Until the termination of
this Agreement in accordance with Section 2.14 hereof, Circus
shall make Additional Contributions (as defined below) to
Partnership in such amounts as are necessary to ensure that
Partnership maintains a Make-Well Coverage Ratio of at least
1.05:1.00 ("Minimum Coverage Ratio") as of the last day of each
Fiscal Quarter for the period of four Fiscal Quarters then
ended. If, at any time prior to the termination of this
Agreement in accordance with Section 2.14 hereof, or the
termination of all of the Commitments, payment in full of all
Loans and other Obligations and the expiration or cancellation
of all Letters of Credit (or the deposit of cash collateral
with respect thereto), Partnership fails to maintain the
Minimum Coverage Ratio, Circus shall make additional
contributions of cash for equity of Partnership or General
Partner Subordinated Debt or both in the amount necessary for
Partnership to maintain the Minimum Coverage Ratio (such
additional contributions, "Additional Contributions"). Circus'
obligations to make such Additional Contributions are referred
to herein as the "Make-Well Obligations."
Circus shall make such Additional Contributions no
later than 10 Business Days after (i) the date on which
Partnership delivers a Compliance Certificate pursuant to
subsection 6.1(iii) of the Credit Agreement demonstrating
Partnership's failure to maintain such Minimum Coverage Ratio
or, (ii) if Partnership fails to deliver a Compliance
Certificate by the date required pursuant to
subsection 6.1(iii) of the Credit Agreement, on the date upon
which Agent determines that the Partnership's Make-Well
Coverage Ratio was less than the Minimum Coverage Ratio (which
determination shall be presumed correct unless and until Circus
demonstrates the inaccuracy thereof) and notifies Circus of the
same. If Circus fails to make Additional Contributions on the
date required, interest shall accrue on the amount of
Additional Contributions at a rate per annum equal to the Base
Rate until such Additional Contributions are made to
Partnership; provided that all such interest accrued to the
date such Additional Contributions are made shall be paid to
Partnership together therewith and shall be treated as a cash
contribution to Partnership in exchange for equity of
Partnership or General Partner Subordinated Debt or, without
duplication, both.
2.2 Liability of Circus Absolute. Circus agrees
that its obligations hereunder are irrevocable,
absolute,,independent and unconditional and shall not be
affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment
in full and prompt and complete performance of the Obligations,
subject, however, to the right of Circus to terminate this
Agreement in the manner, and upon the fulfillment of the
conditions, set forth in Section 2.14 hereof.
In furtherance of the foregoing and without limiting
the generality thereof, Circus agrees as follows:
(a) This Make-Well Agreement is not conditioned
or continent upon the genuineness, validity, regularity or
enforceability of the Loan Documents or other instruments
relating to the creation or performance of the Obligations
or the pursuit by Agent of any remedies that it now has or
may hereafter have with respect thereto under the Loan
Documents, at law, in equity or otherwise.
(b) Agent may enforce this Make-Well Agreement
upon the occurrence of an Event of Default or Potential
Event of Default under subsection 7.6A of the Credit
Agreement even if Partnership, any Loan Party or any
Partnership Parent disputes the existence of such Event of
Default or Potential Event of Default.
(c) The obligations of Circus hereunder are
independent of the obligations of Partnership under the
Loan Documents and the obligations of any other guarantor
of the obligations of Partnership under the Loan
Documents, and a separate action or actions may be brought
and prosecuted against Circus whether or not any action is
brought against Partnership or any of such other
guarantors and whether or not Partnership is joined in any
such action or actions.
(d) Circus' payment of a portion, but not all,
of the Make-Well Obligations shall in no way limit,
affect, modify or abridge Circus' liability for any
portion of the Make-Well Obligations which has not been
paid. Without limiting the generality of the foregoing,
if Agent is awarded a judgment in any suit brought to
enforce Circus' covenant to pay a portion of the Make-Well
Obligations, such judgment shall not be deemed to release
Circus from its covenant to pay the portion of the Make-
Well Obligations that is not the subject of such suit.
(e) Agent, upon such terms as it deems
appropriate, without notice or demand and without
affecting the validity or enforceability of this Make-Well
Agreement or giving rise to any reduction, limitation,
impairment, discharge or termination of Circus' liability
hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment or
performance of the Obligations subject to the limitations
set forth in the Credit Agreement; provided that, at any
time after Galleon, Inc. ceases to be Managing Partner,
unless Circus has received prior notice of any such change
with respect to the performance standard required of
Partnership under sec. 7.6A of the Credit Agreement that
would increase the amount of the Additional Contributions
that would otherwise have been necessary to fulfill the
Make-Well Obligations, Circus' obligations hereunder shall
be limited to making the amount of Additional
Contributions necessary to fulfill the Make-Well
Obligations prior to such change; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the
Obligations or the Make-Well Obligations or any agreement
relating thereto and/or subordinate the payment or
performance of the same to the payment or performance of
any other obligations; (iii) request and accept other
guaranties of the Obligations or the performance of
subsection 7.6A of the Credit Agreement and take and hold
security for the payment of the Make-Well Obligations or
the Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter,
subordinate or modify, with or without consideration, any
security for payment or performance of the Obligations,
any other guaranties of the Obligations or the performance
of subsection 7.6A of the Credit Agreement, or any other
obligation of any Person with respect to the Obligations
or the performance of subsection 7.6A of the Credit
Agreement; (v) enforce and apply any security now or
hereafter held by or for the benefit of Agent or any
Lender in respect of this Make-Well Agreement or the
performance of the Obligations and direct the order or
manner of sale thereof, or exercise any other right or
remedy that Agent or Lenders, or any of them, may have
against any such security, as Agent in its discretion may
determine consistent with the Credit Agreement and any
applicable security agreement; and (vi) exercise any other
rights available to it under the Loan Documents.
(f) This Make-Well Agreement and the
obligations of Circus hereunder shall be valid and
enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any
reason (other than (a) payment in full and prompt and
complete performance of the Obligations or, only as to the
portion paid, payment of a portion of the Make-Well
Obligations for any relevant period), including without
limitation the occurrence of any of the following, whether
or not Circus shall have had notice or knowledge of any of
them: (i) any failure or omission to assert or enforce or
agreement or election not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law
or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising
under the Loan Documents, at law, in equity or otherwise)
with respect to the Obligations, the Make-Well Obligations
or any agreement relating thereto, or with respect to any
other guaranty of or security for the payment of the
Obligations; (ii) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of
the terms or provisions (including without limitation
provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Obligations, or of
the obligations encompassed thereby, in each case whether
or not in accordance with the terms of the Credit
Agreement or such Loan Document or any agreement relating
to such other guaranty or security; (iii) the Obligations,
or any agreement relating thereto, at any time being found
to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source
to the payment of indebtedness other than the Obligations,
even though Agent or Lenders, or any of them, might have
elected to apply such payment to any part or all of the
Obligations; (v) any Lender's or Agent's consent to the
change, reorganization or termination of the legal
structure or existence of Partnership and to any
corresponding restructuring of the Obligations; (vi) any
failure to perfect or continue perfection of a security
interest in any collateral which secures any of the
Obligations; (vii) any defenses, set-offs or counterclaims
which Partnership may allege or assert against Agent or
any Lender in respect of the Obligations, including but
not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury; and
(viii) any other act or thing or omission, or delay to do
any other act or thing, which may or might in any manner
or to any extent vary the risk of Circus as an obligor in
respect of the Make-Well Obligations.
2.3 Waivers by Circus. Circus hereby waives, for
the benefit of Lenders and
Agent:
(a) any right to require Agent or Lenders, as a
condition of payment or performance by Circus, to
(i) proceed against Partnership, any other guarantor of
the Obligations or any other Person, (ii) proceed against
or exhaust any security held from Partnership, any other
guarantor of the Obligations or any other Person,
(iii) proceed against or have resort to any balance of any
deposit account or credit on the books of Agent or any
Lender in favor of Partnership or any other Person, or
(iv) pursue any other remedy in the power of Agent or any
Lender whatsoever;
(b) any defense arising by reason of the
incapacity, lack of authority or any disability or other
defense of Partnership including, without limitation, any
defense based on or arising out of the lack of validity or
the unenforceability of the Obligations or any agreement
or instrument relating thereto or by reason of the
cessation of the liability of Partnership from any cause
other than payment in full of the Obligations;
(c) any defense based upon any statute or rule
of law which provides that the obligation of a surety must
be neither larger in amount nor in other respects more
burdensome than that of the principal;
(d) any defense based upon Agent's or any
Lender's errors or omissions in the administration of the
Obligations, except behavior which amounts to willful
misconduct;
(e) (i) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict
with the terms of this Make-Well Agreement and any legal
or equitable discharge of Circus' obligations hereunder,
(ii) any rights to set-offs, recoupment and counterclaims,
and (iii) promptness, diligence and any requirement that
Agent or any Lender protect, secure. perfect or insure any
security interest or lien or any property subject thereto:
(f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any
action or inaction, including acceptance of this Make-Well
Agreement, notices of default under the Credit Agreement
or any agreement or instrument related thereto, notices of
any renewal, extension or modification of the Obligations
or any agreement related thereto, notices of any extension
of credit to Partnership and notices of any of the matters
referred to in subsection 2.2 and any right to consent to
any thereof: and
(g) any defenses or benefits that may be
derived from or afforded by law which limit the liability
of or exonerate guarantors or sureties, or which may
conflict with the terms of this Make-Well Agreement,
including without limitation the provisions of Nevada
Revised Statutes Sections 40.430-40.459, 40.475 and 40.485
as permitted by Nevada Revised Statutes Sections 40.495
(1993), and any successor provisions.
2.4 Circus' Rights of Subrogation, Contribution,
Etc. Circus and Partnership hereby expressly agree that any
Additional Contributions made by Circus pursuant to this Make-
Well Agreement shall be made in exchange for equity of
Partnership or General Partner Subordinated Debt or, without
duplication, both, and Circus shall not be entitled to any
right of subrogation, contribution or reimbursement from any
Person (including without limitation, Partnership, Agent, any
Lender or any guarantor) with respect to such Additional
Contributions until this Make-Well Agreement has been
terminated pursuant to subsection 2.8 hereof; provided that to
the extent Circus receives General Partner Subordinated Debt in
exchange for Additional Contributions, Circus shall be entitled
(subject to subsection 2.5 below and subsection 7.5 of the
Credit Agreement) to such reimbursement as is permitted
pursuant to the Subordinated Debt Documents; provided further
that such entitlement shall cease upon the occurrence and
during the continuance of an Event of Default or Potential
Event of Default.
2.5 Real Property Security. Circus agrees that, if
all or a portion of the Obligations or any other guaranty of
all or a portion of the Obligations are at any time secured by
a deed of trust or mortgage covering interests in real
property, then, in the event that Additional Contributions are
not made when required pursuant to Section 2.1, Agent or its
designee, in its sole discretion, without notice or demand and
without affecting the liability of Circus, may foreclose at any
time thereafter, pursuant to the terms of the Loan Documents
(including subsection 7.6A of the Credit Agreement) or
otherwise in accordance with applicable law, on any such deed
of trust or mortgage and the property described therein by
nonjudicial or other sale without affecting the obligations of
Circus hereunder. Without limiting any of the waivers
contained elsewhere herein, Circus hereby waives any defense to
liability arising by reason of the exercise by Lenders or Agent
or any of them, of any right or remedy contained in any such
deed of trust or mortgage or any of the other Loan Documents.
Circus hereby authorizes and empowers Agent and any Lender to
exercise, in its sole discretion, any rights or remedies, or
any combination thereof, which may then be available, since it
is the intent and purpose of Circus that its obligations
hereunder shall be absolute, independent and unconditional
under any and all circumstances, subject, only, to the right of
Circus to terminate this Agreement in the manner, and upon the
fulfillment of the conditions, set forth in Section 2.14
hereof. Notwithstanding any foreclosure of the lien of any
such deed of trust or mortgage, whether by the exercise of the
power of sale contained therein, by an action for judicial
foreclosure, or by acceptance of a deed in lieu of foreclosure,
Circus shall remain bound under this Make-Well Agreement;
provided the net proceeds of any such exercise of remedies
shall be deducted from the Obligations to the extent such
proceeds are applied to reduce the Obligations in any
calculation of amounts owing from Circus under the terms of
this Make-Well Agreement.
2.6 Expenses. Circus agrees to pay, or cause to be
paid, on demand, and to save Agent and Lenders harmless against
liability for, any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal
counsel) incurred or expended by Agent or any Lender in
connection with the enforcement of or preservation of any
rights under this Make-Well Agreement.
2.7 Continuing Guaranty. This Make-Well Agreement
is a continuing guaranty and, subject to Section 2.14, shall
remain in effect until all of the Obligations shall have been
paid in full in cash by Circus, Partnership or otherwise and
promptly and completely performed and the Commitments shall
have terminated and all Letters of Credit shall have expired or
been cancelled. Circus' liability under this Make-Well
Agreement shall not be reduced by virtue of any payment by
Partnership of any amounts due under the Credit Agreement
(other than a payment that increases the actual Make-Well
Coverage Ratio maintained by Partnership) or under any of the
Loan Documents or by Agent's or Lenders' recourse to any
collateral or security.' Circus hereby irrevocably waives any
right to revoke this Make-Well Agreement as to future
transactions giving rise to any Make-Well Obligations.
2.8 Authority of Circus or Partnership. It is not
necessary for Lenders or Agent to inquire into the capacity or
powers of Circus or Partnership or the officers, directors or
any agents acting or purporting to act on behalf of any of
them.
2.9 Financial Condition of Partnership. Any Loans
may be granted to Partnership or continued from time to time
without notice to or authorization from Circus regardless of
the financial or other condition of Partnership at the time of
any such grant or continuation. Lenders and Agent shall have
no obligation to disclose or discuss with Circus their
assessment, or Circus' assessment, of the financial condition
of Partnership; provided that Agent shall give notice to Circus
of any reduction of Commitments or change in the final maturity
of the Loans; provided, further, that the failure of Agent to
so notify Circus shall not affect the obligations of Circus
hereunder. Circus has adequate means to obtain information
from Partnership on a continuing basis concerning the financial
condition of Partnership and its ability to perform its
obligations under the Loan Documents (including, without
limitation, its obligations to satisfy its financial
covenants), and Circus assumes the responsibility for being and
keeping informed of the financial condition of Partnership and
of all circumstances bearing upon the risk of nonpayment or
nonperformance of the Obligations. Circus hereby waives and
relinquishes any duty on the part of Agent or any Lender to
disclose any matter, fact or thing relating to the business,
operations or conditions of Partnership now known or hereafter
known by Agent or any Lender.
2.10 Rights Cumulative. The rights, powers and
remedies given to Lenders and Agent by this Make-Well Agreement
are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Lenders and Agent by
virtue of any statute or rule of law or in any of the other
Loan Documents or any agreement between Circus and Lenders
and/or Agent or between Partnership and Lenders and/or Agent.
Any forbearance or failure to exercise, and any delay by any
Lender or Agent in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or
be construed to be a waiver thereof, nor shall it preclude the
further exercise of any such right, power or remedy.
2.11 Bankruptcy. So long as any Obligations remain
outstanding, Circus shall not, without the prior written
consent of Agent in accordance with the terms of the Credit
Agreement, commence or join with any other Person in commencing
any bankruptcy, reorganization or insolvency proceedings of or
against Partnership. The obligations of Circus under this
Make-Well Agreement shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or
arrangement of Partnership or by any defense which Partnership
may have by reason of the order, decree or decision of any
court or administrative body resulting from any such
proceeding.
2.12 Notice of Events. As soon as Circus obtains
knowledge thereof, Circus shall give Agent written notice of
any condition or event which has resulted in (a) a material
adverse change in the financial condition of Circus or
Partnership or (b) a breach of or noncompliance with any term,
condition or covenant contained herein or in the Circus Loan
Agreement, the Credit Agreement, any other Loan Document or any
other document delivered pursuant hereto or thereto. Promptly
upon Agent's receipt of notice thereof, Agent shall give Circus
written notice of any Event of Default; provided that the
failure of Agent to so notify Circus shall not affect any
obligation of Circus hereunder.
2.13 Cooperation With Gaming Boards. Circus agrees
that it shall cooperate with Agent and Lenders to fulfill the
requirements of any Gaming Board with respect to the rights of
Agent and Lenders to enforce and apply any security now or
hereafter held by or for the benefit of Agent or any Lender in
respect of the Obligations, or to exercise any other right or
remedy that Agent or Lenders, or any of them, may have against
any such party.
2.14 Termination of Agreement; Conditions. During
the period from December 31, 2000 through December 31, 2001,
Circus shall have the option to elect to terminate the Make-
Well Agreement by written notice to the Agent (subject to
confirmation of receipt by Agent as set forth below),
substantially in the form of Exhibit A hereto, if all the
following conditions have been satisfied:
(i) on the last day of each of the two most
recent Fiscal Quarters for which financial statements
of Partnership have been delivered pursuant to
subsection 5.1 of the Credit Agreement, the Stand-
Alone Leverage Ratio is 3.00:1.00 or less;
(ii) for each of the two most recent Fiscal
Quarters for which financial statements of
Partnership have been delivered pursuant to
subsection 5.1 of the Credit Agreement, the Stand-
Alone Coverage Ratio for the four consecutive Fiscal
Quarters then ended is not less than 1.25:1.00;
(iii) no Event of Default or Potential Event of
Default shall have occurred and be continuing; and
(iv) Circus shall not be in default in any of
its monetary agreements under this Agreement.
Upon receipt by the Agent of any such notice in a
form which the Agent believes to be proper, the Agent shall
give notice thereof to the Partnership and the Lenders. In the
event that any Lender believes that the Make-Well Agreement may
not properly be terminated, it shall provide written notice of
its objection to the termination of the Make-Well Agreement
within 10 days of the date of such notice, which written notice
shall state the basis of the objection. In the absence of any
such objection, the Agent shall acknowledge receipt of the
request, and terminate the Make-Well Agreement within 14 days
of the giving of such notice (or, if any objection has been
served, as promptly as possible following the resolution of
such objection).
The termination of this Agreement in accordance with
this Section shall not result in a termination of the
Environmental Indemnity executed by Circus nor shall it absolve
Circus of any obligation to make payments which have previously
accrued hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders and Agent to accept this Make-
Well Agreement and to enter into the Credit Agreement and to
make the Loans thereunder, Circus hereby represents and
warrants to Lenders that the following statements are true and
correct:
3.1 Incorporation of Representations and Warranties.
Each of the representations and warranties set forth in the
Circus Loan Agreement is true, correct and complete in all
material respects as if originally made as of the date hereof
other than subsections 4.2, 4.3, 4.4 and 4.11 thereof.
3.2 Authorization of Borrowing, etc.
(a) Authorization of Borrowing. The execution,
delivery and performance of the Loan Documents to which it
is a party have been duly authorized by all necessary
corporate action on the part of Circus.
(b) No Conflict. The execution, delivery and
performance by Circus of the Loan Documents to which it is
a party and the consummation of the transactions
contemplated by the Loan Documents do not and will not
(i) violate any provision of any law or any governmental
rule or regulation applicable to Circus or any of its
Subsidiaries, the Certificate of Incorporation or Bylaws
of Circus or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of
government binding on Circus or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under
any Contractual Obligation of Circus or any of its
Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or
assets of Circus or any of its Subsidiaries (other than
any Liens created under any of the Loan Documents in favor
of Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Circus or any
of its Subsidiaries.
(c) Governmental Consents. The execution,
delivery and performance by Circus of the Loan Documents
to which it is a party and the consummation of the
transactions contemplated by the Loan Documents do not and
will not require any registration with, consent or
approval of, or notice to, or other action to, with or by,
any federal, state or other governmental authority or
regulatory body.
(d) Binding Obligation. Each of the Loan
Documents to which it is a party has been duly executed
and delivered by Circus and is the legally valid and
binding obligation of Circus, enforceable against Circus
in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable
principles relating to enforceability.
SECTION 4. AFFIRMATIVE COVENANTS
Circus covenants and agrees that, unless and until
all of the Obligations shall have been paid in full by Circus,
Partnership or otherwise and the Commitments shall have
terminated and all Letters of Credit shall have expired or been
cancelled, or until the termination of this Agreement in
accordance with Section 2.14 unless Requisite Lenders shall
otherwise consent in writing:
4.1 Covenants in Circus Loan Agreement. Circus
shall at all times perform all of its obligations set forth in
Article 5 of the Circus Loan Agreement for the benefit of the
financial institutions party thereto.
4.2 Reporting Requirements. As soon as possible
after the same are available to Circus, and in any event within
the time set for such delivery in the Circus Loan Agreement,
Circus will deliver to Lenders copies of the documents required
to be delivered under subsections 7.1(a), 7.1(c) and 7.2 of the
Circus Loan Agreement as in effect on the Closing Date
notwithstanding any subsequent amendment, modification or
termination thereof. Circus will promptly and in any event no
later than concurrently with delivery of financial statements
pursuant to such subsection 7.1(a), deliver to Lenders written
notice of any change in the Senior Debt Rating (as defined in
the Circus Loan Agreement).
4.3 Bankruptcy. Circus agrees that it shall not
commence or join with any other creditor of Partnership to
commence any bankruptcy, insolvency, reorganization or other
similar proceedings against Partnership.
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements,
representations and warranties made herein shall survive the
execution and delivery of this Make-Well Agreement and the
other Loan Documents and any increase in the Commitments under
the Credit Agreement.
5.2 Notices. Any communications between or among
Agent, Circus and Partnership and any notices or requests
provided herein to be given may be given by mailing the same,
postage prepaid, or by telex or facsimile transmission prior to
5:00 P.M. (Pacific Time) on a Business Day to each such party
at its address set forth in the Credit Agreement, on the
signature pages hereof or to such other addresses as each such
party may in writing hereafter indicate. Any notice, request
or demand to or upon Agent, Partnership or Lenders or Circus
under or relating to this Make-Well Agreement shall not be
effective until received.
5.3 Severability. In case any provision in or
obligation under this Make-Well Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
5.4 Amendments and Waivers. No amendment,
modification, termination or waiver of any provision of this
Make-Well Agreement, or consent to any departure by Circus
therefrom, shall in any event be effective without the written
concurrence of all Lenders under the Credit Agreement. Any
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
5.5 Headings. Section and subsection headings in
this Make-Well Agreement are included herein for convenience of
reference only and shall not constitute a part of this Make-
Well Agreement for any other purpose or be given any
substantive effect.
5.6 Applicable Law. THIS MAKE-WELL AGREEMENT SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEVADA,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.7 Successors and Assigns. This Make-Well
Agreement is a continuing guaranty and shall be binding upon
Circus and its successors and assigns. This Make-Well
Agreement shall inure to the benefit of Partnership, Lenders,
Agent and their respective successors and assigns. Circus
shall not assign this Make-Well Agreement or any of the rights
or obligations of Circus hereunder without the prior written
consent of all Lenders. Any Lender may, without notice or
consent, assign its third party beneficiary interest in this
Make-Well Agreement in whole or in part. The terms and
provisions of this Make-Well Agreement shall inure to the
benefit of any transferee or assignee of any Loan, and in the
event of such transfer or assignment the rights and privileges
herein conferred upon Lenders and Agent shall automatically
extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
5.8 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST CIRCUS ARISING OUT OF
OR RELATING TO THIS MAKE-WELL AGREEMENT MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF NEVADA AND BY EXECUTION AND DELIVERY OF THIS MAKE-WELL
AGREEMENT CIRCUS ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS MAKE WELL
AGREEMENT. Circus hereby agrees that service of all process in
any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Circus at its
address provided in subsection 5.2, such service being hereby
acknowledged by Circus to be sufficient for personal
jurisdiction in any action against Circus in any such court and
to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any
other manner permitted by law.
5.9 Waiver of Trial by Jury. CIRCUS AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, PARTNERSHIP AND AGENT EACH
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
MAKE-WELL AGREEMENT. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed
in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and
statutory claims. Circus and, by its acceptance of the
benefits hereof, Partnership and Agent each (i) acknowledges
that this waiver is a material inducement for Circus,
Partnership and Agent to enter into a business relationship,
that Circus, Partnership and Agent have already relied on this
waiver in entering into this Make-Well Agreement or accepting
the benefits thereof, as the case may be, and that each will
continue to rely on this waiver in their related future
dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
MAKE-WELL AGREEMENT. In the event of litigation, this Make-
Well Agreement may be filed as a written consent to a trial by
the court.
5.10 No Other Writing. This writing is intended by
Circus, Partnership and Agent as the final expression of this
Make-Well Agreement and is also intended as a complete and
exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing,
course of performance or trade usage, and no parol evidence of
any nature, shall be used to supplement or modify any terms of
this Make-Well Agreement. There are no conditions to the full
effectiveness of this Make-Well Agreement.
5.11 Further Assurances. At any time or from time to
time, upon the request of Agent or Requisite Lenders, Circus or
Partnership or both shall execute and deliver such further
documents and do such other acts and things as Agent or Requi-
site Lenders may reasonably request in order to effect fully
the purposes of this Make-Well Agreement.
5.12 Partnership Third-Party Beneficiary. Circus and
Agent hereby expressly agree and acknowledge that Partnership
is intended to be an express third-party beneficiary of this
Make-Well Agreement and Partnership shall be entitled to
exercise any and all rights and remedies afforded third-party
beneficiaries under the laws of the relevant jurisdiction.
5.13 Counterparts. This Make-Well Agreement may be
executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.
IN WITNESS WHEREOF, Circus has caused this Make-Well
Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first written above.
CIRCUS CIRCUS ENTERPRISES, INC.
By GLENN W. SCHAEFFER
Title President, CFO
Address: 2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
Accepted by:
WELLS FARGO BANK, N.A.,
as Agent on behalf of the Lenders
By STEVE BYRNE
Title Vice President
Address: 3800 Howard Hughes Parkway,
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
CIRCUS AND ELDORADO
JOINT VENTURE, as express
third-party beneficiary
By: GALLEON, INC.
By: CLYDE T. TURNER
Title: President
Address: c/o Circus Circus Enterprises
2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
By: ELDORADO LIMITED LIABILITY COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC.
Its: Manager
By: DON CARANO
Title:
Address: c/o Eldorado Hotel Casino
345 North Virginia Street
P.O. Box 3399
Reno, Nevada 89508
Attention: General Counsel
By: EXECUTIVE COMMITTEE
By: DON CARANO
Title:
By: ROBERT JONES
Title:
[Exhibit A to Make-Well Agreement]
________________, 200__
Wells Fargo Bank, N.A.
3800 Howard Hughes Parkway,
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
Gentlemen:
This letter is delivered with reference to the
Amended and Restated Credit Agreement dated as of September 9,
1996 among CIRCUS AND ELDORADO JOINT VENTURE, the Lenders named
therein, WELLS FARGO BANK, N.A., as arranger and administrative
agent, WELLS FARGO BANK, N.A., THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY and SOCIETE GENERALE, as
managing agents and CIBC INC. and CREDIT LYONNAIS, LOS ANGELES
BRANCH, collectively, as co-agents ("Co-Agents") (said Amended
and Restated Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined).
By this notice Circus Circus Enterprises, Inc.
("Circus") hereby requests the termination of the Make-Well
Agreement referred to in the Credit Agreement. In support of
this request, Circus hereby certifies that:
(i) on the last day of each of the two most
recent Fiscal Quarters for which financial statements
of Partnership have been delivered pursuant to
subsection 5.1 of the Credit Agreement, the Stand-
Alone Leverage Ratio was 3.00:1.00 or less;
(ii) for each of the two most recent Fiscal
Quarters for which financial statements of
Partnership have been delivered pursuant to
subsection 5.1 of the Credit Agreement, the Stand-
Alone Coverage Ratio for the four consecutive Fiscal
Quarters then ended was not less than 1.25:1.00;
(iii) to the best knowledge of Circus, no Event
of Default or Potential Event of Default has occurred
and remains continuing; and
(iv) Circus is not in default in any of its
monetary agreements under the Make-Well Agreement.
Please promptly execute this request in the space
provided below, whereupon the Make-Well Agreement shall be
deemed terminated.
Very truly yours,
CIRCUS CIRCUS ENTERPRISES, INC.
By:
Title:
cc. Circus and Eldorado Joint Venture
Attn: Chief Financial Officer
The undersigned acknowledges on behalf of the Lenders
that the Make-Well Agreement has been terminated in
accordance with its terms.
WELLS FARGO BANK, N.A.
By: STEVE BYRNE
Title: Vice President
Recording requested by:
and when recorded mail to:
Sheppard, Mullin, Richter )
& Hampton LLP )
333 South Hope Street )
48th Floor )
Los Angeles, CA 90071 )
Attn: Mark Okuma, Esq. )
_______________________________________________________________
(Space above line is for Recorder's use)
AMENDED AND RESTATED CONSTRUCTION DEED OF TRUST, FIXTURE FILING
AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING
CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND
REBORROWING. INTEREST ON OBLIGATIONS SECURED HEREBY ACCRUES AT
RATES WHICH MAY FLUCTUATE FROM TIME TO TIME. THIS INSTRUMENT
SECURES FUTURE ADVANCES. THIS DEED OF TRUST SHALL BE DEEMED TO
BE A CONSTRUCTION MORTGAGE UNDER NEVADA REVISED STATUTES
104.9313(1)(c) AND UNDER THE NEVADA UNIFORM COMMERCIAL CODE.
THIS AMENDED AND RESTATED CONSTRUCTION DEED OF TRUST,
FIXTURE FILING AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
(this "Deed of Trust"), made as of September 9, 1996, by and
among CIRCUS AND ELDORADO JOINT VENTURE, a Nevada general
partnership, as debtor and trustor ("Trustor"), FIRST AMERICAN
TITLE COMPANY OF NEVADA, a Nevada corporation, as trustee
("Trustee"), and WELLS FARGO BANK, N.A., in its capacity as
arranger and "Administrative Agent" for the "Lenders" under the
Credit Agreement, as beneficiary, assignee and secured party
(as defined and described hereinbelow), as secured party and
beneficiary ("Beneficiary"),
Trustor and Beneficiary hereby agree that this Deed
of Trust hereby amends and restates in full that certain Deed
of Trust, Fixture Filing and Security Agreement with Assignment
of Rents ("Original Deed of Trust"), made as of May 30, 1995,
by Trustor, as trustor, assignor and debtor, in favor of
Trustee, as trustee, for the benefit of First Interstate Bank
of Nevada, N.A., as Agent ("Original Beneficiary"), as
beneficiary, assignee and secured party, recorded May 31, 1995,
in Book 4312, Page 814, as Document No. 1897110 of the Official
Records of Washoe County, Nevada. Wells Fargo Bank, N.A. is
the successor in interest by merger to the right, title and
interest of First Interstate Bank of Nevada, N.A. under the
Original Deed of Trust.
W I T N E S S E T H:
THAT TRUSTOR HEREBY:
Grants, bargains, sells, transfers, conveys and
assigns the following described real property and related
collateral to Trustee, IN TRUST, WITH POWER OF SALE, to have
and to hold the same unto Trustee and its successors in
interest, for the benefit of and on behalf of Beneficiary, upon
the trusts, covenants and agreements herein expressed:
DESCRIPTION OF REAL PROPERTY COLLATERAL
All that certain real property, and the interests of
Trustor therein, situate in the County of Washoe, State of
Nevada, that is more particularly described on Part I of that
certain exhibit marked Exhibit A, affixed hereto and by this
reference incorporated herein and made a part hereof (the
"Land");
Together with all right, title and interest of
Trustor, now owned or hereafter acquired, in and to any land
lying within the right-of-way of any street, open or proposed,
adjoining any of the Land and any and all sidewalks, bridges,
elevated walkways, tunnels, alleys, strips and gores of land
adjacent to, connecting or used in connection with any of the
Land, with appurtenances ("Adjacent Interests");
Together with all buildings, structures and all other
improvements and fixtures that are or may hereafter be erected
or placed on or in the Land and all rights and interests of
Trustor in and to all buildings, structures and other
improvements and fixtures that are or may hereafter be erected
or placed on or in Adjacent Interests (including, but not
limited to, Trustor's rights, title and interests in and to all
buildings, structures and other improvements and fixtures that
are or may hereafter be erected or placed on or in the easement
areas, and leased areas, or any of them, referred to in Part II
of Exhibit A) (collectively, the "Improvements"), provided,
however, Trustor and Beneficiary acknowledge that the Skyways
(as that term is defined in the "Credit Agreement" described
below) are owned by entities other than Trustor, and that
Trustor's rights, title and interests in and to the Skyways
arise from and under (i) rights of reverter for the air rights
parcels within which the Skyways are located, as provided in
two Grant, Bargain and Sale Deeds executed by Trustor, one in
favor of each of the two entities that own the Skyways, and
(ii) certain Bridge Easements referred to in Part II of Exhibit
A and, while Trustor's rights, title and interests arising from
and under such Grant, Bargain and Sale Deeds and such Bridge
Easements are hereby bargained, sold, transferred, conveyed and
assigned to Trustee, in trust, with power of sale, for the
benefit of and on behalf of Beneficiary, the term
"Improvements" as used in this Deed of Trust shall not
otherwise include the Skyways;
Together with all and singular the tenements,
hereditaments and appurtenances belonging or in anywise
appertaining to any of the Land, Adjacent Interests,
Improvements or Skyways (including, but not limited to, the
easements and other rights referred to in Part II of Exhibit A)
(collectively, the "Appurtenances");
Together with all rents, issues, products, earnings,
revenues, payments, profits, royalties and other proceeds and
income of or from any of the foregoing or of or from any of the
Leases, as hereinafter defined (collectively, the "Rents"),
subject, however, in the case of Rents, to the absolute
assignment given to Beneficiary in Section 12 hereof, to which
Section 12 this grant to the Trustee is subject and
subordinate;
Together with all leasehold estate, right, title and
interest of Trustor in and to all leases, subleases, licenses,
concessions, franchises and other use or occupancy agreements
(excepting, however, agreements made by Trustor in the ordinary
course of business for short-term use by members of the public
of guest rooms and public rooms, including banquet and meeting
facilities, located in the Improvements), and any amendments,
modifications, extensions or renewals thereof (collectively,
"Leases") covering any of the Land, Adjacent Interests,
Improvements, Skyways or Appurtenances, now or hereafter
existing or entered into, and all right, title and interest of
Trustor thereunder, including, without limitation, the right to
all security deposits, advance rentals, other deposits, and all
payments of similar nature, relating thereto;
Together with all water rights and rights to the use
of water now or hereafter appurtenant to or used in connection
with any of the Land, Adjacent Interests, Improvements or
Appurtenances ("Water Rights");
Together with any and all other estate, right, title,
interest, property, possession, claim or demand, in law or in
equity, which Trustor now has or may hereafter acquire in or to
any of the Land, Adjacent Interests, Improvements, Skyways,
Appurtenances, Rents, Leases and Water Rights, or pertaining or
appurtenant thereto, and all reversions and remainders thereof,
and all tenements, hereditaments and appurtenances thereunto
belonging or in any wise appertaining thereto ("Other
Interests") (said Land, Adjacent Interests, Improvements,
Appurtenances, Rents, Leases, Water Rights and Other Interests
may be referred to herein as the "Real Property"); and
THAT TRUSTOR HEREBY:
Grants a security interest, pursuant to the Nevada
Uniform Commercial Code -- Secured Transactions, to
Beneficiary, on the terms and provisions (by this reference
incorporated herein with respect to the security interest
herein granted and the rights and obligations of the parties
with respect to the Personal Property, as hereinafter defined,
but for no other purpose) set forth in that certain Amended and
Restated Security Agreement of even date herewith by and
between Trustor, as Grantor and Debtor, and Beneficiary, as
Secured Party (the "Security Agreement"), in all of the
following described personal property, and the interests of
Trustor therein, whether now owned or hereafter acquired
(collectively, the "Personal Property"):
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL
(a) All present and future chattels, furniture,
furnishings, goods, equipment, fixtures and all other tangible
personal property, of whatever kind and nature, now or
hereafter used in connection with or placed or located in or on
any part of the Real Property (including, without limitation,
any building or structure that is now or that may hereafter be
erected on the Real Property, and including any of the
foregoing owned by Trustor and placed or located in or on the
Skyways), including, but not limited to, machinery, materials,
goods and equipment now or hereafter used in the construction
or operation of the hotel, casino, restaurant, entertainment
and shopping complex constructed and to be constructed on the
Real Property or portions thereof (the "Project") (including,
without limitation, air conditioning, heating, electrical,
lighting, fire fighting and fire prevention, food and beverage
service, laundry, plumbing, refrigeration, security, sound,
signaling, telephone, television, window washing and other
equipment and fixtures, of whatever kind or nature, including
generators, transformers, switching gear, boilers, burners,
furnaces, piping, sprinklers, sinks, tubs, valves, compressors,
motors, carts, dumb waiters, elevators and other lifts, floor
coverings, hardware, keys, locks, organs, pianos, planters,
railings, scales, shelving, signs, tools, machinery, molds,
dies, drills, presses, planers, saws, furniture, business
fixtures, trade fixtures, electric, gas and other motor
vehicles, uniforms, vacuum cleaners, hotel furniture,
furnishings and equipment, bathroom furniture and furnishings
(including towels, bathmats, hamperettes, shower curtains and
other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters,
spreads and other bed linens and furnishings), bric-a-brac,
chairs, chests, vanities, secretaries, bureaus, chiffonniers,
love seats, benches, costumers, smoking stands, sand jars,
desks, dressers, hangings, paintings, pictures, frames,
sculptures, lamps, light bulbs, mirrors, night stands,
ornaments, radios, stereo equipment, sofas, statuary, tables,
telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic
beverages), and other consumables (including soap, shampoo,
cleaning supplies and paper goods), cutlery, cooking, baking
and other kitchen utensils and apparatus (including crockery,
fryers, grills, kettles, mixers, pots, pans, pails, racks,
steamers and toasters), china and other dishes, flatware,
glassware, hollowware, serving pieces, trays, table linens,
washers, dryers, irons, ironing boards and other ironing
equipment, cables, outlets, plugs, wiring and related apparatus
and fixtures, card readers, cash registers, adding machines,
calculators, computers, keyboards, monitors, printers, printing
equipment, envelopes, stationary, posting machines, blank
forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders,
bookkeeping machines, checking machines, payroll machines,
computer reservations systems, equipment used in the operation
of casinos on the Real Property (including but not limited to,
gaming devices and associated equipment (as defined in Nevada
Revised Statutes Chapter 463), including but not limited to,
slot machines, cards, poker chips and gaming tables) and all
other goods, equipment, furnishings, apparatus and fixtures
that are now or may hereafter be located at or used at or in
connection with the Real Property, and all other tangible
personal property used or to be used at or in connection with,
or placed or to be placed in, rooms, halls, lounges, offices,
lobbies, lavatories, basements, cellars, vaults or other
portions of the Project or of any other building or buildings
hereafter constructed or erected thereon, whether herein
enumerated or not, and whether or not contained in any such
building, and which are used or to be used or useful in the
operation and maintenance thereof, or in any bar, casino,
hotel, restaurant, store, health spa, salon or other business
conducted thereon, together with all replacements and
substitutions for any and all personal property in which
Trustor has an interest, including without limitation such
goods and equipment as shall from time to time be located,
placed, installed or used in or upon, or procured for use, or
to be used or useful in connection with the operation of the
whole, or any part of, the Project and all parts thereof and
all accessions thereto;
(b) All present and future goods, including, without
limitation, all consumer goods, inventory, equipment
(excluding, however, any Equipment pledged to secure "Other
Permitted Indebtedness" (as such initially capitalized term is
defined in the Credit Agreement) incurred to finance the
purchase of such Equipment, pursuant to a pledge in form, scope
and substance satisfactory to Beneficiary), and other supplies,
of whatever kind or nature, and any and all other goods,
wherever located, used or to be used in connection with or in
the conduct of Trustor's business;
(c) All present and future inventory and merchandise
in all of its forms (including, but not limited to, (i) all
goods held by Trustor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all
raw materials, work in process, finished goods, and materials
used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in Trustor's business,
(iii) all goods in which Trustor has an interest in mass or a
joint or other interest or right of any kind, (iv) all goods
that are returned to or repossessed by Trustor, and (v) all
packing materials, supplies and containers relating to or used
in connection with any of the foregoing, and all accessions
thereto and products thereof and all negotiable documents of
title (including without limitation warehouse receipts, dock
receipts and bills of lading) issued by any person covering any
of the foregoing;
(d) All present and future accounts, accounts
receivable, rentals, revenues, receipts, payments, and income
of any other nature whatsoever derived from or received with
respect to hotel rooms, banquet facilities, convention
facilities, retail premises, bars, restaurants, casinos and any
other facilities on the Real Property and any facilities in the
Skyways leased by Trustor, agreements, contracts, leases,
contract rights, rights to payment (including, without
limitation, rights to payment under the Make-Well Agreement, as
that term is defined in the Credit Agreement), instruments,
documents, chattel paper, security agreements, guaranties,
undertakings, surety bonds, insurance policies, condemnation
deposits and awards, notes and drafts, securities, certificates
of deposit and the right to receive all payments thereon or in
respect thereof (whether principal, interest, fees or
otherwise), contract rights (other than rights under contracts
or governmental permits that may not be transferred by law),
including, without limitation, rights to all deposits from
tenants and other users of the Project or facilities in the
Skyways leased by Trustor, rights under all contracts relating
to the construction, renovation or restoration of any of the
improvements now or hereafter located on the Real Property or
the financing thereof and all rights under payment or
performance bonds, warranties, and guaranties, and all rights
to payment from any credit/charge card organization or entity
such as or similar to, and including, without limitation, the
organizations or entities that sponsor and administer,
respectively, the American Express Card, the Carte Blanche
Card, the Diners Club Card, the Discover Card, the MasterCard
and the Visa Card, books of account, and principal, interest
and payments due on account of goods sold, services rendered,
loans made or credit extended, on or in connection with the
Project and all forms of obligations owing to and rights of
Trustor or in which Trustor may have any interest, however
created or arising;
(e) All present and future general intangibles
(including but not limited to all governmental permits relating
to construction or other activities on the premises), all tax
refunds of every kind and nature to which Trustor now or
hereafter may become entitled, however arising, all other
refunds, and all deposits, goodwill, choses in action, rights
to payment or performance, gambling debts or gaming debts owed
to Trustor by Trustor's patrons (whether or not evidenced by a
note), judgments taken on any rights or claims included in the
Property (as hereinafter defined), trade secrets, computer
programs, software, customer lists, business names, trademarks,
trade names and service marks (including, but not limited to:
"Silver Legacy Hotel Casino" and any derivation thereof,
including any and all state and federal applications and
registrations thereof), patents, patent applications, licenses,
copyrights, technology, processes, proprietary information and
insurance proceeds;
(f) All present and future deposit accounts of
Trustor, including, without limitation, the Circus and Eldorado
Joint Venture Account maintained at the office of Beneficiary,
any demand, time, savings, passbook or like account maintained
by Trustor with any bank, savings and loan association, credit
union or like organization, and all money, cash and cash
equivalents of Trustor, whether or not deposited in any such
deposit account;
(g) All present and future books and records,
including, without limitation, books of account and ledgers of
every kind and nature, ledger cards, computer programs, tapes,
disks and other information storage devices, all related data
processing software, and all electronically recorded data
relating to Trustor or its business or the Project, all
receptacles and containers for such records, and all files and
correspondence;
(h) All present and future stocks, bonds,
debentures, securities, subscription rights, options, warrants,
puts, calls, certificates, partnership interests, joint venture
interests, investments, brokerage accounts and all rights,
preferences, privileges, dividends, distributions, redemption
payments and liquidation payments received or receivable with
respect thereto;
(i) All present and future right, title and interest
of Trustor in and to all Leases, whether or not specifically
herein described, that now or may hereafter pertain to or
affect the Real Property or any portion thereof, or the
Skyways, and all amendments to the same, including, but not
limited to, the following: (i) all payments due and to become
due under such Leases, whether as rent, damages, insurance
payments, condemnation awards, or otherwise; (ii) all claims,
rights, powers, privileges and remedies under such Leases; and
(iii) all rights of the Trustor under such Leases to exercise
any election or option, or to give or receive any notice,
consent, waiver or approval, or to accept any surrender of the
premises or any part thereof, together with full power and
authority in the name of the Trustor, or otherwise, to demand
and receive, enforce, collect, and receipt for any or all of
the foregoing, to endorse or execute any checks or any
instruments or orders, to file any claims, and to take any
other action that Beneficiary may deem necessary or advisable
in connection therewith;
(j) All present and future maps, plans,
specifications, surveys, studies, reports, data and drawings
(including, without limitation, architectural, structural,
mechanical and engineering plans and specifications, studies,
data and drawings) prepared for or relating to the development
of the Project and the Skyways or the construction, renovation
or restoration of any improvements on the Real Property or the
extraction of minerals, sand, gravel or other valuable
substances from the Real Property, together with all amendments
and modifications thereto;
(k) All present and future licenses, permits,
variances, special permits, franchises, certificates, rulings,
certifications, validations, exemptions, filings,
registrations, authorizations, consents, approvals, waivers,
orders, rights and agreements (including options, option rights
and contract rights), other than those (including non-
transferable gaming permits) that may not be transferred by
law, now or hereafter obtained by Trustor from any governmental
authority having or claiming jurisdiction over the Project, the
Real Property or any other element of the Property or the
Skyways or providing access thereto, or the operation of any
business on, at, or from the Project or the Skyways;
(l) All present and future accessions,
appurtenances, components, repairs, repair parts, spare parts,
replacements, substitutions, additions, issue and improvements
to or of or with respect to any of the foregoing;
(m) All other fixtures and storage and office
facilities, and all accessions thereto and products thereof and
all water stock relating to the Real Property;
(n) All other tangible and intangible personal
property of Trustor;
(o) All rights, remedies, powers and privileges of
Trustor with respect to any of the foregoing; and
(p) Any and all proceeds, products, rents, income
and profits of any of the foregoing, including, without
limitation, all money, accounts, general intangibles, deposit
accounts, documents, instruments, chattel paper, goods,
insurance proceeds (whether or not the Beneficiary is the loss
payee), and any other tangible or intangible property received
upon the sale or disposition of any of the foregoing (it being
agreed, for purposes hereof, that the term "proceeds" includes
whatever is receivable or received when any of the Property is
sold, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary). Notwithstanding
anything to the contrary contained herein, Beneficiary
acknowledges that it has no security interest in (x) any cash
of Trustor described in clauses (e), (f) and (h) above, to the
extent such a security interest is prohibited by any Gaming
Laws (as defined in the Credit Agreement), or (y) any deposit
account described in clause (f) above, to the extent such a
security interest is not permitted by applicable law.
(The Real Property, the Personal Property and all of
the other collateral described above may hereinafter be
collectively referred to as the "Property". The parties intend
for this Deed of Trust to create a lien on and security
interest in the Property, and, as provided in Section 12
hereof, an absolute assignment of the Rents and the Leases, all
in favor of Beneficiary. To the extent any of the Property,
Rents or Leases are not encumbered by a perfected lien or
security interest created above, and are not absolutely
assigned by the assignment set forth in Section 12, below, it
is the intention of the parties that such Property, Rents
and/or Leases shall constitute "proceeds, product, offspring,
rents or profits" (as defined in and for the purposes of
Section 552(b) of the United States Bankruptcy Code, as such
section may be modified or supplemented) of the Land and
Improvements, and/or "fees, charges, accounts, or other
payments for the use or occupancy of rooms and other public
facilities in . . . lodging properties," as applicable (as such
terms are defined in and for the purpose of Section 552(b) of
the United States Bankruptcy Code, as such Section may be
modified or supplemented).)
FOR THE PURPOSE OF SECURING:
First: Payment when due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or
otherwise (including payment of amounts that would become due
but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. sec.362(a)), of all
obligations and liabilities of every nature of Trustor now or
hereafter existing under or arising out of or in connection
with that certain Amended and Restated Credit Agreement
executed concurrently herewith by Trustor, as Borrower,
Beneficiary, as arranger and Administrative Agent, The
Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency and
Societe Generale, as Managing Agents, and CIBC Inc. and Credit
Lyonnais, Los Angeles Branch, as Co-Agents, and the Lenders
listed therein as lenders (the "Lenders"), together with any
and all renewals, extensions, amendments, modifications,
rearrangements, replacements, restatements, substitutions and
addendums thereof or thereto (herein referred to as the "Credit
Agreement"), or the promissory notes issued to the Lenders to
evidence such obligations and liabilities, together with any
and all renewals, extensions, amendments, modifications,
rearrangements, replacements, restatements, substitutions and
addendums thereof or thereto (herein referred to as the
"Notes"), whether for principal in the amount of Two Hundred
Twenty Million Dollars ($220,000,000) or such principal amount
as may be advanced and remain unpaid or for interest
(including, without limitation, interest that, but for the
filing of a petition in bankruptcy with respect to Trustor,
would accrue on such obligations), reimbursement of amounts
drawn under Letters of Credit (as defined in the Credit
Agreement), fees, expenses, and amounts owing under indemnities
or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such
obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or
indirectly from Beneficiary or any such Lender as a preference,
fraudulent transfer or otherwise.
Second: Payment and performance of every obligation,
covenant, promise and agreement of Trustor herein contained
(excepting, however, the obligations of Trustor under Section
5(c) hereof are not secured hereby), or incorporated herein by
reference, including any sums paid or advanced by Beneficiary
or Trustee pursuant to the terms hereof.
Third: Payment of the expenses and costs incurred or
paid by Beneficiary in the preservation and enforcement of the
rights and remedies of Beneficiary and the duties and
liabilities of Trustor hereunder, including, but not by way of
limitation, reasonable attorneys' fees, court costs, reasonable
witness fees, reasonable expert witness fees, reasonable
collection costs, Trustee's fees and costs of a Trustee's Sale
Guarantee, and costs and expenses paid by Beneficiary in
performing for Trustor's account any obligation of Trustor.
Fourth: Payment of additional sums and interest
thereon which may hereafter be loaned to Trustor by the Lenders
when evidenced by a promissory note or notes or other agreement
between Trustor and the Lenders that recites that this Deed of
Trust is security therefor.
Fifth: Performance of every obligation, warranty,
representation, covenant, agreement and promise of Trustor
contained in the Credit Agreement.
The foregoing are described herein as the "Secured
Obligations". All persons who may have or acquire an interest
in all or any part of the Property will be considered to have
notice of, and will be bound by, the terms of the Secured
Obligations and each other agreement or instrument made or
entered into in connection with each of the Secured
Obligations. Such terms include any provisions in the Notes or
the Credit Agreement which permit borrowing, repayment and
reborrowing, or the making of future advances, or which provide
that the interest rate on one or more of the Secured
Obligations may vary from time to time.
It is the intention of Trustor and Beneficiary that
this Deed of Trust is an "instrument" (as defined in NRS
106.330 as amended and recodified from time to time) which
secures "future advances" (as defined in NRS 106.320 as amended
and recodified from time to time) and which is governed by NRS
106.300 through 106.400 as amended and recodified from time to
time. It is the intention of the parties that the Secured
Obligations include the obligation of Trustor to repay "future
advances" of "principal" (as defined in NRS 106.345 as amended
and recodified from time to time) in an amount up to the
aggregate amount of the Commitments (which is initially up to
$220,000,000.00), and that the lien of this Deed of Trust
secures the obligation of Trustor to repay all such "future
advances" with the priority set forth in NRS 106.370(1) as
amended and recodified from time to time. Trustor acknowledges
and agrees that the obligation of Lenders to make the Loans
pursuant to the Credit Agreement, and the obligation of Issuing
Bank (as defined in the Credit Agreement) to issue Letters of
Credit pursuant to the Credit Agreement and to honor draws
thereunder are obligatory in nature and not governed by the
provisions of NRS 106.300, et. seq. Notwithstanding the
foregoing, however, in the event that the making of the Loans,
the issuance of the Letters of Credit, or the honoring of the
draws under the Letters of Credit, are deemed to be optional,
then the maximum "principal" amount of such Advances to be
secured hereunder is initially $220,000,000.00.
THIS DEED OF TRUST FURTHER WITNESSETH THAT, IN
CONNECTION WITH AND IN FURTHERANCE OF THE FOREGOING GRANTS, AND
THE ENCUMBRANCES, LIENS AND SECURITY INTERESTS CREATED THEREBY,
TRUSTOR COVENANTS AND AGREES AS FOLLOWS:
1. Certain Representations and Warranties of
Trustor. Trustor represents, warrants and covenants that,
except as set forth in the Credit Agreement or as previously
disclosed to Beneficiary in a writing making reference to this
Section 1:
(a) Trustor lawfully possesses and holds fee
simple title to all of the Land and Improvements;
(b) Trustor has or will have good title to all
Property other than the Land and Improvements;
(c) Trustor has the full and unlimited
partnership power, right and authority to encumber the
Property and assign the Rents;
(d) This Deed of Trust creates a first priority
deed of trust lien on the Property, subject only to the
Permitted Encumbrances (as defined in the Credit
Agreement);
(e) The Property includes all property and
rights which may be reasonably necessary to promote the
present and any reasonable future beneficial use and
enjoyment of the Land, the Improvements and the Project;
(f) Trustor owns (or, with respect to any
Personal Property acquired by Trustor after the date
hereof, will own) the Personal Property free and clear of
any security agreements, reservations of title or
conditional sales contracts and there is no financing
statement affecting the Personal Property on file in any
public office other than one filed to perfect the security
interests herein granted; and
(g) Trustor's place of business, or its chief
executive office if it has more than one place of
business, is located at the address of Trustor specified
in the Credit Agreement.
2. Payment of Obligations. Trustor shall pay when
due the principal of and interest on the indebtedness evidenced
by the Notes; all charges, fees and other sums as provided in
the Loan Documents (as defined in the Credit Agreement); the
principal of and interest on any future advances secured by
this Deed of Trust; and the principal of and interest on any
other indebtedness secured by this Deed of Trust.
3. Compliance with Laws. Trustor shall not commit,
suffer or permit any act to be done, or condition to exist, on,
or with respect to, the Property which violates or is
prohibited by any law, statute, code, act, ordinance, order,
judgment, decree, injunction, rule, regulation, permit,
license, authorization or direction of any government or
subdivision thereof, whether it be federal, state, county or
municipal (collectively, "Legal Requirements"), which is
applicable to the Property, or any part thereof, now or at any
time hereafter, if such violation or prohibited act or
condition could reasonably be expected to have or cause a
Material Adverse Effect (as defined in the Credit Agreement).
4. Maintenance of Property. Trustor agrees: (a)
properly to care for and keep said Property in good condition
and repair, ordinary wear and tear excepted; (b) not to remove,
demolish or substantially alter any building on the Real
Property, or permit the removal, demolition or substantial
alteration of the Skyways (except as may otherwise be permitted
in the Bridge Easements referred to in Part II of Exhibit A),
except upon the prior written consent of Beneficiary, provided
that neither this clause (b) nor any other provision of this
Deed of Trust shall alter, modify, supersede or limit the
provisions of the Credit Agreement, or any party's rights and
obligations thereunder, relating to the construction of the
Project; (c) to complete promptly and in a good and workmanlike
manner any building or other improvement which may be
constructed thereon, to restore promptly in like manner any
portion of the Improvements (and to cause the prompt
restoration of the Skyways) which may be damaged or destroyed
from any cause whatsoever (provided that if, pursuant to
Section 7(c) below, Beneficiary is to apply insurance proceeds
to the restoration of the Property but fails to do so, such
failure shall excuse Trustor's obligation under this clause (c)
but only to the extent of the insurance proceeds withheld by
Beneficiary) and to pay when due all claims for labor performed
and materials furnished therefor (subject to Trustor's right to
contest the validity or amount of such lien in accordance with
Section 9 below); (d) to comply (or, with respect to the
Skyways, cause the compliance) with all Legal Requirements and
covenants, conditions and restrictions (including any which
require alteration or improvement thereof) now or hereafter
affecting the Property or any part thereof or the Skyways if
such noncompliance could reasonably be expected to have or
cause a Material Adverse Effect, and with all requirements of
insurance companies insuring the Property or any portion
thereof or the Skyways and of any bureau or agency which
establishes standards of insurability; (e) not to commit or
permit any waste or deterioration of the Property or the
Skyways; (f) to keep and maintain abutting grounds, sidewalks,
roads, parking and landscaped areas in good and neat order and
repair; (g) not to apply for, willingly suffer or permit any
change in zoning, subdivision, or land use regulations
affecting the Property or the Skyways without the prior written
consent of Beneficiary, other than any such change that is
beneficial to the Property (with the beneficial nature of any
such change to be determined in Beneficiary's reasonable
judgment); (h) not to drill or extract or enter into any lease
for the drilling for or extraction of oil, gas or other
hydrocarbon substances or any mineral of any kind or character
on or from the Property or any part thereof without the prior
written consent of Beneficiary; and (i) to do (or, with respect
to the Skyways, to cause to be done) all other acts, in a
timely and proper manner, which, from the character or use of
the Property or the Skyways, may be reasonably necessary to
maintain and preserve its value, the specific enumerations
herein not excluding the general. With respect to any matter
in this Section 4 requiring Beneficiary's prior consent,
Trustor shall submit to Beneficiary a written request for such
consent (together with such information and documentation as
appropriate to enable Beneficiary to make an informed decision
regarding such request), and Beneficiary will have thirty (30)
days after receipt thereof in which to review and respond to
such request. If Beneficiary fails to respond to Trustor's
request within said thirty (30) day period, Trustor may
resubmit its request in writing, stating that Beneficiary
failed to respond to the initial request within said thirty
(30) day period and, if Beneficiary thereafter fails to respond
to such request within five (5) days, Beneficiary shall be
deemed to have consented thereto.
5. Environmental Obligations.
(a) Trustor shall exercise due diligence in order to
comply with any and all Environmental Laws (as hereinafter
defined) regarding the presence or removal of Hazardous
Material on or in the Property, shall pay immediately, when
due, the costs of removal from the Property and disposal of any
Hazardous Material which is required to be removed pursuant to
any Environmental Laws and shall keep the Property free of any
lien which may arise pursuant to any such Environmental Laws.
Trustor shall not, and shall use its best efforts to not permit
any person or entity to, release, discharge, or dispose of any
Hazardous Material on the Real Property except in compliance
with all Environmental Laws and, if the same shall exist,
Trustor shall immediately remove or cause to be removed from
the Real Property such Hazardous Material to the extent
required to be removed pursuant to any Environmental Laws.
(b) As used herein, the term "Hazardous Material"
shall means: (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous
substances", "hazardous materials", hazardous wastes",
"extremely hazardous waste", "restricted hazardous waste",
"infectious waste", "toxic substances" or any other
formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, "TCLP toxicity" or "EP toxicity" or
words of similar import under any applicable Environmental Law
or publication promulgated pursuant thereto; (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluid, produced water or other waste
associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any
flammable substance or explosive; (v) any radioactive material;
(vi) asbestos in any form; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing poly-chlorinated biphenyls; (ix)
any pesticide; (x) all hazardous substances defined in NRS
40.504 ("NRS" means Nevada Revised Statutes), and (xi) any
other chemical, material or substance exposure to which is
prohibited, limited or regulated by any Federal, state, local
or other governmental authority or which may or could pose a
hazard to human health or safety or the environment if released
into the workplace or the environment; the term "Environmental
Law" means any statute, ordinance, order, rule, regulation,
plan, policy, decree, permit, guidance document, or other
requirement of any Federal, state, local or other governmental
authority relating to: (aa) environmental matters, including,
without limitation, those relating to fines, injunctions,
penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened
Release of Hazardous Material, (bb) the presence, generation,
use, storage, transportation or disposal of Hazardous Material,
or (cc) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or
welfare, in any manner applicable to any of the Property,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. sec. 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. sec.
1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. sec. 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. sec. 1251 et seq.), the Clean Air Act (42 U.S.C. sec. 7401
et seq.), the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. sec. 136 et seq.), the Occupational Safety and
Health Act (29 U.S.C. sec.651 et seq.) and the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. sec. 11001 et seq.),
each as amended and supplemented, and any analogous future or
present local, state and federal statutes, ordinances and other
laws, and rules and regulations promulgated pursuant thereto,
each as in effect as of the date of determination; and the term
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, dispersal,
dumping, leaching or migration of Hazardous Material into the
indoor or outdoor environment (including, without limitation,
the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Material), or into
or out of any of the Property, including the movement of any
Hazardous Material through the air, soil, surface, water,
groundwater or property.
(c) Trustor hereby agrees to indemnify, hold
harmless and defend (by counsel of Beneficiary's choice)
Beneficiary, its directors, officers, employees, agents,
successors and assigns from and against any and all claims,
losses, damages, demands, liabilities, fines, penalties,
assessments, charges, administrative and judicial proceedings
and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all costs and expenses
incurred in connection therewith (including but not limited to
reasonable attorneys' and consultants' fees and expenses),
arising directly or indirectly, in whole or in part, out of (i)
the presence on or under the Property (including, but not
limited to, the surrounding streets and sidewalks) of any
Hazardous Material (including, without limitation, the
existence in the aquifer underlying the Property and other
portions of Reno, Nevada, or in soils affecting that aquifer,
of PCE (tetrachloroethylene) and hydrocarbons, or either of
them on or prior to the "Transfer Date" (as such term is
defined in the "Environmental Indemnity" described in Section
45 below), or any Release of any Hazardous Material on, under
or from the Property on or prior to the Transfer Date, or (b)
any activity carried on or undertaken on or off the Property on
or prior to the Transfer Date, whether by Trustor or any
employees, agents, contractors or subcontractors of Trustor or
any third persons occupying or present on the Property, in
connection with the use, holding, handling, treatment, removal,
storage, decontamination, cleanup, transport, Release,
generation, processing or abatement of any Hazardous Material
located or present in, on or under the Property (including, but
not limited to, the surrounding streets and sidewalks). The
foregoing indemnity shall further apply to any residual
contamination in, on or under the Property (including, but not
limited to, the surrounding streets and sidewalks), or
affecting any natural resources, and to any contamination of
any property or natural resources arising in connection with
the generation, use, holding, handling, treatment, removal,
decontamination, cleanup, storage, transport, Release,
processing or abatement of any such Hazardous Material on or
prior to the Transfer Date, and irrespective of whether any of
such activities are undertaken in accordance with applicable
Environmental Laws, but shall not include, with respect to any
particular indemnitee and loss, that portion, if any, of that
loss which was caused by the gross negligence or wilful
misconduct of that indemnitee. Trustor hereby acknowledges and
agrees that, notwithstanding any other provision of this Deed
of Trust to the contrary, the obligations of Trustor under this
Section 5(c) shall be unlimited personal obligations of
Trustor, shall not be secured by this Deed of Trust and shall
survive any foreclosure under this Deed of Trust, any transfer
in lieu thereof, and any satisfaction of the Secured
Obligations.
6. Insurance.
(a) Types and Amounts Required. During the
continuance of this Trust, Trustor shall at all times provide,
maintain and keep in force, at no expense to Trustee or
Beneficiary, for the benefit of Trustor and Beneficiary, as
their respective interests may appear, the following policies
of insurance:
(i) During the course of any construction or
repair of Improvements on the Property, (x) builder's
completed value risk insurance against "all risks of
physical loss" (including fire and extended coverage, and
endorsements extending coverage for vandalism and malicious
mischief, collapse and property in transit, offsite storage,
delay of opening (business interruption), demolition and
debris removal, flood, and, if reasonably available,
earthquake), in non-reporting form, covering 100% of the
anticipated construction cost, including "soft costs," with
not more than $250,000 deductible from the loss payable for
any casualty and no more than fourteen (14) days for delay
of opening; said policy to contain a "permission to occupy
upon completion of work or occupancy" endorsement and waiver
of subrogation endorsement acceptable to Beneficiary, and
replacement cost coverage in an agreed amount, and (y) an
"owner/contractor protective liability" policy, providing
separate liability coverage for Trustor and Beneficiary,
with a limit of not less than $10,000,000;
(ii) Insurance against loss or damage to the
Improvements and Personal Property by fire and any of the
other risks covered by insurance of the type now known as
"all risks of physical loss" (including flood, and, if
reasonably available, earthquake coverage) in an amount not
less than 100% of the then replacement cost of the
Improvements and Personal Property (exclusive of the cost of
excavations, pilings, foundations, footings and other
underground improvements lying below the lowest basement
level) without deduction for physical depreciation; with an
Agreed Amount endorsement (waiving co-insurance), a
Replacement Cost Valuation endorsement, a waiver of
subrogation endorsement, coverage for the cost of removing
damaged property, and, if Beneficiary shall so require,
coverage for demolition and increased cost of construction
occasioned by operation of any law or ordinance regulating
the construction, use or repair of the Improvements; and
with not more than $250,000 deductible per occurrence and
$1,000,000 for the perils of flood and earthquake, if a sub-
deductible applies (and Trustor shall cause similar casualty
insurance to be carried by the owners of the Skyways in
accordance with the provisions of the Bridge Easements
referred to in Part II of Exhibit A);
(iii) Mechanical breakdown insurance (also known as
"boiler and machinery" insurance) covering pressure vessels,
air tanks, boilers, machinery, pressure piping, heating, air
conditioning and elevator equipment and escalator equipment,
if the Improvements contain equipment of such nature, and
insurance against loss of occupancy or use arising from any
such breakdown, written on a comprehensive form with a
combined direct and indirect limit of $50,000,000; the
policy shall include an Agreed Amount endorsement (waiving
co-insurance), a Replacement Cost Valuation endorsement,
and coverage for increased cost of construction occasioned
by operation of any law or ordinance regulating the
construction, use or repair of the Improvements; the policy
may contain deductibles of no greater than $250,000 for
direct damage and forty-eight (48) hours for indirect loss;
(iv) Comprehensive general liability insurance
(1973 Form), written on an "occurrence basis," against
claims for death, bodily injury, personal injury and
property damage occurring in, on or about the Real Property
or the adjoining streets, sidewalks and passageways
(including, without limitation, the Skyways), or arising
from or connected with the use, conduct or operation of
Trustor's business or interest (including, without
limitation, products liability coverage; blanket contractual
liability coverage, including both oral and written
contracts; broad form property damage coverage; coverage
against liability for injury or property damage arising out
of the use, by or on behalf of the Trustor or any other
person or organization, of any owned, non-owned, leased or
hired automotive equipment in the conduct of any and all
operations of Trustor; coverage for "liquor legal
liability," "innkeepers legal liability," "safe deposit
legal liability," and "employee benefits legal liability;"
coverage for all professional liability exposures associated
with the operation of the health spa; coverage for those
hazards commonly known in the insurance industry as
explosion, collapse and underground property damage; and
owners' and contractors' protective coverage), such
insurance to afford combined single limit protection of not
less than $1,000,000 per occurrence; if such policy contains
a self-insured retention, (A) such self-insured retention
shall be no greater than $100,000 per occurrence, with an
aggregate of $1,500,000 for all losses (including expenses)
within the self-insured retention, and (B) Trustor shall be
solely responsible for the payment of all amounts due within
said self-insured retention, and the indemnification
provisions contained in this Deed of Trust shall include all
liability associated with said self-insured retention;
(v) Comprehensive business automobile liability
insurance, written under Coverage Symbol "1," covering all
owned, non-owned and hired or borrowed vehicles of Trustor
used in connection with any of the construction, maintenance
and operation of the Improvements, naming Trustor as the
named insured and covering Beneficiary as additional
insured, insuring against liability for bodily injury and
death and/or for property damage in an amount not less than
$1,000,000 combined single limit per accident; (if the
policy contains a self-insured retention, (A) such self-
insured retention shall be no greater than $100,000 per
occurrence, with an aggregate limit of $1,500,000 for all
losses (including expenses) within the self-insured
retention, and (B) Trustor shall be solely responsible for
the payment of all amounts due within said self-insured
retention, and the indemnification provisions contained in
this Deed of Trust shall include all liability associated
with said self-insured retention); in addition to said
automobile liability insurance, Trustor must provide,
maintain and keep in effect (x) garage liability insurance,
providing $1,000,000 combined single limit for bodily injury
and property damage for the parking garage operation, and
(y) garagekeepers legal liability insurance, providing
$1,000,000 limit for comprehensive and collision coverages
for physical damage to vehicles in Trustor's care, custody
and control, with a deductible no greater than $2,500 for
each automobile and $25,000 for each loss;
(vi) A standard Worker's Compensation policy
covering the State of Nevada and Employer's Liability
coverage subject to a limit of no less than $500,000 for
each employee, $500,000 for each accident, and a $500,000
policy limit, which policy shall include endorsements for
Voluntary Compensation and Employer's Liability Coverage and
Stop Gap Liability; if Trustor elects to self-insure
Worker's Compensation coverage in the State of Nevada,
Beneficiary must be furnished with a copy of the certificate
from the state permitting self insurance and evidence of a
stop loss Excess Worker's Compensation policy with a
specific retention of no greater than $300,000.
(vii) An Umbrella Liability policy with a limit of
no less than $75,000,000 providing excess coverage over all
limits and coverages set forth in paragraphs (iv), (v) and
(vi) above, which limits can be obtained by a combination of
Primary and Excess Umbrella policies, provided that all
layers follow form with the underlying policies set forth in
paragraphs (iv), (v) and (vi) and are written on an
"occurrence form;"
(viii) Business interruption insurance/extra expense
and loss of "rental value" insurance, including coverage for
off-premises power losses and an extended period of
indemnity endorsement for at least 180 days, in an amount
representing not less than 100% percent of the annual net
profit plus continuing expenses (including debt service) for
the Project, as such net profit and continuing expenses are
reasonably projected by Trustor and consented to by
Beneficiary (or, in the absence of such a projection, as
reasonably projected by Beneficiary), with a deductible of
no greater than seventy-two (72) hours, or $250,000 if a
separate deductible applies ($1,000,000 for the perils of
flood and earthquake);
(ix) If the Property is located in an area
identified by the Secretary of Housing and Urban Development
as a flood hazard area and in which flood insurance has been
made available under the National Flood Insurance Act of
1968, flood insurance covering the Improvements, in an
amount, available under the Act, satisfactory to
Beneficiary;
(x) A comprehensive crime policy, including the
following coverages: (A) Employee Dishonesty: $5,000,000;
(B) Money & Securities (inside): $2,000,000; (C) Money &
Securities (outside): $2,000,000; (D) Depositors Forgery:
$2,500,000; and (E) Computer Fraud: $2,500,000; such policy
shall be amended so that the term "money" is defined therein
to include "chips," the policy may contain deductibles of no
more than $500,000 for Employee Dishonesty and $250,000 for
all other agreements listed above; and
(xi) Such other insurance and in such amounts, and
such additional amounts of the foregoing insurance, as may
reasonably be required by Beneficiary, from time to time,
due consideration being given to standard practices in the
industry and to the risks involved in Trustor's business,
operations or interest.
(b) Uniform Policy Requirements. All policies of
insurance required by the terms of this Deed of Trust:
(i) shall be issued by insurance companies
licensed and admitted to do business in the State of Nevada,
and rated no lower than A:XII in the most recent edition of
A.M. Best's and AA in the most recent edition of Standard &
Poor's, and in such form and amounts as are reasonably
satisfactory to Beneficiary from time to time;
(ii) shall contain an endorsement or agreement by
the insurer that any loss shall be payable in accordance
with the terms of such policy notwithstanding any act,
failure to act, negligence or breach of representation or
warranty of Trustor, or of any party holding under Trustor,
which might otherwise result in forfeiture of said
insurance;
(iii) shall contain a waiver by the insurer of all
rights of setoff, counterclaim and deduction against
Trustor;
(iv) shall contain a waiver of subrogation by the
insurer in favor of Beneficiary and a clause providing that
the policy is primary and that any other insurance of
Beneficiary with respect to the matters covered by such
policy shall be excess and non-contributing;
(v) shall, in the case of policies affording
liability insurance coverage, name Beneficiary (and
Beneficiary's officers, directors, employees, agents and
representatives) as additional insured by an endorsement
satisfactory to Beneficiary and contain cross-liability and
severability of interest clauses satisfactory to
Beneficiary, and, in the case of other policies, shall name
Beneficiary as a loss payee and have attached thereto a
lender's loss payable endorsement, for the benefit of
Beneficiary, in form satisfactory to Beneficiary (Form
438 BFU, unless otherwise specified by Beneficiary); and
(vi) shall contain a provision that,
notwithstanding any contrary agreement between Trustor and
insurance company, such policies will not be canceled, fail
to be renewed or materially amended (which term shall
include any reduction in the type, scope or limits of
coverage) without at least thirty (30) days prior written
notice to Beneficiary.
(c) Blanket and Umbrella Policies. If Beneficiary
consents, Trustor may provide any of the required insurance
through an umbrella policy or policies or through blanket
policies carried by Trustor and covering more than one
location, or by policies procured by a tenant or other party
holding under Trustor; provided, however, that the amount of
the total insurance allocated to the Real Property and
available with respect to occurrences required to be insured
against shall be such as to furnish protection the equivalent
of separate policies in the amounts herein required, and
provided further, that, in all other respects, any such policy
or policies shall comply with all of the other provisions of
this Deed of Trust.
(d) Evidence of Insurance. At Beneficiary's option,
Trustor shall furnish Beneficiary with an original of all
policies of insurance required under this Section or with a
certificate of insurance for each required policy setting forth
the coverage, the limits of liability, the deductibles, if any,
the name of the carrier, the policy number, and the period of
coverage, which certificates shall be executed by authorized
officials of the companies issuing such insurance, or by agents
or attorneys-in-fact authorized to issue said certificates (in
which event each such certificate shall be accompanied by a
notarized affidavit, agency agreement or power of attorney
evidencing the authority of the signatory to issue such
certificate on behalf of the insurer named therein). Trustor
shall furnish to Beneficiary annually, within ten days after
the date hereof, or more often if Beneficiary shall reasonably
request, a certificate of Trustor specifying all insurance
policies with respect to the Property and all other policies
required hereby then outstanding and in force, and stating
whether or not such insurance complies with the requirements of
this Section and, if it does not, the manner in which it does
not comply. At least ten (10) days prior to the expiration of
each required policy, Trustor shall deliver to Beneficiary
evidence satisfactory to Beneficiary of the payment of premium
and the renewal or replacement of such policy continuing
insurance in force as required by this Deed of Trust.
(e) Procurement by Beneficiary. If Trustor fails to
provide, maintain, keep in force or deliver to Beneficiary the
policies of insurance required by this Deed of Trust,
Beneficiary may (but shall have no obligation to) procure such
insurance, or single interest insurance for such risks covering
Beneficiary's interests, and Trustor will pay all premiums
therefor promptly upon demand by Beneficiary; and until such
payment is made by Trustor, the amount of all such premiums,
together with interest thereon at an annual rate equal to the
rate specified in Section 2.2 E. (Post-Maturity Interest) of
the Credit Agreement (or if such provision is hereafter
replaced or renumbered, the equivalent section) (the "Agreed
Rate"), shall be secured by this Deed of Trust.
(f) Reserve Fund. Upon request by Beneficiary
following an Event of Default (as defined in Section 23 hereof)
relating to the payment of money, or following and during the
continuance of any other Event of Default, Trustor shall pay to
Beneficiary an initial cash reserve in an amount adequate to
pay all insurance premiums due within the next succeeding
twelve calendar months on all policies of insurance required by
this Deed of Trust (or such lesser amount as may then be
specified by Beneficiary), and shall thereafter deposit with
Beneficiary each month, commencing with the first month after
such request by Beneficiary and continuing until all sums
secured hereby are paid in full or Beneficiary notifies Trustor
to cease making such deposits, an amount equal to one-twelfth
of the aggregate annual insurance premiums on all policies of
insurance required by this Deed of Trust, as reasonably
estimated by Beneficiary. In such event Trustor further agrees
to cause all bills, statements or other documents relating to
the foregoing insurance premiums to be sent or mailed directly
to Beneficiary. Upon receipt of such bills, statements or
other documents evidencing that a premium for a required policy
is then payable, and providing Trustor has deposited sufficient
funds with Beneficiary pursuant to this Section, Beneficiary
shall pay such amounts as may be due thereunder out of the
funds so deposited with Beneficiary. If at any time and for
any reason the funds deposited with Beneficiary are or will be
insufficient to pay such amounts as may be then or subsequently
due, Beneficiary may notify Trustor and Trustor shall
immediately deposit an amount equal to such deficiency with
Beneficiary. Notwithstanding the foregoing, nothing contained
herein shall cause Beneficiary to be deemed a trustee of said
funds or to be obligated to pay any amounts in excess of the
amount of funds deposited with Beneficiary pursuant to this
Section, nor shall anything contained herein modify the
obligation of Trustor to maintain and keep in force at all
times such insurance as is required by this Deed of Trust.
Beneficiary may commingle said reserve with its own funds and
Trustor shall be entitled to no interest thereon.
(g) Replacement Cost. Whenever Beneficiary requires
insurance with full replacement cost protection, such full
replacement cost shall be determined annually (except in the
event of substantial changes, alterations or additions to the
Improvements or in the event of new construction undertaken by
the Trustor, in which event such full replacement cost shall be
determined from time to time as required to assure full
replacement cost coverage). Such determination of full
replacement cost shall be made by written agreement of the
insurance carrier and Trustor, subject to the reasonable
approval of Beneficiary. If they cannot agree or the value
shall not be approved by Beneficiary within thirty (30) days
after such request, such full replacement cost shall be
determined by an appraiser, architect or contractor who shall
be reasonably acceptable to Beneficiary. No omission on the
part of Beneficiary to request any such determination shall
relieve Trustor of its obligations hereunder, and any such
determination to the contrary notwithstanding, Beneficiary may
require Trustor to obtain additional insurance as provided in
this Section.
(h) Separate Insurance. Trustor shall not take out
separate insurance concurrent in form or contributing in the
event of loss with that required by this Section to be
furnished by Trustor unless Beneficiary is a named insured
therein, with loss payable as provided herein. Trustor shall
immediately notify Beneficiary of the taking out of any such
separate insurance and shall cause the original policies in
respect thereof or certificates therefor to be delivered to
Beneficiary.
(i) Compliance with Insurance Requirements. Trustor
shall observe and comply with the requirements of all policies
of insurance required to be maintained in accordance with this
Deed of Trust and shall cause the requirements of the companies
writing such policies to be so performed and satisfied that at
all times companies of good standing satisfactory to
Beneficiary shall be willing to write and to continue such
insurance. Notwithstanding any approval, disapproval,
acceptance or acquiescence by Beneficiary with respect to such
insurance, or Beneficiary's obtaining or failure to obtain any
insurance, Beneficiary shall incur no liability as to the form
or legal sufficiency of insurance contracts, the solvency of
any insurer or the payment of any loss, and Trustor hereby
expressly assumes full responsibility therefor.
(j) Assignment of Policies upon Foreclosure. In the
event of foreclosure of this Deed of Trust or other transfer of
title or assignment of any of the Property in extinguishment,
in whole or in part, of the debt secured hereby, all right,
title and interest of Trustor in and to all policies of
insurance required by this Section with respect to such
Property and any unearned premiums paid thereon shall, without
further act, be assigned to and shall inure to the benefit of
and pass to the successor in interest to Trustor or the
purchaser or grantee of the Property, and Trustor hereby
appoints Beneficiary its lawful attorney-in-fact to execute an
assignment thereof and any other document necessary to effect
such transfer.
(k) Waiver of Subrogation. Trustor waives any and all
right to claim or recover against Beneficiary, its directors,
officers, employees, agents and representatives, for loss of or
damage to Trustor, the Property, any other property of Trustor,
or any property of others under Trustor's control, from any
cause insured against or required to be insured against by the
provisions of this Deed of Trust.
(l) Requirements Supplemental. The requirements of
this Deed of Trust with respect to insurance and maintenance of
the Property shall be supplemental to and not exclusive of the
requirements of the Credit Agreement and the Security Agreement
relating thereto.
7. Casualties; Insurance Proceeds.
(a) Notice of Casualties. Trustor shall give prompt
written notice thereof to Beneficiary after the happening of
any material casualty to or in connection with the Property or
any part thereof, whether or not such casualty is covered by
insurance.
(b) Payment of Proceeds. Prior to any Event of
Default, proceeds of insurance in an amount not greater than
$1,000,000 payable in connection with any casualty affecting
all or any portion of the Property shall be payable to Trustor.
Proceeds in any greater amount and, after an Event of Default,
all proceeds, payable in connection with any casualty affecting
all or any portion of the Property shall be payable to
Beneficiary. Trustor hereby authorizes and directs any
affected insurance company to make payment of such proceeds
directly to Beneficiary. If Trustor receives any proceeds of
insurance resulting from a casualty which, pursuant to this
Deed of Trust, are to be paid to Beneficiary, Trustor shall
promptly pay over such proceeds to Beneficiary. Trustor shall
not settle, adjust or compromise any claims for loss, damage or
destruction of the Property or any part thereof under any
policy or policies of insurance in connection with a loss in an
amount of $1,000,000 or more without the prior written consent
of Beneficiary to such settlement, adjustment or compromise;
and, after an Event of Default hereunder, Beneficiary shall
have the sole and exclusive right, and Trustor hereby
authorizes and empowers Beneficiary, to settle, adjust or
compromise any such claims.
(c) Use in Restoration. In the event of any damage to
or destruction of the Property, and provided that (i) at the
time of such damage or destruction or thereafter, an Event of
Default does not exist hereunder, and (ii) application of
insurance proceeds to restoration of the Property will not, in
Beneficiary's sole judgment, materially impair Beneficiary's
security for the obligations secured hereby, insurance proceeds
payable in connection with such damage or destruction shall be
applied, first, toward reimbursement of all of Beneficiary's
reasonable costs and expenses of recovering the proceeds,
including reasonable attorneys' fees; then, to payment of all
sums advanced by Beneficiary to protect the Property or the
security of the Secured Obligations; then, to payment of
installments of principal and interest then due and payable
under the Notes; then, to restoration of the Property, upon
conditions which are substantially similar to the disbursement
provisions and conditions set forth in the Credit Agreement,
and all other conditions and provisions established by
Beneficiary which are similar to conditions and provisions then
used by Beneficiary for disbursements of a construction loan
(including, without limitation: delivery to Beneficiary by
Trustor of detailed plans and specifications providing for
restoration in accordance with all applicable Legal
Requirements of all governmental authorities having
jurisdiction over the Project, together with a detailed
estimate of the cost of the work and schedule therefor and a
construction contract satisfactory to Beneficiary, with a
contractor satisfactory to Beneficiary, for performance of the
work within the budgeted amount, and within the scheduled time
for completion; proof that the insurance required hereby is in
force; proof that an amount equal to the sum which Beneficiary
is requested to disburse has theretofore been paid by Trustor,
or is then due and payable, for materials theretofore installed
or work theretofore performed upon the Property and properly
includable in the cost of repair, reconstruction or restoration
thereof; proof that, after repair or reconstruction, the
Property will be at least as valuable as it was immediately
before the damage or condemnation occurred; and proof that the
insurance proceeds available for repair or restoration are
sufficient, in Beneficiary's determination, to pay for the
total cost of repair or reconstruction, including all
associated development costs and interest projected to be
payable on the Secured Obligations until the repair or
reconstruction is complete, or Trustor must provide its own
funds in an amount equal to the difference between the proceeds
available for repair or restoration and a reasonable estimate,
made by Trustor and found acceptable by Beneficiary, of the
total cost of repair or reconstruction); and, upon completion
of the work of restoration and payment of the cost thereof, any
balance of such proceeds shall be applied to the indebtedness
secured hereby, in such order as Beneficiary, in its sole
discretion, shall determine; and, if any then remains, it shall
be paid over to Trustor.
(d) Application by Beneficiary. If (i) at the time of
such damage or destruction or thereafter, an Event of Default
exists hereunder, or (ii) application of insurance proceeds to
restoration will, in Beneficiary's sole judgment, materially
impair Beneficiary's security for the obligations secured
hereby, Beneficiary shall have the option, in its sole and
absolute discretion, (1) to apply all or any portion of such
proceeds to any indebtedness or other obligation secured hereby
and in such order as Beneficiary may determine, notwithstanding
that said indebtedness or the performance of said obligation
may not be due according to the terms thereof, or (2) to apply
all or any portion of such proceeds to the restoration of the
Property, subject to such conditions as Beneficiary shall
determine, or (3) to deliver all or any portion such proceeds
to Trustor, subject to such conditions as Beneficiary may
determine.
(e) Duty to Restore. Nothing in this Deed of Trust
shall be deemed to excuse Trustor from restoring, repairing and
maintaining the Property, as herein provided (other than
Beneficiary's failure to apply insurance proceeds to the
restoration of the Property as and to the extent required by
Section 7(c) above, which failure shall excuse Trustor only to
the extent of the insurance proceeds so withheld by
Beneficiary), regardless of whether or not insurance proceeds
are available for restoration, whether or not any such proceeds
are sufficient in amount, or whether or not the Property can be
restored to the same condition and character as existed prior
to such damage or destruction.
8. Taxes and Impositions.
(a) Payment by Trustor. Subject to the provisions of
Section 8(d) below, Trustor shall pay, or cause to be paid, at
least ten (10) days prior to delinquency, all real property
taxes and assessments, general and special, and all other taxes
and assessments of any kind or nature whatsoever, including,
without limitation, non-governmental levies or assessments such
as maintenance charges, owner association dues or charges or
fees, levies or charges resulting from covenants, conditions or
restrictions affecting the Property or the Skyways, which are
assessed or imposed upon the Property or the Skyways, or become
due and payable, and which create, may create or appear to
create a lien upon the Property, or any part thereof, or the
Skyways, or upon any personal property, equipment or other
facility used in the operation or maintenance thereof (all of
which taxes, assessments and charges, together with any and all
other taxes, and charges of a similar kind or nature are
collectively referred to hereinafter as "Impositions");
provided, however, that if, by law, any such Imposition is
payable, or may at the option of the taxpayer be paid, in
installments, Trustor may pay the same or cause it to be paid,
together with any accrued interest on the unpaid balance of
such Imposition, in installments as the same become due and
before any fine, penalty, interest or cost may be added thereto
for the nonpayment of any such installment and interest.
(b) New Impositions. If at any time after the date
hereof there shall be assessed or imposed (i) a tax or
assessment on the Property in lieu of or in addition to the
Impositions payable by Trustor pursuant to Subsection (a) of
this Section, or (ii) a license fee, tax or assessment imposed
on Beneficiary and measured by or based in whole or in part
upon the amount of the Notes or other obligations secured
hereby, then all such taxes, assessments or fees shall be
deemed to be included within the term "Impositions" as defined
in Subsection (a) of this Section, and Trustor shall pay and
discharge the same as herein provided with respect to the
payment of Impositions, if Trustor is permitted by law to pay
the same. If Trustor is prohibited by law from paying such
Impositions, then, at the option of Beneficiary, all
obligations secured hereby, together with all accrued interest
thereon, shall immediately become due and payable. Anything to
the contrary herein notwithstanding, Trustor shall have no
obligation to pay any franchise, estate, inheritance, income,
excess profits or similar tax levied on Beneficiary or on the
obligations secured hereby.
(c) Proof of Payment. Subject to the provisions of
Subsection (d) of this Section, Trustor shall deliver to
Beneficiary, within seven (7) days after the date upon which
any Imposition is due and payable by Trustor in accordance with
this Deed of Trust, official receipts of the appropriate taxing
authority, or other proof satisfactory to Beneficiary,
evidencing the payment thereof.
(d) Contest of Assessments. Trustor shall have the
right before any delinquency occurs to contest or object to the
amount or validity or amount of any such Imposition by
appropriate legal proceedings, but this shall not be deemed or
construed in any way as relieving, modifying or extending
Trustor's covenant to pay any such Imposition at the time and
in the manner provided in this Section unless Trustor has given
prior written notice to Beneficiary of Trustor's intent so to
contest or object to an Imposition, and unless, at
Beneficiary's sole option, (i) Trustor shall demonstrate to
Beneficiary's satisfaction that the legal proceedings shall
conclusively operate to prevent the sale of the Property, or
any part thereof, to satisfy such Imposition prior to final
determination of such proceedings; or (ii) Trustor shall
furnish a good and sufficient bond or surety as requested by
and satisfactory to Beneficiary; or (iii) Trustor shall
demonstrate to Beneficiary's satisfaction that Trustor has
provided a good and sufficient undertaking as required or
permitted by law to accomplish a stay of any such sale.
(e) Reserve Fund. Upon request by Beneficiary
following an Event of Default relating to the payment of money,
or following and during the continuance of any other Event of
Default, Trustor shall pay to Beneficiary an initial cash
reserve in an amount adequate to pay all Impositions for the
ensuing tax fiscal year (or such lesser amount as may then be
specified by Beneficiary), and shall thereafter deposit with
Beneficiary each month, commencing with the first month after
such request by Beneficiary and continuing until all sums
secured hereby are paid in full or Beneficiary gives notice to
Trustor to cease making such deposits, an amount equal to one-
twelfth of the sum of the annual Impositions, as reasonably
estimated by Beneficiary. In such event, Trustor further
agrees to cause all bills, statements or other documents
relating to Impositions to be sent or mailed directly to
Beneficiary. Upon receipt of such bills, statements or other
documents evidencing that Impositions are then payable, and
providing Trustor has deposited sufficient funds with
Beneficiary pursuant to this Section, Beneficiary shall pay
such amounts as may be due thereunder out of the funds so
deposited with Beneficiary. If at any time and for any reason
the funds deposited with Beneficiary are or will be
insufficient to pay such amounts as may then or subsequently be
due, Beneficiary may notify Trustor and upon such notice
Trustor shall immediately deposit an amount equal to such
deficiency with Beneficiary. Notwithstanding the foregoing,
nothing contained herein shall cause Beneficiary to be deemed a
trustee of said funds or to be obligated to pay any amounts in
excess of the amount of funds deposited with Beneficiary
pursuant to this Section, nor shall anything contained herein
modify the obligation of Trustor to pay, or cause to be paid,
all Impositions. Beneficiary may commingle said reserve with
its own funds and Trustor shall be entitled to no interest
thereon. Beneficiary may impound or reserve for future payment
of Impositions such portion of such payments as Beneficiary may
in its absolute discretion deem proper, applying the balance
upon any indebtedness or obligation secured hereby in such
order as Beneficiary may determine, notwithstanding that said
indebtedness or the performance of said obligation may not yet
be due according to the terms thereof. Should Trustor fail to
deposit with Beneficiary (exclusive of that portion of said
payments which has been applied by Beneficiary upon any
indebtedness or obligation secured hereby) sums sufficient to
fully pay such Impositions at least thirty (30) days before
delinquency thereof, Beneficiary may, at Beneficiary's
election, but without any obligation so to do, advance any
amounts required to make up the deficiency, which advances, if
any, together with interest thereon at an annual rate equal to
the Agreed Rate, shall be secured hereby and shall be repayable
to Beneficiary upon demand; or, at the option of Beneficiary,
Beneficiary may, without making any advance whatever, apply any
sums held by it upon any indebtedness or obligation secured
hereby, in such order as Beneficiary may determine,
notwithstanding that said indebtedness or the performance of
said obligation may not yet be due according to the terms
thereof.
(f) Joint Assessment. Trustor shall not initiate,
and, to the maximum extent permitted by law, shall not suffer
or permit the joint assessment of any real and personal
property which may constitute all or a portion of the Property
or any other procedure whereby the lien of real property taxes
and the lien of personal property taxes shall be assessed,
levied or charged to the Property as a single lien.
(g) Tax Service. Trustor shall cause to be furnished
to Beneficiary a tax reporting service, covering the Property,
of the type and duration, and with a company, satisfactory to
Beneficiary.
9. Liens. Trustor shall pay and promptly discharge,
at Trustor's cost and expense, all liens, encumbrances and
charges upon the Property, or any part thereof or interest
therein; provided that Trustor shall have the right to contest
in good faith the validity or amount of any such lien,
encumbrance or charge in accordance with the provisions of the
Credit Agreement, and provided further that Trustor will not be
required to pay or discharge Permitted Encumbrances. If
Trustor shall fail to remove and discharge any such lien,
encumbrance or charge when due (or, if being contested in
accordance with the Credit Agreement, promptly upon final
determination of such contest proceedings), then, in addition
to any other right or remedy of Beneficiary, Beneficiary may,
but shall not be obligated to, discharge the same, either by
paying the amount claimed to be due, or by procuring the dis-
charge of such lien, encumbrance or charge by depositing in a
court a bond or the amount claimed or otherwise giving security
for such claim, or by procuring such discharge in such manner
as is or may be prescribed by law. Trustor shall, immediately
upon demand therefor by Beneficiary, pay to Beneficiary an
amount equal to all costs and expenses incurred by Beneficiary
in connection with the exercise by Beneficiary of the foregoing
right to discharge any such lien, encumbrance or charge,
together with interest thereon from the date of such expen-
diture at an annual rate equal to the Agreed Rate.
10. Easements and Leaseholds. If a leasehold estate
or an easement or other incorporeal right constitutes a portion
of the Real Property, Trustor agrees not to amend, change or
modify (other than any such amendment, change or modification
that is beneficial to the Real Property, with the beneficial
nature thereof to be determined in Beneficiary's reasonable
judgment) or terminate such leasehold estate, easement or other
right or interest, or any right thereto or interest therein,
without the prior written consent of Beneficiary. Consent to
one amendment, change, agreement or modification shall not be
deemed to be a waiver of the right to require consent to other,
future or successive amendments, changes, agreements or
modifications. Trustor shall submit to Beneficiary any such
request for consent in writing (which request shall include
such information and documentation as appropriate to enable
Beneficiary to make an informed decision regarding such
request), and Beneficiary will have thirty (30) days after
receipt thereof in which to review and respond to such request.
If Beneficiary fails to respond to Trustor's request within
said thirty (30) day period, Trustor may resubmit its request
in writing, stating that Beneficiary failed to respond to the
initial request within said thirty (30) day period and, if
Beneficiary thereafter fails to respond to such request within
five (5) days, Beneficiary shall be deemed to have consented
thereto. Trustor agrees to perform all obligations and
agreements with respect to said leasehold, easement or other
right or interest and shall not take any action or omit to take
any action which would effect or permit the termination
thereof. Trustor agrees to promptly notify Beneficiary in
writing with respect to any default or alleged default by any
party thereto and to deliver to Beneficiary copies of all
notices, demands, complaints or other communications received
or given by Trustor with respect to any such default or alleged
default. Beneficiary shall have the option to cure any such
default and to perform any or all of Trustor's obligations
thereunder or with respect thereto. All sums expended by
Beneficiary in curing any such default shall be secured hereby
and shall be immediately due and payable without demand or
notice and shall bear interest from date of expenditure at an
annual rate equal to the Agreed Rate.
11. Further Acts. Trustor shall do and perform all
acts necessary to keep valid and effective the charges and lien
hereof, to carry into effect its object and purposes, to
protect the lawful owners of the Notes and other obligations
secured hereby; shall execute and deliver to Beneficiary at any
time, upon request of Beneficiary, all other and further
instruments in writing necessary to vest in and secure to
Trustee each and every part of the Real Property and to
Beneficiary the Rents therefrom and rights and interest of
Beneficiary therein or with respect thereto; and, upon request
by the Beneficiary, shall supply evidence of fulfillment of
each of the covenants herein contained concerning which a
request for such evidence has been made.
12. Assignment of Rents.
(a) Assignment to Beneficiary; Trustor's Limited
License to Collect Prior to Default. Notwithstanding any
language contained herein, or in any other document, to the
contrary, Trustor hereby irrevocably and absolutely assigns and
transfers to Beneficiary, without having to first take
possession of the Property, all Rents, including all present
and future Leases and other rental agreements, reserving unto
Trustor a license to collect such Rents prior to the occurrence
of any Event of Default. Upon the occurrence of an Event of
Default, such license reserved to Trustor shall be immediately
revoked without further demand or notice, and any Rents,
including those past due, unpaid or undetermined, may be
collected by Beneficiary or its agent, and any amount so
collected shall be applied, less costs and expenses of
operation and collection, including reasonable attorneys' fees,
to any indebtedness and/or obligations secured hereby, and in
such order as Beneficiary shall determine, provided that, upon
Trustor's cure of any Event of Default not relating to the
payment of money, Beneficiary will reinstate Trustor's license
to collect such Rents. The collection of such Rents, and the
application thereof as aforesaid, shall not cure or constitute
a waiver of any default or notice of default hereunder or
invalidate any act done pursuant to such notice. Trustor and
Beneficiary intend that this assignment shall be a present,
absolute and unconditional assignment, not an assignment for
additional security only, and shall, immediately upon the
execution hereof, subject to the license granted above, give
Beneficiary, and its agent, the right to collect the Rents and
to apply them as aforesaid. Nothing contained herein, nor any
collection of Rents by Beneficiary, or its agent or a receiver,
shall be construed to make Beneficiary (i) a "Mortgagee-in-
Possession" of the Property so long as Beneficiary has not
itself entered into actual possession of the Property; (ii)
responsible for performing any of the obligations of the lessor
under any Lease; (iii) responsible for any waste committed by
lessees or any other parties, any dangerous or defective
condition of the Property, or any negligence in the management,
upkeep, repair or control of the Property; or (iv) liable in
any manner for the Property or the use, occupancy, enjoyment or
operation of all or any part of it (provided that this clause
(iv) shall not act to relieve Beneficiary from liability
resulting from the gross negligence or willful misconduct of
Beneficiary).
(b) No Other Assignments. Trustor hereby represents
to Beneficiary that there is no assignment or pledge of any
Leases of, or Rent from, the Property now in effect, and
covenants that, until the Notes are fully paid, the Letters of
Credit (as defined in the Credit Agreement) have expired or
been cancelled, and the other Secured Obligations are fully
satisfied and the Commitments (as defined in the Credit
Agreement) are terminated, Trustor will not make any such
assignment or pledge to anyone other than Beneficiary nor will
it accept any periodic payments which are to be made pursuant
to such Leases or Rents more than thirty (30) days in advance
of the date on which such payments are due.
13. Actions Affecting Property. Trustor shall give
Beneficiary and Trustee prompt written notice of the assertion
of any claim with respect to, or the filing of any action or
proceeding affecting or purporting to affect, the Property or
Skyways, or title thereto or any right of possession thereof,
or this Deed of Trust or the security hereof or the rights or
powers of Beneficiary or Trustee hereunder. Trustor shall
appear in and contest any such action or proceeding at
Trustor's sole expense; and shall pay all costs and expenses,
including cost of evidence of title and reasonable attorneys'
fees, in any such action or proceeding in which Beneficiary or
Trustee may appear.
14. Eminent Domain. If any proceeding or action be
commenced for the taking of the Property, or any part thereof
or interest therein, for public or quasi-public use under the
power of eminent domain, condemnation or otherwise, or if the
same be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, or should
Trustor receive any notice or other information regarding such
proceeding, action, taking or damage (including, without
limitation, a proposal to purchase the Property or some portion
thereof in lieu of condemnation), Trustor shall give prompt
written notice thereof to Beneficiary. Beneficiary shall be
entitled, at its option, without regard to the adequacy of its
security, to investigate and negotiate with the condemnor
concerning the proposed taking, to commence, appear in and
prosecute in its own name any such action or proceeding, and,
if the amount of the Award (defined below) is an amount greater
than $1,000,000, or if an Event of Default then exists
hereunder, to make any compromise or settlement in connection
with such taking or damage. Trustor shall not compromise or
settle any such action or proceeding or agree to any sale in
lieu of condemnation if the amount of the Award is an amount
greater than $1,000,000 without the prior written consent of
Beneficiary. All compensation, awards, damages, rights of
action and proceeds awarded to Trustor by reason of any such
taking, transfer or damage (the "Award") are hereby assigned to
Beneficiary and Trustor agrees to execute such further
assignments of the Award as Beneficiary or Trustee may require.
After deducting therefrom all costs and expenses (regardless of
the particular nature thereof and whether incurred with or
without suit), including reasonable attorneys' fees, incurred
by it in connection with any such negotiations, action or
proceeding (whether or not prosecuted to judgment), Beneficiary
shall, if (i) an Event of Default does not then exist
hereunder, and (ii) if application of the Award to restoration
of the Property will not, in Beneficiary's sole judgment,
materially impair Beneficiary's security for the obligations
secured hereby, apply the Award to the restoration of the
Property, upon conditions substantially similar to the
disbursement provisions and conditions set forth in the Credit
Agreement, and all other conditions and provisions established
by Beneficiary which are similar to conditions and provisions
then used by Beneficiary for disbursements of a construction
loan (it being expressly understood and agreed that Beneficiary
may condition disbursement of such proceeds for restoration
upon proof that an amount equal to the sum which Beneficiary is
requested to disburse has theretofore been paid by Trustor
without reimbursement therefor, or is then due and payable, for
materials theretofore installed or work theretofore performed
upon the Property and properly includable in the cost of
repair, reconstruction or restoration thereof). If, at the
time of receipt by Beneficiary of such proceeds, (i) an Event
of Default then exists hereunder, or (ii) application of the
Award to restoration will, in Beneficiary's sole judgment,
materially impair Beneficiary's security for the obligations
secured hereby, Beneficiary shall have the option, in its sole
and absolute discretion, (1) to apply all or any portion of the
Award upon any indebtedness or other obligation secured hereby
and in such order as Beneficiary may determine, notwithstanding
that said indebtedness or the performance of said obligation
may not be due according to the terms thereof, or (2) to apply
all or any portion of the Award to the restoration of the
Property, subject to such conditions as Beneficiary may
determine, or (3) to deliver all or any portion of the Award,
after such deductions, to Trustor, subject to such conditions
as Beneficiary may determine (and, if the Award is not
sufficient to satisfy the Secured Obligations in full, Trustor
shall immediately pay any remaining balance, together with all
accrued interest thereon). Nothing herein contained shall be
deemed to excuse Trustor from restoring, repairing and
maintaining the Property, as herein provided (other than
Beneficiary's failure to apply the Award to the restoration of
the Property as and to the extent required by the provisions of
this Section 14, which failure shall excuse Trustor only to the
extent of the Award so withheld by Beneficiary), regardless of
whether or not the Award is available for restoration, whether
or not any such Award is sufficient in amount, or whether or
not the Property can be restored to the same condition and
character as existed prior to such damage or partial taking.
Trustor hereby specifically, unconditionally and irrevocably
waives all rights of a property owner under all laws, including
NRS 37.115, as amended or recodified from time to time, which
provide for allocation of condemnation proceeds between a
property owner and a lienholder.
15. Due on Sale. Except as otherwise permitted in the
Credit Agreement, or this Deed of Trust, if the Trustor shall
sell or convey, or create or permit to exist any mortgage,
pledge, security interest or other encumbrance on, or in any
other manner alienate or otherwise "transfer" the Real Property
hereby encumbered or any part thereof or any interest therein,
or shall enter into any agreement for the same that is not
expressly conditioned on Beneficiary's approval, or shall be
divested of its title in any manner or way, whether voluntary
or involuntary or by merger, without the written consent of
Beneficiary being first had and obtained, any indebtedness or
obligation secured hereby, irrespective of the maturity dates
expressed in the Notes or any other notes, instruments or
documents evidencing the same, at the option of Beneficiary,
and without demand or notice, shall immediately become due and
payable. Consent to one such transaction shall not be deemed
to be a waiver of the right to require consent to future or
successive transactions. Beneficiary may grant or deny such
consent in its sole discretion and, if consent should be given,
any such transfer shall be subject to this Deed of Trust, and
any such transferee shall assume all obligations hereunder and
agree to be bound by all provisions contained herein. Such
assumption shall not, however, release Trustor or any maker or
guarantor of any Secured Obligation from any liability with
respect thereto without the prior written consent of
Beneficiary. As used herein, "transfer" includes the direct or
indirect sale, agreement to sell, transfer, conveyance, pledge,
collateral assignment or hypothecation of the Real Property, or
any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of
any installment land sale contract or similar instrument
affecting all or a portion of the Real Property, or the lease
of all or substantially all of the Real Property. The term
"transfer" shall also include the direct or indirect transfer,
assignment, hypothecation or conveyance of legal or beneficial
ownership of (i) any partnership interest in Trustor, (ii) any
partnership or other interest in any general partner in
Trustor, or in any partner or member in or other constituent of
any general partner of Trustor, that is a partnership or
limited liability company or similar entity, or (iii) any stock
in any general partner in Trustor, or in any constituent of any
general partner or Trustor, that is a corporation.
16. Partial or Late Payments. By accepting payment of
any indebtedness secured hereby after its due date, Beneficiary
does not waive its right either to require prompt payment, when
due, of all other indebtedness so secured or to declare
default, as herein provided, for failure to so pay.
17. Reconveyance By Trustee. Upon receipt of written
request from Beneficiary reciting that all sums secured hereby
have been paid, and the Letters of Credit have expired or been
cancelled and the Commitments have terminated, and upon
surrender of this Deed of Trust and the Notes secured hereby to
Trustee for cancellation and retention, or such other
disposition as Trustee, in its sole discretion, may choose, and
upon payment of its fees, the Trustee shall reconvey, without
warranty or recourse, the Property then held hereunder. The
recitals in such reconveyance of any matters of fact shall be
conclusive proof of the truth thereof. The grantee in such
reconveyance may be described in general terms as "the person
or persons legally entitled thereto".
18. Right of Beneficiary and Trustee to Appear. If,
during the existence of the trust created hereby, there be
commenced or pending any suit or action materially and
adversely affecting the Property, or any part thereof, or the
title thereto, or if any adverse claim for or against the
Property, or any part thereof, be made or asserted, the Trustee
or Beneficiary may appear or intervene in the suit or action
and retain counsel therein and, unless such suit or action is
being diligently contested in good faith by Trustor and Trustor
shall have established and maintained adequate reserves with
Beneficiary for the full payment and satisfaction of such suit
or action if determined adversely to Trustor, may defend same,
or otherwise take such action therein as the Trustee or
Beneficiary may be advised and may pay and expend such sums of
money as the Trustee or Beneficiary may deem to be necessary
and Trustor shall pay all reasonable costs and expenses of
Trustee and Beneficiary incurred in connection therewith.
19. Performance by Trustee or Beneficiary. If Trustor
fails to make any payment or perform any act as and in the
manner provided in any of the Loan Documents, then the Trustee
or Beneficiary, at the election of either of them and without
any obligation to do so, after the giving of reasonable notice
to the Trustor, or any successor in interest of the Trustor, or
any of them and without releasing Trustor from any obligation
hereunder, may make such payment or perform such act and incur
any liability, or expend whatever amounts, in its absolute
discretion, it may deem necessary therefor. In connection
therewith (without limiting their general and other powers,
whether conferred herein, in another Loan Document or by law),
Beneficiary and Trustee, and each of them, shall have and are
hereby given the right, but not the obligation, (i) to enter
upon and take possession of the Property; (ii) to make
additions, alterations, repairs and improvements to the
Property which they or either of them may consider necessary or
proper to keep the Property in good condition and repair;
(iii) to appear and participate in any action or proceeding
affecting or which may affect the security hereof or the rights
or powers of Beneficiary or Trustee; (iv) to pay, purchase,
contest or compromise any encumbrance, claim, charge, lien or
debt which in the judgment of either may affect or appears to
affect the security of this Deed of Trust or to be prior or
superior hereto; and (v) in exercising such powers, to pay
necessary expenses, including employment of counsel and other
necessary or desirable consultants. All sums incurred or
expended by the Trustee or Beneficiary, under the terms hereof
(including, without limiting the generality of the foregoing,
costs of evidence of title, court costs, appraisals, surveys,
and receiver's, Trustee's and reasonable attorneys' fees, costs
and expenses (including, without limitation, the reasonable
fees and expenses of attorneys for Trustee), whether or not an
action is actually commenced in connection therewith), shall
become due and payable by the Trustor to the Trustee or
Beneficiary, as the case may be, on the next interest or
installment payment date under the Notes secured hereby and
shall bear interest until paid at an annual percentage rate
equal to the Agreed Rate. In no event shall payment by Trustee
or Beneficiary be construed as a waiver of the default
occasioned by Trustor's failure to make such payment or
payments.
20. Inspections. Beneficiary, or its agents,
representatives or workers, are authorized to enter at any
reasonable time upon or in any part of the Property for the
purpose of inspecting the same and for the purpose of per-
forming any of the acts it is authorized to perform hereunder
or under the terms of any of the Loan Documents.
21. Invalidity of Lien. If the lien of this Deed of
Trust is invalid or unenforceable as to any part of the
"Obligations" or the "Indebtedness" (as those capitalized terms
are defined in the Credit Agreement) of Trustor under the Loan
Documents, or if the lien is invalid or unenforceable as to any
part of the Property, the unsecured or partially secured
portion of such Obligations and Indebtedness shall be
completely paid prior to the payment of the remaining and
secured or partially secured portion of such Obligations and
Indebtedness, and all payments made on such Obligations and
Indebtedness, whether voluntary or under foreclosure or other
enforcement action or procedure, shall be considered to have
been first paid on and applied to the full payment of that
portion of such Obligations and Indebtedness which is not
secured or is not fully secured by the lien of this Deed of
Trust.
22. Subrogation. To the extent that proceeds of the
Notes or other sums advanced by Beneficiary are used to pay any
outstanding lien, charge or prior encumbrance against the
Property, such proceeds shall be deemed to have been advanced
by Beneficiary at Trustor's request and Beneficiary shall be
subrogated to any and all rights and liens held by any owner or
holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or
encumbrances are released.
23. Events of Default. Trustor will be in default
under this Deed of Trust upon the occurrence of any one or more
of the following events (some or all collectively, "Events of
Default"; any one singly, an "Event of Default"):
(a) Failure to Pay. Any amount due under any of the
Notes, the Credit Agreement, this Deed of Trust or any other
Loan Document, or any other amount the payment of which is
secured hereby, is not paid when due; or
(b) Other Breaches Hereof. A breach by Trustor of any
representation, warranty or covenant in this Deed of Trust
which is not cured within fifteen (15) days after receipt by
Trustor of notice of such breach; or
(c) Future Advances. Trustor or any other "borrower"
(as that term is defined in NRS 106.310, as amended or
recodified from time to time) who may send a notice pursuant to
NRS 106.380(1), as amended or recodified from time to time with
respect to this Deed of Trust, (i) delivers, sends by mail or
otherwise gives, or purports to deliver, send by mail or
otherwise give, to Beneficiary, (A) any notice of an election
to terminate the operation of this Deed of Trust as security
for any Secured Obligation, including any obligation to repay
any "future advance" (as defined in NRS 106.320, as amended or
recodified from time to time) of "principal" (as defined in
NRS 106.345, as amended or recodified from time to time), or
(B) any other notice pursuant to NRS 106.380(1), as amended or
recodified from time to time, (ii) records a statement pursuant
to NRS 106.380(3), as amended or recodified from time to time,
or (iii) causes this Deed of Trust, any Secured Obligation, or
Beneficiary to be subject to NRS 106.380(2), 106.380(3) or
106.400, each as amended or recodified from time to time; or
(d) Defaults Under Other Loan Documents. The
occurrence under any of the Loan Documents of an "Event of
Default" (as defined therein).
24. Remedies. At any time after an Event of Default,
Beneficiary and Trustee will be entitled to invoke any and all
of the following rights and remedies, all of which will be
cumulative, and the exercise of any one or more of which shall
not constitute an election of remedies:
(a) Acceleration. Beneficiary may declare any or all
of the Secured Obligations to be due and payable immediately,
without presentment, demand, protest or notice of any kind.
(b) Receiver. Beneficiary may apply to any court of
competent jurisdiction for, and obtain appointment of, a
receiver for the Property or any part thereof, without notice
to Trustor or anyone claiming under Trustor, and without regard
to the then value of the Property or the adequacy of any
security for the Secured Obligations, and Trustor hereby
irrevocably consents to such appointment and waives notice of
any application therefor. Any such receiver or receivers shall
have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Beneficiary in
case of entry as provided herein and in the Credit Agreement
and shall continue as such and exercise all such powers until
the later of (i) the date of confirmation of sale of all of the
Property; (ii) the disbursement of all proceeds of the Property
collected by such receiver and the payment of all expenses
incurred in connection therewith; or (iii) the termination of
such receivership with the consent of Beneficiary or pursuant
to an order of a court of competent jurisdiction. Beneficiary
may also request, in connection with any foreclosure proceeding
hereunder, that the Nevada Gaming Commission petition a
District Court of the State of Nevada for the appointment of a
supervisor to conduct the normal gaming activities on the
Property following such foreclosure proceeding.
(c) Entry. Beneficiary, in person, by agent or by
court-appointed receiver, may enter, take possession of, manage
and operate all or any part of the Property, subject to
applicable Gaming Laws, and may also do any and all other
things in connection with those actions that Beneficiary may,
in its sole discretion, consider necessary and appropriate to
protect the security of this Deed of Trust. Such other things
may include, among other things, any of the following: taking
and possessing all of Trustor's or the then owner's books and
records; entering into, enforcing, modifying, or canceling
Leases on such terms and conditions as Beneficiary may consider
proper; obtaining and evicting tenants; fixing or modifying
Rents; collecting and receiving any payment of money owing to
Trustor; completing construction; and contracting for and
making repairs and alterations. If Beneficiary so requests,
Trustor shall assemble all of the Property that has been
removed from the Real Property in violation of the Loan
Documents and make all of it available to Beneficiary at the
site of the Real Property. Trustor hereby irrevocably
constitutes and appoints Beneficiary as Trustor's attorney-in-
fact to perform such acts and execute such documents as
Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including
endorsement of Trustor's name on any instruments. Regardless
of any provision of this Deed of Trust or the Credit Agreement,
Beneficiary shall not be considered to have accepted any
property other than cash or immediately available funds in
satisfaction of any obligation of Trustor to Beneficiary,
unless Beneficiary has given express written notice of
Beneficiary's election of that remedy in accordance with the
Nevada Uniform Commercial Code, as it may be amended or
recodified from time to time.
(d) Cure; Protection of Security. Either Beneficiary
or Trustee may cure any breach or default of Trustor, and if it
chooses to do so in connection with any such cure, Beneficiary
or Trustee may also enter the Property and, whether or not
Beneficiary or Trustee enter the Property, do any and all other
things which it, in its sole discretion, may consider necessary
and appropriate to protect the security of this Deed of Trust,
including, without limitation, the right to complete the
Improvements. Such other things may include: appearing in
and/or defending any action or proceeding which purports to
affect the security of, or the rights or powers of Beneficiary
or Trustee under, this Deed of Trust; paying, purchasing,
contesting or compromising any encumbrance, charge, lien or
claim of lien which in Beneficiary's or Trustee's sole judgment
is or may be senior in priority to this Deed of Trust, such
judgment of Beneficiary or Trustee to be conclusive as among
the parties to this Deed of Trust; obtaining insurance and/or
paying any premiums or charges for insurance required to be
carried under this Deed of Trust; otherwise caring for and
protecting any and all of the Property; and employing counsel,
accountants, contractors and other appropriate persons to
assist Beneficiary or Trustee. Beneficiary and Trustee may
take any of the actions permitted under this Subsection either
with or without giving notice to any person.
(e) Uniform Commercial Code Remedies. With respect to
Personal Property, Beneficiary may exercise any or all of the
remedies granted to a secured party under NRS Article 104.9101
et seq. (the Nevada enactment of the Uniform Commercial Code),
together with any and all other rights and remedies provided in
the Security Agreement.
(f) Judicial Action. Beneficiary may bring an action
in any court of competent jurisdiction to foreclose this Deed
of Trust or to obtain specific enforcement of any of the
covenants or agreements of this Deed of Trust or for any other
remedy provided herein, in the Credit Agreement, in any Loan
Document or otherwise provided by law or in equity.
(g) Power of Sale. Under the power of sale herein
granted, Beneficiary shall have the discretionary right to
cause some or all of the Property, including any Property which
constitutes personal property, to be sold or otherwise disposed
of in any combination and in any manner permitted by applicable
law.
(i) Sales of Personal Property.
(A) For purposes of the power of sale herein
granted, Beneficiary may elect to treat as personal
property any Property which is intangible or which can
be severed from the Land or Improvements without
causing structural damage. If Beneficiary chooses to do
so, Beneficiary may dispose of any personal property
separately from the sale of real property, in any
manner permitted by or under the NRS, including any
public or private sale, or in any manner permitted by
any other applicable law.
(B) The following provision shall apply in
the absence of any specific statutory requirement which
permits or requires a different notice period: In
connection with any sale or other disposition of such
Property, Trustor agrees that the following procedures
constitute a commercially reasonable sale: Beneficiary
shall mail written notice of the sale to Trustor not
later than ten (10) days prior to such sale. Upon
receipt of any written request, Beneficiary will, to
the extent reasonably practicable, make the Property
available to any bona fide prospective purchaser for
inspection during reasonable business hours prior to
the sale. Notwithstanding any provision to the
contrary, Beneficiary shall be under no obligation to
consummate a sale if, in its judgment, none of the
offers received by it equals the fair value of the
Property offered for sale. The foregoing procedures do
not constitute the only procedures that may be
commercially reasonable.
(ii) Trustee's Sales of Real Property or Mixed
Collateral.
(A) Beneficiary may choose to dispose of
some or all of the Property which consists solely of
real property in any manner then permitted by
applicable law. In its discretion, Beneficiary may
also or alternatively choose to dispose of some or all
of the Property, in any combination consisting of both
real and personal property, together in one sale to be
held in accordance with the law and procedures
applicable to real property. Trustor agrees that any
sale of personal property together with real property
constitutes a commercially reasonable sale of the
personal property. For purposes of this power of sale,
either a sale of real property alone, or a sale of both
real and personal property together in accordance with
law, will sometimes be referred to as a "Trustee's
Sale."
(B) Before any Trustee's Sale, Beneficiary
or Trustee shall give and record such notice of default
and election to sell as may then be required by law.
When all time periods then legally mandated have
expired, and after such notice of sale as may then be
legally required has been given, Trustee shall sell the
property being sold at a public auction to be held at
the time and place specified in the notice of sale.
Neither Trustee nor Beneficiary shall have any
obligation to make demand on Trustor before any
Trustee's Sale. From time to time, in accordance with
then applicable law, Trustee may, and in any event at
Beneficiary's request shall, postpone any Trustee's
sale by public announcement at the time and place
noticed for that sale, or may, in its discretion, give
a new notice of sale.
(C) At any Trustee's Sale, Trustee shall
sell to the highest bidder at public auction for cash
in lawful money of the United States. Trustee shall
execute and deliver to the purchaser(s) a deed or deeds
conveying the property being sold without any covenant
or warranty whatsoever, express or implied. The
recitals in any such deed of any matters or facts,
including any facts bearing upon the regularity or
validity of any Trustee's Sale, shall be conclusive
proof of their truthfulness. Any such deed shall be
conclusive against all persons as to the facts recited
in it.
(h) Single or Multiple Foreclosure Sales. If the
Property at the time of sale or other disposition consists of
more than one lot, parcel or item of property, Beneficiary may:
(i) Designate the order in which the lots,
parcels or items shall be sold or disposed of or
offered for sale or disposition; and
(ii) Elect to dispose of the lots, parcels or
items through a single consolidated sale or disposition
to be held or made under the power of sale herein
granted, or in connection with judicial proceedings, or
by virtue of a judgment and decree of foreclosure and
sale; or through two or more such sales or
dispositions; or in any other manner that Beneficiary
may deem to be in its best interests (any such sale or
disposition, a "Foreclosure Sale;" any two or more,
"Foreclosure Sales").
If Beneficiary chooses to have more than one Foreclosure Sale,
Beneficiary at its option may cause the Foreclosure Sales to be
held simultaneously or successively, on the same day, or on
such different days and at such different times and in such
order as Beneficiary may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the liens of this
Deed of Trust on any part of the Property which has not been
sold, until all of the Secured Obligations have been paid in
full.
25. Costs of Enforcement. If an installment of
principal or interest on the Notes is not paid when due or if
any other Event of Default occurs, Beneficiary and Trustee, and
each of them, may employ an attorney or attorneys to protect
their rights hereunder. Trustor promises to pay to
Beneficiary, on demand, the reasonable fees and expenses of
such attorneys and all other costs of enforcing the obligations
secured hereby, including but not limited to, recording fees,
the expense of a Trustee's Sale Guarantee, Trustee's fees and
expenses, receivers' fees and expenses, and all other expenses,
of whatever kind or nature, incurred by Beneficiary and
Trustee, and each of them, in connection with the enforcement
of the obligations secured hereby, whether or not such
enforcement includes the filing of a lawsuit. Until paid, such
sums shall be secured hereby and shall bear interest, from date
of expenditure, at an annual rate equal to the Agreed Rate.
26. Remedies Cumulative and Not Exclusive. Trustee
and Beneficiary, and each of them, shall be entitled to enforce
payment and performance of any indebtedness or obligations
secured hereby and to exercise all rights and powers under this
Deed of Trust or under any Loan Document or other agreement or
any laws now or hereafter in force, notwithstanding some or all
of the said indebtedness and obligations secured hereby may now
or hereafter be otherwise secured, whether by mortgage, deed of
trust, pledge, lien, assignment or otherwise. Neither the
acceptance of this Deed of Trust nor its enforcement whether by
court action or pursuant to the power of sale or other powers
herein contained, shall prejudice or in any manner affect
Trustee's or Beneficiary's right to realize upon or enforce any
other security now or hereafter held by Trustee or Beneficiary,
it being agreed that Trustee and Beneficiary, and each of them,
shall be entitled to enforce this Deed of Trust and any other
security now or hereafter held by Beneficiary or Trustee in
such order and manner as they or either of them may in their
absolute discretion determine. No remedy herein conferred upon
or reserved to Trustee or Beneficiary is intended to be
exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Trustee
or Beneficiary or to which either of them may be otherwise
entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Trustee
or Beneficiary and either of them may pursue inconsistent
remedies.
27. Credit Bids. At any Foreclosure Sale, any person,
including Trustor, Trustee or Beneficiary, may bid for and
acquire the Property or any part thereof to the extent
permitted by then applicable law. Instead of paying cash for
such property, Beneficiary may settle therefor by crediting
such portion of the following obligations against the sales
price of the property as is necessary to equal such price:
(a) First, the portion of the Secured Obligations
attributable to the expenses of sale, costs of any action and
any other sums for which Trustor is obligated to pay or
reimburse Beneficiary or Trustee hereunder or under any other
Loan Document; and
(b) Second, any of the other Secured Obligations, in
any order and proportion as Beneficiary, in its sole discre-
tion, may elect.
28. Application of Foreclosure Sale Proceeds.
Beneficiary and Trustee shall apply the proceeds of any
Foreclosure Sale in the following manner:
(a) First, to pay the portion of the Secured
Obligations attributable to the expenses of sale, costs of any
action and any other sums for which Trustor is obligated to
reimburse Beneficiary or Trustee hereunder or under any other
Loan Document;
(b) Second, to pay the portion of the Secured
Obligations attributable to any sums expended or advanced by
Beneficiary or Trustee under the terms of this Deed of Trust
which then remain unpaid;
(c) Third, to pay any and all other Secured
Obligations, in any order and proportion as Beneficiary, in its
sole discretion, may elect; and
(d) Fourth, the remainder, if any, shall be remitted
to the person or persons entitled to it.
29. Application of Rents and Other Sums. Beneficiary
shall apply any and all Rents collected by it, and any and all
sums, other than proceeds of a Foreclosure Sale, which
Beneficiary may receive or collect, in the following manner:
(a) First, to pay the portion of the Secured
Obligations attributable to the costs and expenses of operation
and collection that may be incurred by Trustee, Beneficiary or
any receiver;
(b) Second, to pay any and all other Secured
Obligations in any order and proportion as Beneficiary, in its
sole discretion, may elect; and
(c) Third, the remainder, if any, shall be remitted to
the person or persons entitled to it.
Beneficiary shall have no liability for any funds which it does
not actually receive.
30. Incorporation of Certain Nevada Covenants. The
following covenants, Nos. 1, 3, 4 (at the Agreed Rate), 6, 7
(reasonable percentage), 8 and 9 of NRS 107.030, where not in
conflict with the provisions of the Loan Documents, are hereby
adopted and made a part of this Deed of Trust. Upon any Event
of Default by Trustor hereunder, Beneficiary may (a) declare
all sums secured immediately due and payable without demand or
notice or (b) have a receiver appointed as a matter of right
without regard to the sufficiency of said property or any other
security or guaranty and without any showing as required by NRS
sec.107.100. All remedies provided in this Deed of Trust are
distinct and cumulative to any other right or remedy under this
Deed of Trust or afforded by law or equity and may be exercised
concurrently, independently or successively. The sale of said
property conducted pursuant to Covenants Nos. 6, 7 and 8 of NRS
sec.107.030 may be conducted either as to the whole of said
property or in separate parcels and in such order as Trustee
may determine.
31. Substitution of Trustee. Beneficiary or assigns
may, from time to time, by a written instrument executed and
acknowledged by Beneficiary, recorded in the county in which
the Real Property is located and otherwise complying with
applicable law, appoint a successor trustee or trustees to any
Trustee named herein or acting hereunder, to execute the trust
created by the Deed of Trust or other conveyance in trust.
Upon the recording of such instrument, the new trustee or
trustees shall, without conveyance from the predecessor
trustee, be vested with all the title, estate, interest,
rights, powers, duties and trusts in the premises vested in or
conferred upon the predecessor trustee. If there be more than
one trustee, either may act alone and execute the trusts upon
the request of the Beneficiary, and all his acts thereunder
shall be deemed to be the acts of all trustees, and the recital
in any conveyance executed by such sole trustee of such request
shall be conclusive evidence thereof, and of the authority of
such sole trustee to act.
32. Binding Nature. This Deed of Trust applies to,
inures to the benefit of and binds Trustor and the heirs,
legatees, devisees, administrators, personal representatives,
executors and the successors and assigns thereof, Trustee and
Beneficiary. As used herein, the term "Beneficiary" shall
include the owners and holders of the Notes and other Secured
Obligations from time to time, whether or not named as
Beneficiary herein (it being expressly agreed, however, that
Beneficiary may act through an agent; that only the signature
of such agent is required on any amendment hereof or any
consent, approval or other action hereunder; and that Wells
Fargo Bank, N.A., is the initial such agent hereunder); the
term "Trustee" shall mean the trustee appointed hereunder from
time to time, whether or not notice of such appointment is
given; and the term "Trustor" shall mean the Trustor named
herein and the successors-in-interest, if any, of said named
Trustor, in and to the Property or any part thereof. If there
be more than one Trustor hereunder, their obligations hereunder
shall be joint and several. It is expressly agreed that the
Trust created hereby is irrevocable by Trustor.
33. Acceptance of Trust; Resignation by Trustee.
Trustee accepts this trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided
by law, reserving, however, unto the Trustee, the right to
resign from the duties and obligations imposed herein whenever
Trustee, in its sole discretion, deems such resignation to be
in the best interest of the Trustee. Written notice of such
resignation shall be given to Trustor and Beneficiary.
34. Full Performance Required; Survival of Warranties.
All representations, warranties and covenants of Trustor
contained in any loan application or made to Beneficiary in
connection with the loan secured hereby or contained in any of
the Loan Documents or incorporated by reference therein, shall
survive the execution and delivery of this Deed of Trust and
shall remain continuing obligations, warranties and
representations of Trustor so long as any portion of the
obligations secured by this Deed of Trust remains outstanding.
35. Waiver of Certain Rights By Trustor. Trustor
waives, to the extent permitted by law, (i) the benefit of all
laws now existing or that may hereafter be enacted providing
for any appraisement before sale of any portion of the
Property, (ii) all rights of redemption, valuation, appraise-
ment, stay of execution, notice of election to mature or
declare due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the liens hereby
created, and (iii) all rights and remedies which Trustor may
have or be able to assert by reason of the laws of the State of
Nevada pertaining to the rights and remedies of sureties.
Without limiting the generality of the foregoing, Trustor
waives, to the extent permitted by law, all rights (including
any rights provided by NRS 100.040 and 100.050) to direct the
order in which any of the Property shall be sold in the event
of any sale or sales pursuant hereto and to have any of the
Property or any other property now or hereafter constituting
security for the indebtedness secured hereby marshalled upon
any foreclosure of this Deed of Trust or of any other security
for any of such indebtedness.
36. Construction. The language in all parts of this
Deed of Trust shall be in all cases construed simply according
to its fair meaning and not strictly for or against any of the
parties hereto. Headings at the beginning of Sections,
Subsections, paragraphs and subparagraphs of this Deed of Trust
are solely for the convenience of the parties, are not a part
hereof and shall not be used in construing this Deed of Trust.
The preamble, any recitals and all exhibits and schedules to
this Deed of Trust are part of this Deed of Trust and are
incorporated herein by this reference. When required by the
context: whenever the singular number is used in this Deed of
Trust, the same shall include the plural, and the plural shall
include the singular; and the masculine gender shall include
the feminine and neuter genders and vice versa. Unless
otherwise required by the context (or otherwise provided
herein): the words "herein", "hereof" and "hereunder" and
similar words shall refer to this Deed of Trust generally and
not merely to the provision in which such term is used; the
word "person" shall include individual, partnership,
corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint
venture, governmental authority and other entity of whatever
nature; the words "including", "include" or "includes" shall
be interpreted in a non-exclusive manner as though the words
"but [is] not limited to" or "but without limiting the
generality of the foregoing" or "without limitation"
immediately followed the same; the word "month" shall mean
calendar month; and the term "business day" shall mean any day
other than a Saturday, Sunday or legal holiday under the laws
of the State of Nevada. If the day on which performance of any
act or the occurrence of any event hereunder is due is not a
business day, the time when such performance or occurrence
shall be due shall be the first business day occurring after
the day on which performance or occurrence would otherwise be
due hereunder. All times provided in this Deed of Trust for
the performance of any act will be strictly construed, time
being of the essence hereof.
37. Priority. This Deed of Trust is intended to have,
and retain, priority over all other liens and encumbrances upon
the Real Property, excepting only: (i) such Impositions as, at
the date hereof, have, or, by law, gain, priority over the lien
created hereby; (ii) covenants, conditions, restrictions,
easements, rights of way and Leases which are of record or are
disclosed of record and which, on the date hereof, affect the
Real Property and are superior in right to or have priority
over this Deed of Trust and (iii) Leases, liens, encumbrances
and other matters as to which Beneficiary hereafter expressly
subordinates the lien of this Deed of Trust by written
instrument in recordable form. Under no circumstances shall
Beneficiary be obligated or required to subordinate the lien
hereof to any lien, encumbrance, covenant or other matter
affecting the Real Property or any portion thereof.
Beneficiary may, however, at Beneficiary's option, exercisable
in its sole and absolute discretion, subordinate the lien of
this Deed of Trust, in whole or in part, to any or all Leases,
liens, encumbrances or other matters affecting all or any
portion of the Real Property, by executing and recording, in
the Office of the County Recorder of the county or counties in
which the Real Property is located, a unilateral declaration of
such subordination specifying the Lease, lien, encumbrance or
other matter or matters to which this Deed of Trust shall
thereafter be subordinate.
38. Amendments. This Deed of Trust cannot be waived,
changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom
enforcement of any waiver, change, discharge or termination is
sought.
39. Financing Statement. Portions of the Personal
Property (and portions of the Real Property) are goods which
are or are to become fixtures on or relating to the Real
Property. This Deed of Trust constitutes a financing statement
filed as a fixture filing, under NRS 104.9402(6) of the Nevada
Uniform Commercial Code, in the Official Records of the County
Recorder of the County in which the Real Property is located
with respect to any and all fixtures included within the term
"Property" as used herein and with respect to any goods or
other Personal Property that may now be or hereafter become
such fixtures. The address of Beneficiary, the secured party,
from which information concerning the security interest granted
hereunder may be obtained, is set forth in Section 48, below,
and the address of Trustor, the debtor, is set forth in Section
48, below.
40. Attorney-in-Fact. Trustor hereby appoints
Beneficiary the attorney-in-fact of Trustor to prepare, sign,
file and record one or more financing statements; any documents
of title or registration, or like papers, and to take any other
action deemed necessary, useful or desirable by Beneficiary to
perfect and preserve Beneficiary's security interest against
the rights or interests of third persons.
41. Releases, Extensions, Modifications and Additional
Security.
(a) From time to time, Beneficiary may perform any of
the following acts without incurring any liability or giving
notice to any person, and without affecting the personal
liability of any person for the payment of the Secured
Obligations (except as provided below), and without affecting
the security hereof for the full amount of the Secured
Obligations on all Property remaining subject hereto, and
without the necessity that any sum representing the value of
any portion of the Property affected by the Beneficiary's
action be credited on the Secured Obligations:
(i) Release any person liable for payment of any
Secured Obligation;
(ii) Extend the time for payment, or otherwise
alter the terms of payment, of any Secured Obligation;
(iii) Accept additional real or personal property of
any kind as security for any Secured Obligation, whether
evidenced by deeds of trust, mortgages, security agreements
or any other instruments of security; or
(iv) Alter, substitute or release any property
securing the Secured Obligations.
(b) From time to time when requested to do so by
Beneficiary in writing, Trustee may perform any of the
following acts without incurring any liability or giving notice
to any person:
(i) Consent in writing to the making of any plat
or map of the Property or any part of it;
(ii) Join in granting any easement or creating any
restriction affecting the Property;
(iii) Join in any subordination or other agreement
affecting this Deed of Trust or the lien of it or other
agreement or instrument relating hereto or to the Property
or any portion thereof; or
(iv) Reconvey the Property or any part of it
without any warranty.
42. Exculpation and Indemnification.
(a) Beneficiary shall not be directly or indirectly
liable to Trustor or any other person as a consequence of any
of the following:
(i) Beneficiary's exercise of or failure to
exercise any rights, remedies or powers granted to
Beneficiary in this Deed of Trust;
(ii) Beneficiary's failure or refusal to perform or
discharge any obligation or liability of Trustor under any
agreement related to the Property or under this Deed of
Trust; or
(iii) Any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the
Property, or from any other act or omission of Beneficiary
in managing the Property, after an Event of Default, unless
the loss is caused by the willful misconduct, gross
negligence or bad faith of Beneficiary.
To the extent permitted by applicable law, Trustor hereby
expressly waives and releases all liability of the types
described above, and agrees that no such liability shall be
asserted against or imposed upon Beneficiary.
(b) Except for losses caused by the willful
misconduct, gross negligence or bad faith of Trustee or
Beneficiary, Trustor agrees to indemnify Trustee and
Beneficiary against and hold them harmless from all losses,
damages, liabilities, claims, causes of action, judgments,
court costs, reasonable attorneys' fees and other reasonable
legal expenses, cost of evidence of title, cost of evidence of
value, and other reasonable costs and expenses which either may
suffer or incur:
(i) In performing any act required or permitted by
this Deed of Trust or any of the other Loan Documents or by
law;
(ii) Because of any failure of Trustor to perform
any of Trustor's obligations; or
(iii) Because of any alleged obligation of or
undertaking by Beneficiary to perform or discharge any of
the representations, warranties, conditions, covenants or
other obligations in any document relating to the Property
other than the Loan Documents.
This agreement by Trustor to indemnify Trustee and Beneficiary
shall survive the release and cancellation of any or all of the
Secured Obligations and the full or partial release and/or
reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts arising under the
indemnity obligations of this Deed of Trust immediately upon
demand by Trustee or Beneficiary.
43. Relationship to Credit Agreement. This Deed of
Trust has been executed pursuant to and is subject to the terms
of the Credit Agreement executed concurrently herewith and
Trustor agrees to observe and perform all provisions contained
therein. If and to the extent of any conflict between the
provisions of the Credit Agreement and the provisions of this
Deed of Trust, the provisions of this Deed of Trust shall
control.
44. Relationship to Security Agreement. Concurrently
herewith, Trustor is entering into the Security Agreement with
Beneficiary with respect to the Personal Property. As provided
above, the terms of said Security Agreement shall, with respect
to the Personal Property and the security interest therein
granted hereby, supplement the terms of this Deed of Trust and,
if and to the extent of any conflict with the terms hereof
applicable to said security interest and Personal Property,
shall, to the extent enforceable, control. Nothing in this
Section 44 shall be deemed or construed, however, to impair the
rights of Beneficiary to conduct one or more Trustee's Sales at
which real and personal property are sold together pursuant to
the laws applicable to the sale of real property.
45. Relationship to Environmental Indemnity. Trustor
has executed an agreement entitled "Environmental Indemnity"
dated as of May 30, 1995, for the benefit of the Lenders.
Trustor hereby acknowledges and agrees that, notwithstanding
any other provision of this Deed of Trust to the contrary, the
obligations of Trustor under such "Environmental Indemnity"
agreement shall be unlimited personal obligations of Trustor,
the obligations of Trustor under such instrument shall not be
secured by this Deed of Trust and shall survive foreclosure
under this Deed of Trust, any transfer in lieu thereof, and any
satisfaction of the Secured Obligations.
46. Severability. If any provision in or obligation
under this Deed of Trust shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
47. Loan Statement Fees. Trustor shall pay the amount
demanded by Beneficiary or its authorized loan servicing agent
for any statement requested by Trustor regarding the
obligations secured hereby; provided, however, that such amount
may not exceed the maximum amount allowed by law at the time
request for the statement is made.
48. Notices.
(a) Methods; Addresses. All notices, requests and
demands to be made hereunder to the parties hereto shall be in
writing and shall be given by any of the following means:
(i) personal service; (ii) electronic communication, whether by
telex, telegram or telecopying (if confirmed in writing sent by
registered or certified, first class mail, return receipt
requested); or (iii) registered or certified, first class mail,
return receipt requested. Such addresses may be changed by
notice to the other parties given in the same manner as
provided above. Any notice, demand or request sent pursuant to
clause (i) of this Section shall be deemed received upon such
personal service, and if sent pursuant to clause (ii) of this
Section shall be deemed received upon receipt if sent prior to
5:00 p.m. on a business day, and otherwise shall be deemed
received on the next succeeding business day, and, if sent
pursuant to clause (iii) of this Section shall be deemed
received three (3) days following deposit in the mail.
To Beneficiary: Wells Fargo Bank, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
With a copy to: Sheppard, Mullin, Richter & Hampton
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attn: William M. Scott IV
To Trustor: Circus and Eldorado Joint Venture
430 North Virginia Street
Reno, Nevada 89503
Attn: General Manager
To Trustee: First American Title Company of Nevada
241 Ridge Street
Reno, Nevada 89504
Attn: Gene T. Turk
(b) Reliance on Faxes. Each party hereto (a
"Recipient") who receives from another party hereto (a
"Sender") by electronic facsimile transmission (telecopier or
fax) any writing which appears to be signed by an authorized
signatory of that Sender is authorized to rely and act upon
that writing in the same manner as if the original signed
writing was in the possession of the Recipient upon oral
confirmation of that Sender to the Recipient that the writing
was signed by an authorized signatory of that Sender and is
intended by that Sender to be relied upon by the Recipient.
Each party transmitting any writing to any other party by
electronic facsimile transmission agrees to forward immediately
to that Recipient, by expedited means (for next day delivery,
if possible), or by first class mail if the Recipient so
agrees, the signed hard copy of that writing, unless the
Recipient expressly agrees to some other disposition of the
original by the Sender.
49. Governing Law. THIS DEED OF TRUST SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
APPLICABLE LAW PROVIDES THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEVADA.
50. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST TRUSTOR ARISING OUT OF
OR RELATING TO THIS DEED OF TRUST MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEVADA, AND BY EXECUTION AND DELIVERY OF THIS DEED OF TRUST
TRUSTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS DEED OF
TRUST. Trustor hereby agrees that service of all process in
any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Trustor at its
address provided in the Credit Agreement, such service being
hereby acknowledged by Trustor to be sufficient for personal
jurisdiction in any action against Trustor in any such court
and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
51. Waiver of Jury Trial. TRUSTOR AND BENEFICIARY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS DEED OF TRUST. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and
statutory claims. Trustor and Beneficiary each acknowledge
that this waiver is a material inducement for Trustor and
Beneficiary to enter into a business relationship, that Trustor
and Beneficiary have already relied on this waiver in entering
into this Deed of Trust and that each will continue to rely on
this waiver in their related future dealings. Trustor and
Beneficiary further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS DEED
OF TRUST. In the event of litigation, this Deed of Trust may
be filed as a written consent to a trial by the court.
52. Nonforeign Entity. Section 1445 of the Internal
Revenue Code of 1986, as amended (the "Code") provides that a
transferee of a U.S. real property interest must withhold tax
if the transferor is a foreign person. To inform Beneficiary
that the withholding of tax will not be required in the event
of the disposition of the Property pursuant to the terms of
this Deed of Trust, Trustor hereby certifies, under penalty of
perjury, that:
(a) Trustor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate, as those terms
are defined in the Code and the regulations promulgated
thereunder; and
(b) Trustor's U.S. employer identification number is
88-0310787; and
(c) Trustor's principal place of business is 430 North
Virginia Street, Reno, Nevada 89503.
It is understood that Beneficiary may disclose the contents of
this certification to the Internal Revenue Service and that any
false statement contained herein could be punished by fine,
imprisonment or both. Trustor covenants and agrees to execute
such further certificates, which shall be signed under penalty
of perjury, as Beneficiary shall reasonably require. The
covenant set forth herein shall survive the foreclosure of the
lien of this Deed of Trust or acceptance of a deed in lieu
thereof.
53. Counterparts. This Deed of Trust may be executed
in any number of counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same
document with the same effect as if all parties had signed the
same signature page. Any signature page and acknowledgment
page of this Deed of Trust may be detached from any counterpart
of this Deed of Trust and reattached to any other counterpart
of this Deed of Trust identical in form hereto but having
attached to it one or more additional signature and
acknowledgment pages.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, Trustor has executed this
instrument as of the day and year first above written.
TRUSTOR:
CIRCUS AND ELDORADO JOINT VENTURE,
a Nevada general partnership
By: GALLEON, INC.
Its: Managing Partner
By: CLYDE T. TURNER
Title: President
By: ELDORADO LIMITED LIABILITY COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC
Its: Manager
By: DON CARANO
Title:
By: EXECUTIVE COMMITTEE
By: DON CARANO
Title:
By: ROBERT JONES
Title:
BENEFICIARY
WELLS FARGO BANK, N.A.
in its capacity as arranger and
"Administrative Agent"
for the "Lenders" under the
"Credit Agreement"
By: STEVE BYRNE
Title: Vice President
ACKNOWLEDGEMENT FOR GALLEON, INC.
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
This instrument was acknowledged before me on September
___, 1996, by _________________________ as
____________________________ of Galleon, Inc. of/for CIRCUS AND
ELDORADO JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR ELDORADO RESORTS LLC
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on September
___, 1996, by DONALD L. CARANO as Chief Executive Officer of
Eldorado Resorts LLC, Managing Member of Eldorado Limited
Liability Company, of/for CIRCUS AND ELDORADO JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR EXECUTIVE COMMITTEE
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on September
____ 1996, by _____________________________, as a member of the
Executive Committee of/for CIRCUS AND ELDORADO JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR EXECUTIVE COMMITTEE
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on September
____ 1996, by _____________________________, as a member of the
Executive Committee of/for CIRCUS AND ELDORADO JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR WELLS FARGO BANK, N.A., as Agent
STATE OF NEVADA )
) ss
COUNTY OF )
This instrument was acknowledged before me on September
______, 1996, by Steve Byrne, as Vice President of WELLS FARGO
BANK, N.A.
________________________________
Notary Public
EXHIBIT A
Legal Description
THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF
WASHOE, STATE OF NEVADA, AND IS DESCRIBED AS FOLLOWS:
PART I:
PART II:
RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
Sheppard Mullin Richter & Hampton, LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: William M. Scott IV, Esq.
_______________________________________________________________
Space Above Line for Recorder's Use
AMENDED AND RESTATED
SUBORDINATION AND DEBT AGREEMENT
Dated as of September 9, 1996
By
CIRCUS CIRCUS ENTERPRISES, INC.
("Subordinated Creditor")
and
CIRCUS AND ELDORADO JOINT VENTURE
("Partnership")
In favor of
WELLS FARGO BANK, N.A.
Agent for the Lenders Identified Herein
AMENDED AND RESTATED
SUBORDINATION AND DEBT PUT AGREEMENT
NOTICE: THIS AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN
THE PROPERTY BECOMING SUBJECT TO SOME OTHER OR LATER SECURITY
INSTRUMENT.
This AMENDED AND RESTATED SUBORDINATION AND DEBT PUT
AGREEMENT, dated as of September 9, 1996 ("Agreement"), is made
by CIRCUS CIRCUS ENTERPRISES, INC., a Nevada corporation
(together with its successors and assigns as holders of the
Subordinated Notes (as defined below), "Subordinated
Creditor"), and CIRCUS AND ELDORADO JOINT VENTURE, a Nevada
general partnership ("Partnership"), in favor of WELLS FARGO
BANK, N.A., as arranger and administrative agent ("in such
capacity, "Agent") for the Lenders identified below.
R E C I T A L S
WHEREAS, Partnership entered into that certain Credit
Agreement dated as of May 30, 1995 with the financial
institutions from time to time party thereto (together with
Agent, the "Senior Lenders"), First Interstate Bank of Nevada,
N.A. (to whom Wells Fargo Bank, N.A. is successor by merger) as
Agent, The Long-Term Credit Bank of Japan, Ltd., Los Angeles
Agency and Societe Generale, as managing agents, and Bank of
America, N.T. & S.A., CIBC Inc. and Credit Lyonnais,
Los Angeles Branch, collectively, as co-agents (the "original
Credit Agreement"); and
WHEREAS, the parties hereto have previously entered
into a Subordination and Debt Put Agreement dated as of May 30,
1995 and recorded in the Official Records of Washoe County,
Nevada (the "Official Records") on May 31, 1995 at Book 4312,
Page 903 and as Instrument 1897113; and
WHEREAS, concurrently with the execution and delivery
hereof, the Original Credit Agreement is being amended and
restated in its entirety by that certain Amended and Restated
Credit Agreement of even date herewith among Partnership, Wells
Fargo Bank, N.A., in its capacity as Arranger and Administra-
tive Agent for the lenders named therein ("Agent"), The Long-
Term Credit Bank of Japan, Ltd., Los Angeles Agency and Societe
Generale, collectively, as Managing Agents for Lenders (in such
capacity, "Managing Agents") and CIBC Inc. and Credit Lyonnais,
Los Angeles Branch, collectively, as Co-Agents for Lenders (in
such capacity, "Co-Agents") (said agreement, as it may here-
after be further amended, restated, supplemented, waived,
extended or otherwise modified from time to time, together with
any refinancings thereof being referred to herein as the
"Credit Agreement"); and
WHEREAS, capitalized terms used in this Agreement are
used with the meanings set forth for those terms in the Credit
Agreement; and
WHEREAS, each Note issued pursuant to the Credit
Agreement is secured by, among other things
(a) that certain Amended and Restated Deed of
Trust, Fixture Filing and Security Agreement with
Assignment of Rents, executed by Partnership, as trustor,
to First American Title Company of Nevada, as trustee, for
the benefit of Agent, dated as of even date herewith (the
"Senior Deed of Trust") and to be recorded in the Official
Records; which Amended and Restated Deed of Trust amends
and restates the Deed of Trust, Fixture Filing and
Security Agreement executed in connection with the
Original Credit Agreement and recorded in the Official
Records on May 31, 1995 at Book 4312, Page 814 and as
Instrument 1897110;
(b) that certain Amended and Restated
Assignment of Rents and Revenues, executed by Partnership,
as assignor, in favor of Agent, as assignee, dated as of
even date herewith (the "Senior Assignment of Rents and
Revenues") and to be recorded in the Official Records;
which Amended and Restated Assignment of Rents amends and
restates the Assignment of Rents executed in connection
with the Original Credit Agreement and recorded in the
Official Records on May 31, 1995 in Book 4312, Page 859,
as Instrument 1897111;
(c) that certain Amended and Restated Security
Agreement dated as of even date herewith by and between
Partnership and Agent (the "Senior Security Agreement");
and
(d) UCC-1 fixture filings and financing
statements recorded and filed on the Closing Date and
contemporaneously herewith.
The Loan Documents and the other documents described
in this recital as of any date, whether now as hereafter
existing, as such documents may be consolidated, renewed,
replaced, extended, restated, modified, amended or supplemented
from time to time through such date are hereinafter
collectively referred to as the "Senior Loan Documents."
WHEREAS, Partnership has issued or will issue one or
more notes to Subordinated Creditor evidencing General Partner
Subordinated Debt in substantially the form included in
Exhibit XVIII to the Credit Agreement (the "Subordinated
Notes") pursuant to the Loan Agreement dated as of May 30, 1995
by and between Subordinated Creditor and Partnership (the
"Subordinated Agreement"); and
WHEREAS, as of the date hereof, the outstanding
principal balance of the loans outstanding under Subordinated
Agreement is $35,068,696, and, to the best knowledge of the
Subordinated Creditor, no default exists with respect thereto.
WHEREAS, the Subordinated Notes are secured by:
(a) that certain Construction Deed of Trust
executed by Partnership as trustor, to First American
Title Company of Nevada, as trustee, for the benefit of
Subordinated Creditor, dated as of even date herewith (the
"Subordinated Deed of Trust") and recorded in the Official
Records on May 31, 1995 at Book 4313, Page 164 and as
Instrument 1897178;
(b) that certain Security Agreement executed by
Partnership, as assignor, in favor of Subordinated
Creditor; and
(c) UCC-1 fixture filings and financing
statements recorded and filed on the Closing Date.
The Subordinated Notes and the documents described in
this recital and the immediately preceding recital as of any
date, together with any other documents and instruments
evidencing, securing, or pertaining to the Subordinated Notes,
whether now or hereafter existing, as such documents may be
consolidated, renewed, replaced, extended, restated, modified,
amended or supplemented from time to time through such date in
accordance with the terms and conditions of this Agreement, are
hereinafter collectively referred to as the "Subordinated Loan
Documents;" and
WHEREAS, it is a condition to the transactions
contemplated by the Credit Agreement that this Agreement be
entered into to amend and restate the Original Subordination
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and
in order to induce Senior Lenders to make Loans under the
Credit Agreement, the parties hereto hereby agree as follows:
1. Certain Defined Terms. For purposes of this
Agreement, the following terms shall have the following
meanings:
a. "Bankruptcy Proceeding" means any insolvency,
reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or other similar proceeding against
Partnership, or receivership proceedings, or assignment for the
benefit of creditors, or any other marshalling of the assets of
Partnership.
b. "Distribution of Assets" means any distribution
of assets of Partnership of any kind or character in exchange
for or in payment of the Subordinated Debt, whether (a) a
payment, purchase or other acquisition or retirement for cash,
property or securities or (b) by way of cancellation,
forgiveness or offset of the Subordinated Debt against any
Indebtedness owed by Subordinated Creditor to Partnership or
(c) payable or deliverable by reason of the payment of any
other Indebtedness of Partnership being subordinated to the
payment of the Subordinated Debt and, in any case, shall
include any assets of any kind or character received by
Subordinated Creditor in connection with the realization of
security for the Subordinated Debt.
c. "payment in full," "paid in full" and any
similar terms mean payment in full in cash of the Senior
Obligations, including, without limitation, all principal,
interest (whether accruing before or after commencement of a
Bankruptcy Proceeding or whether due under the terms of the
Credit Agreement, but not accrued as a result of the
commencement of any such proceeding), costs, fees and expenses
(including, without limitation, reasonable legal fees and
expenses) of Senior Lenders and Agent as required under the
Senior Loan Documents and any advances by Senior Lenders,
whether or not deemed obligatory, made (1) to protect the
priority, validity or enforceability of the lien of the Senior
Deed of Trust, (2) to protect the value or the security of any
Collateral pursuant to the Senior Loan Documents, or (3) to
cure any Event of Default or Potential Event of Default under
any of the Senior Loan Documents. For purposes of this
Agreement, the Senior Obligations shall not be deemed to have
been paid in full to the extent any payment thereof has been
set aside as a result of any proceeding in law or equity.
d. "Senior Obligations" means all Obligations as
that term is defined in the Credit Agreement including, without
limitation, all advances made under the Credit Agreement
whenever made on or after the Closing Date, any refundings,
renewals or extensions of any Indebtedness thereunder or other
obligation thereunder and all expenses and attorneys' fees for
which Partnership is now or hereafter becomes liable to pay to
any Senior Lender.
e. "Subordinated Debt" means all obligations of
Partnership to Subordinated Creditor now or hereafter existing
(whether created directly or acquired by assignment or
otherwise), with respect to all Indebtedness of Partnership
pursuant to the Subordinated Agreement and the other
Subordinated Loan Documents, and interest and premium, if any,
thereon, fees, expenses, indemnity payments, all other amounts
payable in respect thereof, and all other amounts due with
respect to the foregoing whether arising from breach or
contract, in tort or otherwise.
f. "Enforcement Action" means any foreclosure
proceeding, the exercise of any power of sale, the taking of a
deed or assignment in lieu of foreclosure, the obtaining of a
receiver, or the taking of any other enforcement action against
the Collateral or any part thereof, including the taking
(except by Managing Partner in the ordinary course of business)
of possession, or control of, or the collection of any rents
from the Collateral or any part thereof.
2. Subordination.
a. Subordinated Creditor shall not receive or
accept any Distribution of Assets from Partnership in respect
of principal of or interest on or any other payments in respect
of the Subordinated Debt, pursuant to the Subordinated
Agreement, the Subordinated Deed of Trust or the other
Subordinated Loan Documents unless and until payment in full of
all Senior Obligations, the termination of all Commitments, and
the expiration or cancellation of all Letters of Credit;
provided, however, that Subordinated Creditor may receive
payments permitted under Subsection 7.5 of the Credit
Agreement. Upon the occurrence of a Potential Event of Default
or Event of Default, Subordinated Creditor hereby covenants to
promptly pay over to the Senior Lenders all payments received
by Subordinated Creditor during the 90 days preceding the
occurrence of such Potential Event of Default or Event of
Default. In no event shall the Subordinated Debt be prepaid,
in whole or in part, except to the extent permitted by
subsection 7.5 of the Credit Agreement, without prior written
consent of each Senior Lender.
b. The Subordinated Deed of Trust and all other
Subordinated Loan Documents, the liens thereof, and the rights,
powers, any privileges of the trustee and of Subordinated
Creditor thereunder are and shall continue to be, with full
knowledge and understanding of the effect thereof,
unconditionally subject, subordinate, and inferior to the
Senior Deed of Trust and all other Senior Loan Documents
(including, without limitation, the Senior Security Agreement)
and the liens thereof, and the rights, powers, and privileges
of the trustee thereunder and of Senior Lenders set forth
therein, to the full extent of the Indebtedness now and
hereafter evidenced thereby. In addition, Subordinated
Creditor acknowledges that the Subordinated Deed of Trust shall
be subject and subordinate to the Skyway Easements and to all
leases of space in the Premises. The Subordinated Deed of
Trust and all other Subordinated Loan Documents, and all of the
terms, covenants and conditions and the rights, powers and
privileges of the trustee and of Subordinated Creditor
thereunder are and shall be subject and subordinate in priority
and payment to all of the terms, covenants and conditions of
the Senior Deed of Trust and the other Senior Loan Documents
(including, without limitation, the Senior Security Agreement)
and the rights, powers and privileges of the trustee and of
Senior Lenders therein, and to the lien of all renewals,
extensions, modifications, amendments, consolidations,
spreaders, refinancing, or replacements of the Senior Deed of
Trust and the other Senior Loan Documents. Trustee under the
Senior Deed of Trust and Agent may take any action whatsoever
to enforce any term or provision of the Senior Deed of Trust
and the other Senior Loan Documents (including, without
limitation, the Senior Security Agreement) or to enforce any
rights of Agent and Senior Lenders in respect of the
Collateral, Subordinated Creditor shall have no right to direct
the exercise of any remedy thereunder or with respect thereto
and Trustee under the Senior Deed of Trust and Agent shall have
no liability for any such action.
3. Distributions Held in Trust. If Subordinated
Creditor receives any Distribution of Assets of Partnership
that Subordinated Creditor is not entitled to retain under the
provisions of this Agreement, such payment or assets shall be
delivered forthwith by Subordinated Creditor to Agent for the
benefit of the Senior Lenders for application to the Senior
Obligations, in the form received except for the addition of
any endorsement or assignment necessary to effect a transfer of
all rights therein to Agent for the benefit of the Senior
Lenders. Agent, for the benefit of the Senior Lenders, is
irrevocably authorized to supply any endorsement or assignment
required under this subsection 3 that may have been omitted.
Until so delivered any such payment or collateral shall be held
by Subordinated Creditor in trust for the Senior Lenders and
shall not be commingled with other funds or property of
Subordinated Creditor.
4. Instruments; Collateral for Senior Obligations.
If Partnership issues or has issued any instrument or document
evidencing the Subordinated Debt (including, without
limitation, the Subordinated Loan Documents), each such
instrument and document shall bear a conspicuous legend that it
is subordinated to the Senior Obligations. Partnership's and
Subordinated Creditor's books shall be marked to evidence the
subordination of all of the Subordinated Debt to the Senior
Obligations. Agent for the Senior Lenders is authorized to
examine such books from time to time during normal business
hours and to make any notations required by this Agreement.
5. Insolvency, Dissolution, Etc. of Partnership.
a. In the event of any dissolution, winding up,
liquidation, reorganization or other similar proceedings with
respect to Partnership, its property or its operations (whether
in a Bankruptcy Proceeding or otherwise), all Senior
Obligations (including, without limitation, interest on Senior
Obligations at the rate stated in subsection 2.2E of the Credit
Agreement from the date of filing any petition in bankruptcy to
the date of payment whether or not allowed as a claim) shall
first be paid in full before Subordinated Creditor shall be
entitled to receive or retain any Distribution of Assets of
Partnership with respect to the Subordinated Debt. In any such
proceedings, any Distribution of Assets to which Subordinated
Creditor would be entitled if the Subordinated Debt were not
subordinated to the Senior Obligations shall be paid by the
trustee or agent or other person making such payment or
distribution, or by Subordinated Creditor if received by it,
directly to Agent for the benefit of the Senior Lenders to the
extent necessary to make payment in full of all Senior
Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to or for the benefit of the
Senior Lenders.
b. At any time and from time to time after the
occurrence and during the continuation of an Event of Default
under the Senior Loan Documents until payment in full of all
Senior Obligations, the termination of all Commitments, and the
expiration or cancellation of all Letters of Credit,
Subordinated Creditor shall duly and promptly take such action
as Agent for the benefit of the Senior Lenders may reasonably
request (i) to collect the Subordinated Debt for the account of
the Senior Lenders and to file appropriate claims or proofs of
claim in respect of the Subordinated Debt, (ii) to execute and
deliver to any Senior Lenders such powers of attorney,
assignments or other instruments as it may reasonably request
in order to enable it to enforce any and all claims with
respect to, and any security interests and other liens securing
payment of, the Subordinated Debt, and (iii) to collect and
receive any and all payments or distributions that may be
payable or deliverable upon or with respect to the Subordinated
Debt. Subordinated Creditor shall have the rights provided in
subsection 20(b) that result from any payment to Senior Lenders
under this subsection 5(b).
6. Power of Attorney.
a. Subordinated Creditor hereby irrevocably
authorizes and empowers Agent for the benefit of the Senior
Lenders (and its representative or representatives) to demand,
sue for, collect and receive all payments and distributions
under the Subordinated Agreement and give acquittance therefor
and to file and enforce claims and proofs of claims or suit and
take all such other actions (including, without limitation,
voting the Subordinated Debt (including in connection with any
liquidation, reorganization or arrangement) or enforcing any
security interest or other lien securing payment of the
Subordinated Debt) in the name of Subordinated Creditor or
otherwise, as the Senior Lenders determine to be necessary or
appropriate at any time and from time to time after the
occurrence and during the continuation of an Event of Default
under the Senior Loan Documents; provided however, that if
Agent has failed to file a proof of claim with respect to the
Subordinated Debt in any Bankruptcy Proceeding and 7 or fewer
calendar days remain until the claims' bar date in such
proceeding, then, in such event, Subordinated Creditor may file
such proof of claim. This authorization to file and enforce
claims and proofs of claims and to vote such claims (the
"Authorization") includes the authorization to vote or decline
to vote such claims on any matter whatsoever and specifically
includes the authority to vote such claims to approve a plan of
reorganization, including such plan that provides for the
distribution on the Subordinated Debt of only equity in the
reorganized debtor. Additionally, Agent may, pursuant to the
Authorization, decline to take certain actions with respect to
the Subordinated Debt, including, by way of example and not
limitation, declining to request adequate protection for
Subordinated Creditor's collateral or declining to object to
any priming lien thereon. In the event any Governmental
Authority or other Person does not recognize or accept Agent's
right to act on behalf of the Subordinated Creditor pursuant to
this Section 6a, Subordinated Creditor agrees to take such
lawful action as is directed by Agent in accordance with this
Section 6a. In no event shall Subordinated Creditor waive,
forgive or cancel any claim Subordinated Creditor may now or
hereafter have against Partnership.
Subordinated Creditor agrees that, upon the
commencement of any Bankruptcy Proceeding or action or
proceeding against Partnership to recover all or any part of
the Subordinated Debt prior to payment in full of all Senior
Obligations, the termination of all Commitments, and the
expiration or cancellation of all Letters of Credit, Agent, on
behalf of Senior Lenders, shall have the right to vote the
rights of Subordinated Creditor in any such Bankruptcy
Proceeding, or action or proceeding against Partnership to
recover all or any part of the Subordinated Debt, in a manner
that benefits Senior Lenders and without regard to whether
Subordinated Creditor is benefitted or receives more than
equity interests in Partnership in exchange for its claims
against Partnership.
b. In no event shall any Senior Lender be liable to
Subordinated Creditor for any failure to prove the Subordinated
Debt, to exercise any right with respect thereto or to collect
any sums payable thereon. Subordinated Creditor agrees to
protect, indemnify, pay and save harmless, Agent and Senior
Obligation Holders from and against any and all claims or
demands, asserted by (or on behalf of) Subordinated Creditor
and any and all liabilities, damages, losses, costs, charges
and expenses (including reasonable fees, expenses and
disbursements of counsel) related thereto that Agent or Senior
Lender or both may incur or be subject to as a consequence,
direct or indirect of any action in foreclosure under the
Senior Deed of Trust or other Senior Loan Documents.
7. Agreements by Subordinated Creditor.
a. Subordinated Creditor has reviewed the Credit
Agreement, and Subordinated Creditor hereby consents to and
approves of the provisions contained therein. Subordinated
Creditor acknowledges that there are no conditions precedent to
the effectiveness of this Agreement and that this Agreement is
in full force and effect and is binding on Subordinated
Creditor upon Subordinated Creditor's execution and delivery of
this Agreement, regardless of whether the Senior Lenders obtain
collateral or any guaranties from others or take any other
action contemplated by Subordinated Creditor. Without affect-
ing the rights of Senior Lenders or Partnership under the
Credit Agreement, Subordinated Creditor agrees that, except to
the extent that the Credit Agreement provides for the consent
of or notice to Subordinated Creditor, the Senior Lenders may,
at any time and from time to time, without the consent of or
notice to Subordinated Creditor, without incurring responsi-
bility to Subordinated Creditor, and without impairing or
releasing the rights of any of the Senior Lenders, or any of
the obligations of Subordinated Creditor hereunder:
(i) change the amount, manner, place or terms of
payment or change or extend the time of payment of or
renew or alter Senior Obligations or amend the Credit
Agreement in any manner or enter into or amend in any
manner any other agreement relating to the Senior
Obligations (provided, however, that no such amendment
shall, without the consent of Subordinated Creditor,
affect Subordinated Creditor's right to receive payments
as permitted by subsection 7.5 of the Credit Agreement);
(ii) Sell, exchange, release or otherwise deal with
any property by whomever at any time pledged or mortgaged
to secure, or however securing, the Senior Obligations;
(iii) Release anyone (including any guarantor) liable
in any manner for the payment or collection of the Senior
Obligations;
(iv) Exercise or refrain from exercising any rights
against Partnership and others (including any guarantor or
Subordinated Creditor);
(v) Apply any sums by whomever paid or however
realized to the Senior Obligations; or
(vi) Take any other action that otherwise might be
deemed to impair the rights of Subordinated Creditor.
Subordinated Creditor's obligations hereunder shall
be performed in accordance with and to the extent required by
this Agreement regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of the
terms of the Notes or the Credit Agreement or any other
document related thereto or the rights of the Senior Lenders
with respect thereto. The obligations of Subordinated Creditor
under this Agreement shall be absolute and unconditional
irrespective of:
(i) any lack of genuineness, legality, validity,
enforceability or value of the Credit Agreement, the Notes
or any other agreement or instrument relating thereto or
any Collateral;
(ii) any failure to pay any taxes that may be payable
with respect to the issuance or transfer of the Notes; or
any failure to obtain any authorization or approval from
or other action by, or to notify or file with, any
Governmental Authority required in connection with the
issuance or transfer of the Notes;
(iii) any impossibility or impracticality of
performance, force majeure, any act of any government, or
any other circumstance that might constitute a defense
available to, or a discharge of, the Partnership in
respect of the Notes or the Credit Agreement or
Subordinated Creditor in respect of this Agreement or any
other circumstance, event or happening whatsoever, whether
foreseen or unforeseen and whether similar or dissimilar
to anything referred to above in this Section;
(iv) the fact that the Senior Obligations or any
claim for the Senior Obligations is subordinated, avoided
or disallowed, in whole or in part, under the Bankruptcy
Code or other applicable law; or
(v) whether any Person to whom Senior Lenders make
disbursements of the proceeds of the Loans in accordance
with the Credit Agreement applies such proceeds for
purposes other than those provided for in the Credit
Agreement and any such application shall not defeat the
subordination herein in whole or in part.
b. Subordinated Creditor (i) will not, without the
prior written consent of the Senior Lenders, accelerate the
Subordinated Debt, and (ii) agrees that until payment in full
of all Senior Obligations, the termination of all Commitments,
and the expiration or cancellation of all Letters of Credit,
Subordinated Creditor shall neither commence nor join with any
other creditor of Partnership to commence any Bankruptcy
Proceeding or commence any action or proceeding against
Partnership to recover all or any part of the Subordinated Debt
before any Governmental Authority or other entity with power to
bind the parties to its decisions.
c. Subordinated Creditor agrees that, until payment
in full of all Senior Obligations, the termination of all
Commitments, and the expiration or cancellation of all Letters
of Credit, the Subordinated Loan and the lien of the
Subordinated Loan Documents shall be subordinate to all leases
of space in the Collateral. Senior Lenders and Subordinated
Creditor hereby agree that Senior Lenders shall be entitled to
seek the appointment of a receiver for the Collateral to
collect rents, pursuant to the terms of Senior Loan Documents
and the Subordinated Loan Documents, respectively, and this
Agreement.
8. Waivers. Partnership and Subordinated Creditor
each hereby waives any defense based on the adequacy of a
remedy at law that might be asserted as a bar to the remedy of
specific performance of this Agreement in any action brought
therefor by any Senior Lender. To the fullest extent permitted
by law, Partnership and Subordinated Creditor each hereby
further waives: promptness, diligence, presentment, demand,
protest, notice of protest, notice of default or dishonor,
notice of payment or nonpayment and any and all other notices
and demands of any kind in connection with all negotiable
instruments evidencing all or any portion of the Senior
Obligations or the Subordinated Debt to which Partnership or
Subordinated Creditor may be a party; notice of the acceptance
of this Agreement; notice of any loans made, extensions granted
or other actions taken in reliance hereon; all other demands
and notices of every kind in connection with this Agreement,
the Senior Obligations or the Subordinated Debt; any right to
require marshalling of the assets of Partnership; any defense
based on any statute or rule of law that provides that the
obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; any
provisions of law that conflict with this Agreement and any
legal or equitable discharge of Subordinated Creditor's
obligations hereunder; the benefit of any statute of
limitations; any rights of setoff, recoupment and counterclaim,
promptness and diligence by Agent or Senior Lenders; any
defenses arising from the incapacity, lack of authority or any
disability or other defense of Partnership; any defense based
on any Senior Lender's errors or omissions in the
administration of the Obligations (other than willful
misconduct); any defenses or benefits that may be derived from
or afforded by law that limit or exonerate guarantors or
sureties, including, without limitation, Nevada Revised
Statutes Sections 40.430-40.459, 40-475 and 40.485 as permitted
by Nevada Revised Statute Section 40.495, and any successor
provisions; and any right to require that the Senior Lenders
exhaust any right or take any action against Partnership or any
other person or entity or any collateral or pursue any other
remedy in the power of Senior Lenders whatsoever.
9. Representations and Warranties. Subordinated
Creditor hereby represents, warrants and covenants to the
Senior Lenders, which representations, warranties and covenants
shall be true and correct as of the date hereof and throughout
the term of this Agreement, that:
a. Subordinated Creditor has not heretofore
assigned or transferred any of the Subordinated Debt, any
interest therein or any collateral or security pertaining
thereto; Subordinated Creditor is the true and lawful holder
and owner of the Subordinated Notes; the Subordinated Notes and
the Subordinated Agreement delivered to the Senior Lenders are
true and correct an have not been amended or modified in any
way; and the Subordinated Notes are free and clear of any
defense, offset, counterclaim or other adverse claims and any
liens, encumbrances or security interests.
b. There are no agreements or understandings,
written or oral, by Subordinated Creditor with Partnership
other than as set forth in the Subordinated Agreement and the
Joint Venture Agreement with respect to the obligations
evidenced by the Subordinated Agreement and Subordinated
Creditor has not heretofore given any subordination in respect
of the Subordinated Debt.
c. To the best knowledge of Subordinated Creditor,
no default exists with respect to the Subordinated Notes.
10. Negative Covenants. Until payment in full of
all Senior Obligations, the termination of all Commitments, and
the expiration or cancellation-of all Letters of Credit,
without the consent of all Senior Lenders:
a. Except as expressly permitted in this Agreement
and the Credit Agreement, Partnership shall not, directly or
indirectly, make any payment on account of or grant a security
interest in, mortgage, pledge, assign or transfer any
properties to satisfy or secure all or any part of the
Subordinated Debt or in any way amend or modify the
Subordinated Notes, the Subordinated Agreement or any other
Subordinated Loan Document.
b. Except as expressly permitted in this Agreement,
Subordinated Creditor shall not demand or accept, directly or
indirectly, from Partnership or any Affiliate of Partnership,
any payment or collateral to satisfy or secure all or any part
of or exercise any remedy under the Subordinated Debt nor shall
Subordinated Creditor release, exchange, extend the time of
payment of, compromise, set off or otherwise discharge or
enforce any part of the Subordinated Debt or in any way amend
or modify the Subordinated Debt, the Subordinated Loan
Documents or this Agreement.
c. Subordinated Creditor shall not hereafter give
any subordination in respect of the Subordinated Debt, convert
any or all of the Subordinated Debt to capital stock or other
securities of Partnership, or transfer or assign any of the
Subordinated Debt to any person other than the Senior Lenders
without the consent of Senior Lenders.
d. Partnership will not issue any instrument,
security or other writing evidencing any part of the
Subordinated Debt other than the Subordinated Notes, and
Subordinated Creditor shall not receive any such writing or
transfer or assign any of the Subordinated Debt, except upon
the prior written approval of the Senior Lenders.
e. The Subordinated Debt and the Subordinated Loan
Documents shall not be cross-defaulted or cross-collateralized
with any other loan or any security interest encumbering any
other property other than pursuant to the provisions of the
Credit Agreement and the Subordinated Agreement (it being
understood that a cross-default is a default of an obligor that
occurs under the terms of one agreement as a direct and express
result of a default by such obligor' under the terms of another
agreement).
f. Subordinated Creditor shall not transfer or
assign the Subordinated Debt or the Subordinated Loan Documents
or any claim that Subordinated Creditor has or may have against
Partnership or the Premises, without Senior Lenders' prior
written consent, which may be granted or denied in Senior
Lenders' sole and complete discretion. In the event that
Subordinated Creditor, its nominee or designee, obtains title
to the Collateral pursuant to an Enforcement Action or
otherwise, Subordinated Creditor shall not thereafter transfer
its interest in the Collateral without Senior Lenders' prior
written consent, which may be granted or denied in Senior
Lenders' sole and complete discretion. Neither Partnership nor
Subordinated Creditor otherwise shall take or permit any action
prejudicial to or inconsistent with the priority of the Senior
Lenders over Subordinated Creditor that is created by this
Agreement.
11. Put and Call Option.
(a) In the event that Subordinated Creditor violates
any provision of subsection 6(a) or 7(b) or begins any
Enforcement Action or (other than as expressly permitted by
subsection 6(a)) attempts to assert any of its rights in any
Bankruptcy Proceeding which assertion could prevent Agent on
behalf of Senior Lenders from exercising the rights granted to
Agent and Senior Lenders by Subordinated Creditor in accordance
with subsection 6(a) or challenges or attempts to invalidate
the rights granted to Agent and Senior Lenders in subsection
6(a), then, and upon the demand of Agent on behalf of the
Senior Lenders, Subordinated Creditor will, at the time, in the
manner and otherwise as hereinafter set forth, cause the Senior
Obligations to be paid in full. Such payment in full shall be
made by Subordinated Creditor not later than 12:00 noon
(Pacific Time) on a Business Day at the Funding and Payment
Office not less than 5 (five) days after the date of such
demand for purchase, at a purchase price of the total of the
then unpaid principal amount of the Loans, plus unpaid interest
thereon accrued (or that otherwise would accrue but for the
commencement of a Bankruptcy Proceeding) to the date of payment
in full of such purchase price, plus the unpaid amount of all
other Senior Obligations (collectively, the "Purchase Price").
The Purchase Price shall be paid by Subordinated Creditor in
immediately available funds to the Agent. Promptly after such
payment, each Senior Lender holding a Note shall deliver and
endorse such Note without recourse over to Subordinated
Creditor and shall assign its interests under the Collateral
Documents to Subordinated Creditor. Subordinated Creditor
hereby agrees that the payment in full of the Purchase Price
made by it hereunder shall be without recourse to or
representation or warranty (other than the representation and
warranty by each Senior Lender that it is the legal and
beneficial owner of the Senior Obligations held by such Senior
Lender free and clear of any adverse claim) by any such Senior
Lenders.
(b) IF SUBORDINATED CREDITOR SHALL FAIL TO PAY THE
PURCHASE PRICE, AS AFORESAID, SUBORDINATED CREDITOR (I) AGREES
THAT IT WILL BE UNCONDITIONALLY LIABLE TO THE SENIOR LENDERS
FOR LIQUIDATED DAMAGES (FOR THE LOSS OF A BARGAIN AND NOT AS A
PENALTY), FOR THE AMOUNT OF SUCH PURCHASE PRICE PLUS 10% OF THE
AMOUNT OF THE PURCHASE PRICE AND ALL COSTS AND EXPENSES, IF
ANY, INCURRED BY THE SENIOR LENDERS IN ENFORCING THIS AGREEMENT
AND (II) IRREVOCABLY WAIVES TO THE FULL EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT OR DEFENSE SUBORDINATED CREDITOR MAY
HAVE TO CAUSE THE SENIOR LENDERS TO PROVE THE CAUSE OR AMOUNT
OF SUCH DAMAGES OR TO MITIGATE THE SAME. THE AMOUNT PAID TO
AND RETAINED BY SENIOR LENDERS UNDER THIS SECTION ARE LIQUI-
DATED DAMAGES AND SHALL BE SENIOR LENDERS' SOLE REMEDY IN THE
EVENT OF SUBORDINATED CREDITOR'S FAILURE TO PAY THE PURCHASE
PRICE. THE PARTIES HERETO EXPRESSLY AGREE AND ACKNOWLEDGE THAT
SENIOR LENDERS' ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY
SUBORDINATED CREDITOR WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICAL TO ASCERTAIN AND THAT THE AMOUNT OF THE PURCHASE
PRICE PLUS 10% OF THE AMOUNT OF THE PURCHASE PRICE REPRESENTS
THE PARTIES REASONABLE ESTIMATE OF SUCH DAMAGES. NOTWITHSTAND-
ING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION 11(b),
SENIOR LENDERS AND SUBORDINATED CREDITOR AGREE THAT THIS
LIQUIDATED DAMAGES PROVISION IS NOT INTENDED AND SHOULD NOT BE
DEEMED OR CONSTRUED TO LIMIT IN ANY WAY SUBORDINATED CREDITOR'S
INDEMNITY OBLIGATIONS UNDER SECTIONS 6 AND 12.
(c) At any time after the occurrence and during the
continuation of an Event of Default under the Senior Loan
Documents Subordinated Creditor shall be entitled, but shall
not be obligated, to pay in full or cause payment in full of
the Purchase Price. Subordinated Creditor shall give each
Senior Lender and Agent written notice of its intention to make
such payment no less than 5 Business Days prior to the proposed
payment date. Such payment shall be made no later than noon on
such proposed payment date in the amount of the Purchase Price
described in subsection 11(a) above at the Funding and Payment
Office in immediately available Funds to the Agent. Promptly
after such payment, each Senior Lender holding a Note shall
deliver and endorse such Note without recourse over to
Subordinated Creditor and shall assign its interests under the
Collateral Documents to Subordinated Creditor. Subordinated
Creditor agrees that the payment in full of the Senior
Obligations made by it hereunder shall be without recourse to
or representation or warranty (other than the representation
and warranty by each Senior Lender that it is the legal and
beneficial owner of the Senior Obligations held by such Senior
Lender free and clear of any adverse claims) by any such Senior
Lenders.
12. Taxes, Authorizations, Etc. (a) Subordinated
Creditor will pay any stamp or other tax (including any
interest and penalties) with respect to the payment in full of
the Senior Obligations pursuant to Section 11 of this
Agreement. If any such tax is paid by the Senior Lenders,
Subordinated Creditor will, upon demand of the Senior Lenders
and whether or not such tax shall be correctly or legally
asserted, indemnify the Senior Lenders for such payment,
together with any interest, penalties and expenses in
connection therewith.
(b) Subordinated Creditor will use its best efforts
to obtain any authorization or approval (including exchange
control approval) or other action by, and will give any notice
to or make any filing with, any Governmental Authority required
in connection with the transfer of the Notes to Subordinated
Creditor upon any purchase pursuant to this Agreement.
13. Financial Matters. Subordinated Creditor has
established adequate and independent means of obtaining from
Partnership on a continuing basis financial and other informa-
tion pertaining to the financial condition of Partnership.
Subordinated Creditor agrees to keep adequately informed from
such means of any facts, events or circumstances that might in
any way affect Subordinated Creditor's risks hereunder, and
Subordinated Creditor further agree that no Senior Lender shall
have any obligation to disclose to Subordinated Creditor
information or material acquired by such Senior Lender in the
course of its relationship with Partnership. Subordinated
Creditor understands that there may be various agreements among
the Senior Lenders and Partnership evidencing and governing the
Senior Obligations and Subordinated Creditor acknowledges and
agrees that such agreements are not intended to confer any
benefits on Subordinated Creditor and that no Senior Lender
shall have any obligation to Subordinated Creditor or any other
Person to exercise any rights, enforce any remedies, or take
any actions that may be available to it under such agreements.
14. Reliance. Subordinated Creditor understands
that in reliance upon the terms and provisions of this
Agreement, specific monetary and other obligations are being
entered into and will be entered into by the Senior Lenders
that would not be made or entered into but for reliance on this
Agreement. Subordinated Creditor further understands that this
Agreement constitutes a continuing offer to all persons who
become holders of, or continue to hold Senior Obligations
(whether such Senior Obligations was created or acquired before
or after the date of this Agreement).
15. Insurance Proceeds and Condemnation Awards. In
the event of a casualty to the buildings or improvements
constructed on the Premises or a condemnation or taking under a
power of eminent domain of the Premises, or the buildings or
improvements thereon, Senior Lenders shall have a first and
prior interest in and to any payments, awards, proceeds,
distributions, or consideration arising from any such event
(the "Award"), provided that if the amount of the Award is in
excess of all Senior Obligations, such excess Award shall be
paid to or held by Senior Lenders (or any other person) for the
benefit of the persons or entities legally entitled thereto.
Notwithstanding the foregoing, in the event of casualty or
condemnation, Senior Lenders shall release the Awards from any
such event to Partnership if and to the extent required by the
terms and conditions of the Senior Loan Documents in order to
repair and restore the Premises in accordance with the terms
and provisions of the Senior Loan Documents. Awards made
available to Partnership for the repair or restoration of the
buildings or improvements on the Premises shall not be subject
to attachment by Subordinate Creditor.
16. Amendments, Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, or
consent to any departure by Subordinated Creditor or
Partnership therefrom, shall in any event be effective without
the written concurrence of Requisite Lenders under the Credit
Agreement. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
17. Entire Agreement. This writing is intended by
Subordinated Creditor, Partnership and Senior Lenders as the
final expression of their agreement with respect to the matters
covered hereby. No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Agreement. There are
no conditions to the full effectiveness of this Agreement,
other than execution by Senior Lenders of the Credit Agreement.
If there is any conflict between the terms hereof and the terms
of any other documents executed in connection with the Credit
Agreement, the terms of such documents shall be read together
so as to provide the Senior Lenders with the broadest possible
range of rights and remedies.
18. Notices. Any communications between and among
Agent, Senior Lenders, Subordinated Creditor and Partnership
and any notices or requests provided herein to be given may be
given by mailing the same, postage prepaid, or by telex,
facsimile transmission or cable by 5:00 p.m. (Pacific Time) on
a Business Day to each such party at its address set forth in
the Credit Agreement, on the signature pages hereof or to such
other addresses as each such party may in writing hereafter
indicate. Any notice, request or demand to or upon Agent or
Senior Lenders or Subordinated Creditor or Partnership under or
relating to this Agreement shall not be effective until
received.
19. Expenses. Subordinated Creditor and Partnership
jointly and severally agree to pay, upon demand, to Agent for
the benefit of the Senior Lenders the amount of any and all
reasonable expenses, including the reasonable fees and expenses
of their respective counsel, that the Senior Lenders may incur
in connection with the exercise or enforcement of any of their
rights or interests hereunder.
20. Validity of the Subordinated Debt and Senior
Obligations.
a. The provisions of this Agreement subordinating
the Subordinated Debt are solely for the purpose of defining
the relative rights of the Senior Lenders and Subordinated
Creditor and shall not impair, as between Subordinated Creditor
and Partnership, the obligation of Partnership, which is
unconditional and absolute, to pay the Subordinated Debt in
accordance with its terms, nor shall any such provisions,
except as otherwise set forth herein, prevent Subordinated
Creditor from exercising all remedies otherwise permitted by
applicable law or under any instrument or agreement evidencing
the Subordinated Debt upon default thereunder, subject to the
rights of the Senior Lenders hereunder to receive cash,
property or securities or any other Distribution of Assets
otherwise payable or deliverable to Subordinated Creditor until
the payment in full of all Senior Obligations, the termination
of all Commitments, and the expiration or cancellation of all
Letters of Credit. This agreement shall provide no rights or
remedies to any Person other than Agent, Senior Lenders and
Subordinated Creditor.
b. Subordinated Creditor shall be subrogated to all
rights of the Senior Lenders against Partnership in respect of
any amounts paid to the Senior Lenders directly or indirectly
by Subordinated Creditor pursuant to the provisions of this
Agreement; provided that Subordinated Creditor shall not be
entitled to enforce, or to receive any payments arising out of
or based upon, such right of subrogation until payment in full
of all Senior Obligations (including without limitation, any
Protective Advances), the termination of all Commitments and
the expiration or cancellation of all Letters of Credit.
c. This Agreement is effective notwithstanding any
defect in the validity or enforceability of any instrument or
document evidencing the Senior Obligations.
21. Termination. This Agreement is a continuing
agreement and shall remain in full force and effect until
three-hundred sixty-seven (367) days after payment in full of
all Senior Obligations, the termination of all Commitments, and
the expiration or cancellation of all Letters of Credit.
Neither the dissolution nor the bankruptcy or dissolution of
Subordinated Creditor shall effect a termination hereof. Until
payment in full of all Senior Obligations, the termination of
all Commitments, and the expiration or cancellation of all
Letters of Credit, any Senior Lender may, without notice to
Subordinated Creditor, extend or continue credit and make other
financial accommodations to or for the account of Partnership
in reliance upon this Agreement.
22. Successors. This Agreement shall be binding
upon Subordinated Creditor and its successors and assigns.
This Agreement shall inure to the benefit of Senior Lenders,
Agent, Partnership and their respective successors and assigns.
Subordinated Creditor shall not assign this Agreement or any of
the rights or obligations of Subordinated Creditor hereunder
without the prior written consent of all Senior Lenders.
Subject to subsection 10.1 of the Credit Agreement and as part
of an assignment, participation or any transfer of its
interests in any Loan, any Senior Lenders may, without notice
or consent, assign its interest in this Agreement in whole or
in part. The terms and provisions of this Agreement shall
inure to the benefit of any transferee or assignee of any Loan,
and in the event of such transfer or assignment the rights and
privileges herein conferred upon Senior Lenders and Agent shall
automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
23. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.
24. Duties of Senior Lenders Limited. THE RIGHTS
GRANTED TO THE SENIOR LENDERS IN THIS AGREEMENT ARE SOLELY FOR
THEIR PROTECTION AND NOTHING HEREIN CONTAINED (I) IMPOSES ON
ANY SENIOR LENDER ANY DUTIES WITH RESPECT TO ANY PROPERTY
EITHER OF PARTNERSHIP OR OF SUBORDINATED CREDITOR HERETOFORE OR
HEREAFTER RECEIVED BY ANY SENIOR LENDER NOR (II) SHALL BE
DEEMED TO CONSTITUTE ANY SENIOR LENDER THE AGENT OF
SUBORDINATED CREDITOR FOR ANY PURPOSE NOR CREATE ANY FIDUCIARY
DUTY BETWEEN ANY SENIOR LENDER AND SUBORDINATED CREDITOR. AS
BETWEEN SENIOR LENDERS AND SUBORDINATED CREDITOR, NO SENIOR
LENDER HAS ANY DUTY TO PRESERVE RIGHTS AGAINST PRIOR PARTIES ON
ANY INSTRUMENT OR CHATTEL PAPER RECEIVED FROM PARTNERSHIP OR
SUBORDINATED CREDITOR AS COLLATERAL SECURITY FOR THE SENIOR
OBLIGATIONS OR ANY PORTION THEREOF. AS BETWEEN SENIOR LENDERS
AND SUBORDINATED CREDITOR, NO ACTION OR INACTION WITH RESPECT
TO ANY COLLATERAL FOR THE SENIOR OBLIGATIONS; NOR ANY AMENDMENT
TO ANY OF THE SENIOR LOAN DOCUMENTS OR ANY OTHER INSTRUMENT OR
AGREEMENT RELATING TO, SECURING OR GUARANTEEING ANY OF THE
SENIOR OBLIGATIONS; NOR ANY EXERCISE OR NON-EXERCISE OF ANY
RIGHT, POWER OR REMEDY UNDER OR IN RESPECT OF ANY OF THE SENIOR
OBLIGATIONS OR ANY INSTRUMENT OR AGREEMENT RELATING TO,
SECURING OR GUARANTEEING ANY OF THE SENIOR OBLIGATIONS; NOR ANY
WAIVER, CONSENT, RELEASE, INDULGENCE, EXTENSION, RENEWAL,
MODIFICATION, DELAY OR OTHER ACTION, INACTION OR OMISSION IN
RESPECT OF ANY OF THE SENIOR OBLIGATIONS OR ANY INSTRUMENT OR
AGREEMENT RELATING TO, SECURING OR GUARANTEEING ANY OF THE
SENIOR OBLIGATIONS SHALL IN ANY EVENT GIVE RISE TO ANY CLAIM
AGAINST ANY SENIOR LENDER OR ANY OFFICER, DIRECTOR, EMPLOYEE OR
AGENT OF SUCH SENIOR LENDER.
25. Additional Documentation. Partnership and
Subordinated Creditor shall execute and deliver to the Agent
such further instruments and shall take such further action as
Agent or any Senior Lender may at any time reasonably request
in order to carry out the provisions and intent of this
Agreement.
26. Severability. In case any provision in or
obligation under this Agreement shall be held invalid, illegal
or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations
or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
27. Waiver of Jury Trial. SUBORDINATED CREDITOR,
PARTNERSHIP, AGENT AND EACH SENIOR LENDER EACH HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including
without limitation, contract claims, tort claims, breach of
duty claims, and all other common law and statutory claims.
Subordinated Creditor, Partnership, and by their acceptance of
the benefits hereof, Agent and each Senior Lender each
(i) acknowledges that this waiver is a material inducement for
Subordinated Creditor, Partnership, Agent and each Senior
Lender Holder to enter into a business relationship, that each
has already relied on this waiver in entering into this
Agreement and that each will continue to rely on the waiver in
related future dealings (ii) further warrants and represents
that each has reviewed this waiver with legal counsel, and that
each knowingly and voluntarily waives jury trial rights
following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
28. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.
29. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST SUBORDINATED CREDITOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT SUBORDINATED CREDITOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH
THIS AGREEMENT. Subordinated Creditor hereby agrees that
service of all process in any such proceeding in any such court
may be made by registered or certified mail, return receipt
requested, to Subordinated Creditor at its address provided in
Section 18, such service being hereby acknowledged by
Subordinated Creditor to be sufficient for personal
jurisdiction in any action against Subordinated Creditor in any
such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
30. All Action Required to be Lawful. No provision
of this Agreement shall require any party hereto to take any
action or fail to take any action that would violate any Gaming
Law.
31. Capacity of Subordinated Creditor. This
Agreement applies to Subordinated Creditor only in its capacity
as a holder of General Partner Subordinated Debt.
<PAGE>
IN WITNESS WHEREOF, Subordinated Creditor and Partnership
each has caused this Agreement to be duly executed and
delivered for the benefit of the Senior Obligations Holders by
its officer thereunto duly authorized as of the date first
above written.
CIRCUS AND ELDORADO JOINT VENTURE
a Nevada general partnership
By: GALLEON, INC.,
Nevada Corporation
Its: Managing General Partner
By: CLYDE T. TURNER
Title: President
Notice
Address: c/o Circus Circus Enterprises,
Inc.
2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
By: ELDORADO LIMITED LIABILITY COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC, a Nevada
limited liability company
Its: manager
By: DON CARANO
Title:
Notice
Address: c/o Eldorado Hotel Casino
345 N. Virginia Street
Reno, Nevada 89508
Attention: General Counsel
By: EXECUTIVE COMMITTEE
By: DON CARANO
Title:
By: ROBERT JONES
Title:
NOTICE: THIS SUBORDINATION AND DEBT PUT AGREEMENT CONTAINS
PROVISIONS THAT ALLOW THE PERSON OBLIGATED ON YOUR
REAL PROPERTY SECURITY TO OBTAIN A LOAN, A PORTION OF
WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN
IMPROVEMENT OF THE PROPERTY.
CIRCUS CIRCUS ENTERPRISES, INC.
By: GLENN W. SCHAEFFER
Title: President, CFO
Notice
Address: 2880 Las Vegas Boulevard
South Las Vegas, Nevada
89109
Attention: General Counsel
Accepted this 9th day of
September, 1996:
AGENT
WELLS FARGO BANK, N.A.
By: STEVE BYRNE
Steve Byrne, Vice President
Notice Address:
Suite 400
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: Steve Byrne
<PAGE>
ACKNOWLEDGEMENT FOR GALLEON, INC.
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
This instrument was acknowledged before me on
September ___, 1996, by _________________________ as
____________________________ of Galleon, Inc. of/for CIRCUS AND
ELDORADO JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR ELDORADO RESORTS LLC
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on
September ___, 1996, by DONALD L. CARANO as Chief Executive
Officer of Eldorado Resorts LLC, Managing Member of Eldorado
Limited Liability Company, of/for CIRCUS AND ELDORADO JOINT
VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR EXECUTIVE COMMITTEE
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on
September ____ 1996, by _____________________________, as a
member of the Executive Committee of/for CIRCUS AND ELDORADO
JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR EXECUTIVE COMMITTEE
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on
September ____ 1996, by _____________________________, as a
member of the Executive Committee of/for CIRCUS AND ELDORADO
JOINT VENTURE.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR CIRCUS CIRCUS ENTERPRISES, INC.
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
This instrument was acknowledged before me on
September ___, 1996, by _________________________ as
____________________________ of CIRCUS CIRCUS ENTERPRISES, INC.
_________________________
Notary Public
ACKNOWLEDGEMENT FOR WELLS FARGO BANK, N.A., as Agent
STATE OF NEVADA )
) ss
COUNTY OF )
This instrument was acknowledged before me on
September ______, 1996, by Steve Byrne, as Vice President of
WELLS FARGO BANK, N.A.
________________________________
Notary Public
GUARANTEE
OF
CIRCUS CIRCUS ENTERPRISES, INC.
This guarantee made as of July 10, 1996.
WHEREAS Windsor Casino Financial Limited (hereinafter,
together with any successor, referred to as the Borrower ) has
entered into a credit agreement dated as of July 10, 1996 (as
amended, modified or supplemented from time to time with the
approval of the Guarantor, the Credit Agreement ) with Canadian
Imperial Bank of Commerce (hereinafter, together with any
successor in that capacity, referred to as the Agent ) for and
on behalf of itself and the certain other financial institutions
named from time to time therein as lenders (the Lenders ); and
WHEREAS, the undersigned (hereinafter referred to as
the "Guarantor"), a corporation organized under the laws of the
State of Nevada, represents that it owns, directly or indirectly,
33 % of the equity of the Borrower and is financially interested
in its affairs and expects to derive benefit from the extensions
of credit made to the Borrower under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt
whereof by the Guarantor is hereby acknowledged, the Guarantor
agrees as follows:
1. Definitions. In this guarantee, unless something in
the subject matter or context is inconsistent therewith:
"Acceleration Event" means any of the events or
circumstances set out in paragraph 10 of this guarantee.
"Acquiring Guarantor" has the meaning given to that
term in paragraph 10.(e).
Act has the meaning given to that term in paragraph
10.(f) of this guarantee.
"Auditors" means Arthur Andersen LLP, with respect to
the Guarantor, or such other firm of certified public accountants
of national standing who are the duly appointed independent
auditors thereof.
Board has the meaning given to that term in paragraph
10.(f) of this guarantee.
"Compliance Certificate" in respect of the Guarantor,
means a certificate signed by the chief financial officer or
other authorized representative of the Guarantor substantially in
the form of Schedule 1 to this guarantee certifying, among other
things, that to the best of such officer s or representative s
knowledge the Guarantor is not in default under this guarantee.
"Credit Arrangement" means any instrument, writing or
arrangement executed or delivered pursuant to the Credit
Agreement, and for greater certainty includes the Credit
Agreement.
Disposing Guarantor has the meaning given to it in
paragraph 10.(e) of this guarantee.
"Enforcement Costs" means all reasonable costs and
expenses (including reasonable legal fees) which the Agent may
expend or incur in the enforcement of the Guarantor's obligations
under this guarantee, and for greater certainty, the term
"Enforcement Costs" does not include the costs and expenses which
the Agent may expend or incur in the enforcement of the
obligations of any other guarantor.
Excluded Taxes has the meaning given to it in
paragraph 5.(d) of this guarantee.
"GAAP" means, in relation to the Guarantor, generally
accepted accounting principles which are in effect from time to
time in the United States of America applied in a consistent
manner from period to period.
Guaranteed Obligations has the meaning given to it in
paragraph 3 of this guarantee.
Interest has the meaning given to it in paragraph
3.(b) of this guarantee.
Principal Amount has the meaning given to it in
paragraph 3.(a) of this guarantee.
Second Currency has the meaning given to it in
paragraph 14.(b) of this guarantee.
Specified Currency has the meaning given to it in
paragraph 14.(a) of this guarantee.
"Total Indebtedness" means all sums stated to be
payable in, or which become payable under, any Credit Arrangement
by the Borrower to the Agent, the Lenders, or any of them,
including, without limitation, interest and fees (including
interest and fees which would otherwise accrue but for the
operation of any bankruptcy or insolvency laws), and any and all
reasonable legal and other costs and expenses paid or incurred in
connection therewith by the Agent, the Lenders or any of them,
but for greater certainty, Total Indebtedness does not include
Enforcement Costs or costs and expenses which a Lender or the
Agent may expend or incur in the enforcement of the obligations
of any other guarantor.
All terms used herein, unless otherwise defined herein,
are defined in the Credit Agreement.
2. Guarantee. To induce the Agent and the Lenders, at any
time or from time to time, to extend financial accommodations
pursuant to the Credit Agreement to or for the account of the
Borrower, the Guarantor hereby unconditionally and irrevocably
guarantees to each of the Lenders and the Agent, subject to the
terms hereof and of the Credit Agreement, irrespective of the
validity, regularity or enforceability of any Credit Arrangement
or of the obligations thereunder and irrespective of any present
or future law or order of any government (whether of right or in
fact) or of any agency thereof purporting to reduce, amend or
otherwise affect any obligation of the Borrower or to vary the
terms of payment, that the Borrower will promptly perform and
observe every agreement and condition in any Credit Arrangement
to be performed or observed by the Borrower, that the Total
Indebtedness will be promptly paid in full when due, whether at
maturity or earlier by reason of default or acceleration or
otherwise, and, in case of one or more extensions of time of
payment or renewals, in whole or in part, of any Credit
Arrangement or obligation, that the same will be promptly paid or
performed when due, according to each such extension or renewal,
whether at maturity or earlier by reason of default or
acceleration or otherwise. The Guarantor agrees that, as among
the Guarantor, the Lenders and the Agent, the obligations of the
Borrower guaranteed hereunder may be declared to be due and
payable for purposes of this guarantee notwithstanding any stay,
injunction or other prohibition which may prevent, delay or
vitiate any such declaration as against the Borrower and that, in
the event of any such declaration (or attempted declaration),
such obligations shall forthwith become due and payable by the
Guarantor for purposes of this guarantee but only to the extent
such obligations may then be declared payable by the Borrower
under the terms of the Credit Arrangement absent such stay,
injunction or other prohibition. The Guarantor further
guarantees that all payments made by the Borrower to the Lenders
and the Agent on any obligation hereby guaranteed will, when
made, be final and agrees that if any such payment is recovered
from, or repaid by, the Lenders or the Agent in whole or in part
in any bankruptcy, insolvency or similar proceeding instituted by
or against the Borrower this guarantee shall continue to be fully
applicable to such obligation to the same extent as though the
payment so recovered or repaid had never been originally made on
such obligation.
3. Amount of Guarantee. Notwithstanding the aggregate
sums which may be or become payable by the Borrower to the
Lenders or the Agent at any time or from time to time, the
liability of the Guarantor to the Lenders or the Agent hereunder
shall not, subject to paragraphs 5 and 14 of this guarantee,
exceed:
(a) one-third (1/3) of the amount of the Total Indebtedness
outstanding at the time of any demand made by the Agent at
any time or from time to time hereunder (the "Principal
Amount"); plus
(b) interest accruing on the Principal Amount calculated in
accordance with Section 4.2 of the Credit Agreement from the
date of demand for payment of the same until the date such
payment is made (the "Interest")
(the Principal Amount and the Interest are collectively referred
to as the "Guaranteed Obligations"). Nothing herein shall
entitle the Agent, on behalf of itself and the Lenders, to make
demand under this guarantee for any other amount on account of
the Total Indebtedness owing to the Agent or the Lenders as of
the date of demand made hereunder including, without limitation,
amounts previously demanded of and unpaid by any of the other
guarantors under their respective guarantees. In addition to the
foregoing, the Guarantor agrees to pay to the Agent, for
distribution to the Agent and each Lender, an amount equal to all
Enforcement Costs. It is understood that the obligations of the
Borrower to the Agent and the Lenders may at any time and from
time to time exceed the liability of the Guarantor hereunder
without impairing this guarantee. Any payment made by the
Guarantor to the Agent, for the account of the Agent and the
Lenders, pursuant to this paragraph shall be applied promptly as
follows:
First, to the payment of Enforcement Costs due and
payable under this guarantee;
Second, to the payment of the Guaranteed Obligations;
and
Third, to the payment to the Guarantor of any surplus
remaining after applying such payments as provided
hereinabove.
4. Indemnity.
(a) In addition to the foregoing, the Guarantor shall
indemnify the Agent and the Lenders against all direct losses,
reasonable expenses and liabilities which the Lenders and the
Agent may sustain or incur solely as a consequence of any
Acceleration Event under this guarantee or any material
misrepresentation by the Guarantor contained in any writing
delivered to the Agent or the Lenders in connection with the
Credit Agreement, any other Credit Arrangement or this guarantee,
and the Agent and the Lenders shall mitigate such losses,
expenses and liabilities.
(b) The Guarantor shall also indemnify the Agent and the
Lender for any Taxes (other than Excluded Taxes) that may arise
as a consequence of the execution, sale, transfer, delivery or
registration of, or otherwise with respect to, this guarantee or
any other agreements or instruments executed in connection with
this guarantee.
5. Payments.
(a) Any and all payments made by the Guarantor hereunder
shall be made to the Agent, for distribution among itself and the
Lenders in accordance with the terms of the Credit Agreement, in
full, without set-off or counterclaim and free and clear of and
without deduction or withholding for, or on account of, any and
all present or future Taxes, unless such deduction or withholding
is required by Applicable Laws. If the Guarantor is required to
deduct or withhold any Taxes from or in respect of any sum
payable hereunder to the Agent or any Lender, (i) the sum payable
shall be increased, as may be necessary, so that after making all
required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this
paragraph and taking into account all Taxes on, or arising by
reason of the payment of, additional sums payable under this
paragraph) such Lender or the Agent receives an amount equal to
the sum that it would have received had no such deductions or
withholdings been made, (ii) the Guarantor shall make such
deductions or withholdings, and (iii) the Guarantor shall pay the
full amount deducted or withheld to the relevant taxing authority
in accordance with Applicable Laws. Notwithstanding the
foregoing, the Guarantor shall not be required to pay additional
sums in respect of Excluded Taxes.
(b) The Guarantor shall indemnify the Lenders and the Agent
for the full amount of any Taxes (other than Excluded Taxes)
imposed by any jurisdiction on amounts payable by the Guarantor
under this paragraph and paid by the Lenders or the Agent and any
liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted, and any Taxes (other
than Excluded Taxes) levied or imposed with respect to any
indemnity payment made under this paragraph. This
indemnification shall be made within 30 days after the date the
Agent makes written demand therefor, which demand shall include
evidence reasonably satisfactory to the Guarantor establishing
the amount of such demand.
(c) Within 30 days after the date of any payment of Taxes
by the Guarantor, the Guarantor shall furnish to the Agent at the
address as set out in Schedule 12.3 of the Credit Agreement, the
original or a certified copy of a receipt evidencing payment by
the Guarantor of any Taxes (other than Excluded Taxes) with
respect to any amount payable to the Agent and the Lenders
hereunder.
(d) For the purpose of paragraphs 4 and 5, "Excluded Taxes"
means, in relation to the Agent and each Lender, (a) any Taxes
imposed on the Agent and such Lender s net income or capital by
any jurisdiction or any political subdivision thereof as a result
of the Agent or such Lender (i) carrying on a trade or business
therein or having a permanent establishment therein, (ii) being
organized under the laws of such jurisdiction or any political
subdivision thereof, or (iii) being or being deemed to be
resident in such jurisdiction, or (b) any Taxes imposed solely by
reason of the failure of the Agent or such Lender to comply with
a request by the Guarantor to comply with any certification,
identification or other reporting requirements imposed by
Applicable Laws with respect to nationality, residence or other
connection with the relevant jurisdiction.
(e) The Agent and each Lender agree to use reasonable
efforts to take such actions as would minimize the Guarantor's
indemnification obligations under this paragraph 5 (other than
with respect to withholding taxes) to the extent that such action
would minimize such indemnification obligations and would not, in
the determination of the Agent and such Lender, be otherwise
disadvantageous to the Agent and such Lender.
(f) The Guarantor's obligations under this paragraph shall
survive the termination of this guarantee and the Credit
Agreement and the payment of all amounts payable under this
guarantee and the Credit Agreement.
6. Waivers by Guarantor. The Guarantor hereby waives
presentment of any instrument, demand of payment, protest and
notice of non-payment or protest thereof or of any exchange,
sale, surrender or other handling or disposition of any such
collateral, and any requirement that the Agent and Lenders
exhaust any right, power or remedy or proceed against the
Borrower under any Credit Arrangement or against any other person
under any other guarantee of, or security for, any of the
obligations guaranteed hereunder. Notice of acceptance of this
guarantee and of the incurring of any and all of the obligations
of the Borrower hereinbefore mentioned is hereby waived. In
addition to any other waivers provided herein, the Guarantor
waives all suretyship defenses and rights of every nature
otherwise available under the laws of the State of Nevada and the
laws of any other jurisdiction including, without limitation the
benefits of Nevada Revised Statutes Sections 40.430 - 40.459,
40.475 and 40.485 as and to the fullest extent permitted by
Nevada Revised Statutes Section 40.495 and all other rights and
defenses the assertion or exercise of which would in any way
diminish the liability of the Guarantor hereunder. This
guarantee shall not be affected by the change in the name of the
Borrower, or by the acquisition of the Borrower s business by any
Person, or by any change whatsoever in the objects, capital
structure or constitution of the Borrower or by the Borrower s
business being amalgamated with a corporation. No payment by the
Guarantor pursuant to any provision hereunder shall entitle the
Guarantor, by subrogation to the rights of the Agent or the
Lenders or otherwise, to any payment by the Borrower (or out of
the property of the Borrower) except after payment in full of the
Total Indebtedness and Enforcement Costs.
7. Continuing Guarantee. This guarantee shall be a
continuing guarantee, and the Agent and the Lenders may continue
to act in reliance hereon until the Borrower is no longer liable
to the Agent and the Lenders under the Credit Agreement in
respect of the Total Indebtedness.
8. Affirmative Covenants of the Guarantor. The Guarantor
covenants with the Agent and the Lenders that unless the
Guarantor obtains the prior written consent of the Majority
Lenders:
(a) Financial Reporting and Information. The Guarantor
will keep and maintain proper books of account and other
accounting records and will furnish to the Agent in sufficient
numbers for distribution to each of the Lenders:
(i) as soon as available and in any event within 60
days after the end of each of the first three
quarters in each fiscal year (A) a copy of the
Form 10-Q filed with the Securities and Exchange
Commission, if any, otherwise, a copy of the
unaudited Financial Statements of the Guarantor as
at the end of such quarter and (B) a compliance
certificate in the form attached to this guarantee
as Schedule 1, dated as of the end of such
quarter,
(ii) as soon as available and in any event within 120
days after the end of each fiscal year, a copy of
the Form 10-K filed with the Securities and
Exchange Commission, if any, together with copies
of the Guarantor's audited Financial Statements as
at the end of such fiscal year together with
comparative figures for the immediately preceding
year if applicable, all prepared in accordance
with GAAP in all material respects in reasonable
detail and accompanied by the opinions thereon of
the Auditors, and
(iii) such other information as to the Guarantor's
financial status as the Agent may from time
to time reasonably request;
(b) Change in Auditors. The Guarantor will promptly, and
in any event not later than 30 days following a change in its
Auditors, give notice to the Agent of a change in its Auditors
and the reasons underlying the change;
(c) Notice of Acceleration Event. The Guarantor will
provide to the Agent as soon as possible and, in any event,
within two (2) Business Days after any senior officer of the
Guarantor obtains knowledge of the occurrence of any Acceleration
Event or any event which with the giving of notice or lapse of
time or the happening of any further condition would constitute
an Acceleration Event under this guarantee, a statement of an
authorized officer or representative of the Guarantor setting
forth details of the Acceleration Event or event and the action
taken or to be taken by the Guarantor;
(d) Maintain Licence. The Guarantor will maintain such
valid gaming licenses in all jurisdictions as may be necessary to
conduct its casino business.
9. Negative Covenants of the Guarantor. The Guarantor
covenants with the Agent and the Lenders that, without the prior
written consent of the Majority Lenders (except as otherwise
indicated):
(a) Negative Pledge. the Guarantor will not, without the
consent of the Majority Lenders, create, agree to create, assume,
incur or suffer to exist any Lien in respect of all or any part
of its shares, rights or other ownership interests, in the
Borrower or WCL except with respect to any Liens granted by the
Guarantor in favour of any other guarantors of the Borrower.
(b) Material Adverse Change. the Guarantor will not cease
to carry on any material portion of its business if the effect of
such event would have a material adverse effect on the ability of
the Guarantor to satisfy its financial obligations under this
guarantee.
10. Acceleration Events. The occurrence of any one or more
of the following events or circumstances constitutes an
Acceleration Event under this guarantee, provided that prior to
the expiry of any applicable cure period an Acquiring Guarantor
has not assumed, pursuant to paragraph 10.(e)(i), all of the
liability and indebtedness of the Guarantor under this guarantee:
(a) Voluntary Bankruptcy Proceedings. the commencement by
the Guarantor of any voluntary case or proceeding (including, the
filing of any notice in connection therewith) under any
insolvency or other law now or hereinafter in effect of any
jurisdiction for the:
(i) bankruptcy, liquidation, winding-up, dissolution
or suspension of general operations of;
(ii) composition, rescheduling, reorganization,
arrangement or readjustment of, or other relief
from, or stay of proceedings to enforce, all or a
substantial part of the debts of; or
(iii) appointment of a trustee, receiver, receiver
and manager, liquidator, administrator,
custodian or other official for, or for all
or a substantial part of the assets of;
the Guarantor;
(b) Involuntary Bankruptcy Proceedings. the commencement
of any involuntary case or proceeding (including, the filing of
any notice in connection therewith) under any insolvency or other
law now or hereinafter in effect of any jurisdiction for the:
(i) bankruptcy, liquidation, winding-up, dissolution
or suspension of general operations of;
(ii) composition, rescheduling, reorganization,
arrangement or readjustment of, or other relief
from, or stay of proceedings to enforce, some or
all of the debts of;
(iii) appointment of a trustee, receiver, receiver
and manager, liquidator, administrator,
custodian or other official for, or for all
or a substantial part of the assets of; or
(iv) possession, foreclosure, seizure or retention, or
sale or other disposition of, or other proceedings
to enforce security over, all or a substantial
part of the assets of
the Guarantor, and such case or proceeding continues unstayed or
undismissed for a period of 60 Business Days;
(c) Cross Default. if the Guarantor shall default in (i)
the observance or performance of any payment obligation, any
financial covenant, or any other material negative covenant
contained in any agreement in respect of borrowed money in the
principal amount of more than US$50,000,000 (or its equivalent in
another currency) or (ii) the observance or performance of any
other agreement or condition contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is more than US$10,000,000 and is to
permit the holder or holders of such liability or indebtedness
(or a trustee or agent on behalf of such holder or holders) to
cause such liability or indebtedness to become due prior to its
stated maturity, and the holder or holders of such liability or
indebtedness have in fact exercised its or their right to declare
such liability or indebtedness to be due prior to its stated
maturity;
(d) Covenants. the Guarantor shall default or fail to
perform any covenant or term contained in this guarantee and,
other than with respect to paragraphs 10.(a) and 10.(b), such
default or failure shall remain uncured for a period of 5 days
after receipt by the Guarantor of notice from the Agent
specifying such default or failure;
(e) Maintain Ownership. if the Guarantor does not maintain
its ownership interest in the Borrower or in WCL as determined on
the date hereof, except that
(i) any Guarantor (the "Acquiring Guarantor") may
purchase all or a proportionate ownership interest
in the Borrower or in WCL of another Guarantor
(the "Disposing Guarantor") provided (A) the
Acquiring Guarantor assumes all or the
proportionate share of the liability and
indebtedness of the Disposing Guarantor pursuant
to such Disposing Guarantor's Guarantee and (B)
the Acquiring Guarantor agrees to amend paragraph
3 of its Guarantee to reflect such assumption of
such Disposing Guarantor's liability and
indebtedness under such Disposing Guarantor's
Guarantee,
(ii) any Guarantor may transfer its ownership interest
in the Borrower or in WCL to any of its
Affiliates, in accordance with Section 6.4(a) of
the Interim Casino Operating Agreement or the
equivalent provisions of the Permanent Casino
Operating Agreement or
(iii) any Guarantor may dispose of its ownership
interest in the Borrower or in WCL with the
prior approval of all of the Lenders, which
approval may be granted or withheld in each
Lender's sole discretion;
(f) Change of Control. if any "person" (within the meaning
of Sections 13(d) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Act")), shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Act) of 25% or more
of the outstanding shares of common stock of the Guarantor or the
individuals who constitute the Board of Directors of the
Guarantor (the "Board") as of the date hereof (together with any
new member(s) of the Board whose election by the Guarantor's
stockholders was approved by a vote of at least two-thirds of the
members of the Board then still in office who either were members
of the Board as of the date hereof or whose election or
nomination for election to the Board was previously so approved)
cease for any reason to constitute at least 75% of the members of
the Board then in office.
11. Gaming Licence. The Agent, the Lenders, their
respective successors and assigns, as holders of this guarantee,
agree to provide any requested information and to otherwise
cooperate with Gaming Authorities upon the request of the
Guarantor. If any holder of this guarantee is found disqualified
by a Gaming Authority, it may be unlawful for that Person to (a)
receive interest based upon this guarantee, (b) exercise directly
or through a trustee or nominee, including the Agent, any rights
conferred by this guarantee, or (c) receive any remuneration from
the Borrower, the Guarantor or any Affiliates of the Guarantor.
12. Assignment. The Agent or any Lender may assign any of
its rights and powers hereunder only in accordance with the terms
of the Credit Agreement. Except as otherwise permitted in
paragraph 10.(e) of this guarantee, the Guarantor shall not
assign or transfer all or any part of its rights or obligations
hereunder without the prior written consent of all the Lenders.
An assignment of this guarantee shall become effective when the
Agent, the Guarantor or the Lenders, as the case may be, have
consented to the assignment.
13. GOVERNING LAW. THIS GUARANTEE AND ALL RIGHTS,
OBLIGATIONS AND LIABILITIES ARISING HEREUNDER SHALL BE CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF NEVADA IRRESPECTIVE OF ITS
CONFLICTS OF LAWS RULES.
14. Currency of Payment.
(a) With respect to each Guaranteed Obligation (or portion
thereof), the Guarantor shall be obligated to pay the Agent, on
behalf of itself and the Lenders, the amount of such Guaranteed
Obligation in the same currency (hereinafter referred to as the
"Specified Currency") and place in which such Guaranteed
Obligation is payable by its terms;
(b) The specification of the Specified Currency with
respect to each Guaranteed Obligation (or portion thereof) and
the place of payment thereof is of the essence, and the Specified
Currency shall be the currency of accounts in all events with
respect to such Guaranteed Obligation. The payment of such
obligations of the Guarantor hereunder shall not be discharged by
an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the
amount so paid on conversion to the Specified Currency and
transfer to the specified place of payment under normal banking
procedures does not yield the amount of the Specified Currency at
the specified place of payment due hereunder. If for the purpose
of obtaining judgment in any court it is necessary to convert a
sum due hereunder in the Specified Currency into another currency
(the "Second Currency") the rate of exchange which shall be
applied shall be that at which in accordance with its normal
banking procedures the Agent could purchase the Specified
Currency with the Second Currency on the Business Day next
preceding that on which such judgment is rendered. The
obligation of the Guarantor in respect of any such sum due from
it to the Agent and the Lenders hereunder shall, notwithstanding
the rate of exchange actually applied in rendering such judgment,
be discharged only to the extent that on the Business Day
following the payment by or for the account of the Guarantor, to
or for the account of the Agent and the Lenders of any sum
adjudged to be due hereunder in the Second Currency, the Agent
may in accordance with normal banking procedures purchase and
transfer to the specified place of payment the Specified Currency
with the amount of the Second Currency so adjudged to be due; and
the Guarantor hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify the Agent
and the Lenders against, and to pay, on demand in the Specified
Currency, any difference between the sum originally due to the
Agent and the Lenders in the Specified Currency and the amount of
the Specified Currency so purchased and transferred.
15. Forum Selection and Consent to Jurisdiction. Any
litigation based hereon, or arising out of, under, or in
connection with, this guarantee may be brought and maintained in
the courts of the State of Nevada or in the United States
District Court for the State of Nevada. The Guarantor hereby
expressly and irrevocably submits to the jurisdiction of the
courts of the State of Nevada and of the United States District
Court for the State of Nevada for the purpose of any such
litigation as set forth above and irrevocably agrees to be bound
by any judgment rendered thereby in connection with such
litigation. The Guarantor further irrevocably consents to the
service of process by registered mail, postage prepaid, or by
personal service within or without the State of Nevada. The
Guarantor hereby expressly and irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that
any such litigation has been brought in an inconvenient forum.
16. No Deemed Waiver by Lenders. No failure on the part of
the Agent or the Lenders to exercise, and no delay in exercising,
any right, power or privilege under this guarantee shall operate
as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
17. Unanimous Consent. Except as otherwise provided in
this guarantee, no provision of this guarantee may be modified or
waived without the prior written unanimous consent of the Agent,
the Lenders and the Guarantors.
18. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTEE.
THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO
THE CREDIT AGREEMENT.
19. Severability. If any provision of this guarantee is
held to be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining
provisions in such jurisdiction shall not be affected, unless its
removal would substantially defeat the basic intent, spirit and
purpose of this guarantee.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this
instrument to be duly executed as of the date first written
above.
CIRCUS CIRCUS ENTERPRISES, INC.
By: CLYDE T. TURNER
Title: President
SCHEDULE 1
COMPLIANCE CERTIFICATE WITH RESPECT TO GUARANTOR
I, Glenn W. Schaeffer , of the City of
Las Vegas in the State of Nevada hereby certify,
in a corporate capacity and not personally, as follows:
1. That I am the President of Circus Circus
Enterprises, Inc. (the "Guarantor").
2. That I am familiar with and have examined the
provisions of the guarantee (the "Guarantee") dated as of July
10, 1996 given by the Guarantor in favour of the Agent and the
Lenders named therein, and have made reasonable investigations of
corporate records and inquiries of other officers and senior
personnel of the Guarantor. Terms defined in the Guarantee have
the same meaning in this certificate.
3. As of the date hereof, to the best of my knowledge, no
Acceleration Event has occurred which has not been waived nor has
any event occurred and is continuing which would, with the giving
of notice or the passage of time or both, constitute an
Acceleration Event of which the Guarantor has not previously
notified the Agent in writing.
By: GLENN W. SCHAEFFER
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JUL-31-1996
<CASH> 58,737
<SECURITIES> 0
<RECEIVABLES> 17,039
<ALLOWANCES> 0
<INVENTORY> 19,721
<CURRENT-ASSETS> 122,536
<PP&E> 2,032,851
<DEPRECIATION> 492,344
<TOTAL-ASSETS> 2,326,006
<CURRENT-LIABILITIES> 188,850
<BONDS> 658,942
18,530
0
<COMMON> 1,880
<OTHER-SE> 1,293,484
<TOTAL-LIABILITY-AND-EQUITY> 2,326,006
<SALES> 691,691
<TOTAL-REVENUES> 691,691
<CGS> 0
<TOTAL-COSTS> 570,608
<OTHER-EXPENSES> 15,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,681
<INCOME-PRETAX> 82,266
<INCOME-TAX> 31,485
<INCOME-CONTINUING> 50,781
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,781
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
