<PAGE>
UNITED STATES
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: JUNE 30, 1996
----------------------------------------------
[_] 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: 1-9481
------------------------------------------------------
SANTA FE GAMING CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 88-0304348
- ---------------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
4949 NORTH RANCHO DRIVE, LAS VEGAS, NEVADA 89130
- ------------------------------------------------------------------------------
(Address of principal executive office and zip code)
(702) 658-4300
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by a 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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES _____ NO _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
6,195,356 as of August 12, 1996
- ----------------------------------- ------------------------------------
Amount Outstanding Date
<PAGE>
SANTA FE GAMING CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Balance sheets at June 30, 1996
(unaudited) and September 30, 1995 2
Statements of Operations for the three and nine
months ended June 30, 1996 and 1995
(unaudited) 3
Statement of Changes in Stockholders' Equity
for the nine months ended June 30, 1996
(unaudited) 4
Statements of Cash Flows for the nine months
ended June 30, 1996 and 1995 (unaudited) 5
Notes to Consolidated Condensed Financial
Statements (unaudited) 6
Independent Accountants' Review Report 14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 15
PART II. OTHER INFORMATION 27
</TABLE>
1
<PAGE>
SANTA FE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
ASSETS 1996 1995
------ -------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 16,644,759 $ 42,749,932
Accounts receivable, net 2,641,226 6,189,109
Accounts receivable, officer 623,466 545,042
Inventories 1,544,553 1,776,427
Prepaid expenses & other 4,322,468 5,758,808
Assets held for sale 0 98,712,541
------------ ------------
Total current assets 25,776,472 155,731,859
Land held for development 40,618,886 19,114,486
Property and equipment, net 117,208,189 126,311,847
Goodwill 46,431,989 47,506,348
Deferred income taxes 0 5,663,665
Other assets 7,251,942 12,309,796
------------ ------------
Total assets $237,287,478 $366,638,001
============ ============
LIABILITIES and STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 3,802,783 $ 6,234,550
Accounts payable 6,197,190 7,024,980
Interest payable 2,154,954 9,516,776
Accrued and other liabilities 10,147,409 15,709,850
Debt due upon sale of assets 0 114,612,680
------------ ------------
Total current liabilities 22,302,336 153,098,836
Deferred income taxes 7,760,335 0
Long-term debt - less current portion 167,438,813 198,655,174
Stockholders' Equity:
Common Stock, $.01 par value; authorized-100,000,000
shares; issued and outstanding-6,195,356 shares 61,954 61,954
Preferred stock, exchangeable, redeemable 8% cumulative,
stated at $2.14 liquidation value, authorized-10,000,000
shares; issued and outstanding-8,187,563 shares at
Sept. 30, 1995 and 8,514,761 at June 30, 1996 18,221,589 17,521,385
Additional paid-in capital 51,513,504 51,513,504
Accumulated deficit (29,923,279) (54,125,078)
------------ ------------
Total 39,873,768 14,971,765
Less treasury stock - 4,875 shares, at cost (87,774) (87,774)
------------ ------------
Total stockholders' equity 39,785,994 14,883,991
------------ ------------
Total liabilities and stockholders' equity $237,287,478 $366,638,001
============ ============
</TABLE>
See the accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
SANTA FE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Casino $ 20,374,926 $ 38,549,416 $ 65,205,811 $ 116,098,061
Hotel 1,063,904 10,723,398 3,028,663 30,904,657
Food and beverage 2,812,246 8,295,366 8,488,705 24,021,492
Other revenues 1,698,950 5,972,648 6,380,207 18,490,308
Gain on sale of assets 0 0 40,753,738 0
------------ ------------- ------------ -------------
Total revenues 25,950,026 63,540,828 123,857,124 189,514,518
------------ ------------- ------------ -------------
Operating expenses:
Casino 10,943,438 18,621,432 32,732,907 54,012,108
Hotel 474,049 4,735,177 1,365,017 13,192,624
Food and beverage 4,040,954 10,716,256 11,803,497 30,640,753
Other operating expenses 850,305 3,388,588 2,684,479 10,390,944
Selling, general & administrative 3,826,082 7,866,806 12,014,077 23,137,043
Utilities & property expenses 2,652,156 6,369,613 7,429,110 18,827,301
Depreciation & amortization 3,532,881 7,331,441 10,868,140 21,374,234
Write-down of development costs 0 14,898,317 0 14,898,317
------------ ------------- ------------ -------------
Total operating expenses 26,319,865 73,927,630 78,897,227 186,473,324
------------ ------------- ------------ -------------
Operating income (loss) (369,839) (10,386,802) 44,959,897 3,041,194
Interest expense 5,766,250 11,360,754 18,716,389 33,730,521
------------ ------------- ------------ -------------
Income (loss) before income tax expense
(benefit) and extraordinary item (6,136,089) (21,747,556) 26,243,508 (30,689,327)
Federal income tax expense (benefit) (1,965,000) (7,246,000) 9,195,000 (9,965,000)
------------ ------------- ------------ -------------
Income (loss) before extraordinary item (4,171,089) (14,501,556) 17,048,508 (20,724,327)
Extraordinary item-gain (loss) on early extinguishment
of debt, net of tax provision of $4,229,000 in 1996
and benefit of $846,000 in 1995, respectively 0 (1,572,330) 7,854,707 (1,572,330)
------------ ------------- ------------ -------------
Net income (loss) (4,171,089) (16,073,886) 24,903,215 (22,296,657)
Dividends on preferred shares 364,432 336,974 1,065,848 985,112
------------ ------------- ------------ -------------
Net income (loss) applicable to common shares ($4,535,521) ($16,410,860) $ 23,837,367 ($23,281,769)
============ ============= ============ =============
Average common shares outstanding 6,195,356 6,195,356 6,195,356 6,195,356
============ ============= ============ =============
Income (loss) per common share ($0.73) ($2.65) $ 3.85 ($3.76)
============ ============= ============ =============
</TABLE>
See the accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
SANTA FE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Preferred Paid-in Accumulated Treasury
Stock Stock Capital Deficit Stock Total
------ ---------- ---------- ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances, October 1, 1995 $61,954 $17,521,385 $51,513,504 ($54,125,078) ($87,774) $14,883,991
Net Income 24,903,215 24,903,215
Preferred stock dividend 700,204 (701,416) (1,212)
------- ----------- ----------- ------------ -------- -----------
Balances, June 30, 1996 $61,954 $18,221,589 $51,513,504 ($29,923,279) ($87,774) $39,785,994
======= =========== =========== ============ ======== ===========
</TABLE>
See the accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
SANTA FE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
June 30, 1996 June 30, 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash and short-term investments
provided by operations $ 37,098,150 $ 17,859,999
Gain on sale of subsidiary assets (40,753,738) 0
Gain on early extinguishment of debt (7,854,707) 0
Deferred gain on sale of equipment (862,552) 0
Decrease in accounts receivable, net 3,547,883 670,059
Increase in due from officer (78,424) (32,012)
Decrease in inventories 231,874 74,763
Decrease (increase) in prepaid expenses & other 575,309 (16,728)
Decrease (increase) in deferred income taxes 9,195,000 (10,811,000)
Decrease (increase) in other assets 2,409,023 (1,138,870)
Increase (decrease) in accounts payable (827,790) 1,585,793
Decrease in interest payable (7,361,822) (6,621,851)
Decrease in other current liabilities (5,562,441) (3,104,923)
------------- ------------
Net cash used in operating activities (10,244,235) (1,534,770)
------------- ------------
Cash flows from investing activities:
Proceeds from sale of subsidiary assets 128,508,377 0
Proceeds from sale leaseback of equipment 3,470,000 0
Decrease in restricted cash 95,569 3,910,440
Capital expenditures (4,369,535) (23,305,588)
------------- ------------
Net cash provided by (used in) investing activities 127,704,411 (19,395,148)
------------- ------------
Cash flows from financing activities:
Cash proceeds of long-term debt 20,000,000 1,800,000
Cash paid on long-term debt (163,565,349) (7,930,001)
------------- ------------
Net cash used in financing activities (143,565,349) (6,130,001)
------------- ------------
Decrease in cash and short-term investments (26,105,173) (27,059,919)
Cash and short-term investments,
beginning of year 42,749,932 55,582,503
------------- ------------
Cash and short-term investments,
end of period $ 16,644,759 $ 28,522,584
============= ============
</TABLE>
See the accompanying Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
SANTA FE GAMING CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION AND GENERAL INFORMATION
Santa Fe Gaming Corporation, formerly known as Sahara Gaming Corporation, (the
"Company" or "Santa Fe Gaming"), a publicly traded Nevada corporation, is the
successor corporation of two affiliates, Sahara Resorts and Sahara Casino
Partners, L.P., which combined in a business combination in September, 1993. The
Company's primary business operations have been conducted through four wholly
owned subsidiary corporations, Sahara Nevada Corp. ("SNC"), Hacienda Hotel Inc.
("HHI"), Santa Fe Hotel Inc. ("SFHI") and Pioneer Hotel Inc. ("PHI") (the
"Operating Companies"). HHI sold substantially all the assets of the Hacienda
Resort Hotel and Casino (the "Hacienda") in August 1995 and SNC sold
substantially all the assets of the Sahara Hotel and Casino (the "Sahara") in
October 1995. SFHI owns and operates the Santa Fe Hotel and Casino (the "Santa
Fe"), located in Las Vegas, Nevada, and PHI owns and operates the Pioneer Hotel
& Gambling Hall (the "Pioneer") in Laughlin, Nevada.
These consolidated condensed financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Annual Report to stockholders for the year ended September 30, 1995.
The results of operations for the three and nine month periods ended June 30,
1996 are not necessarily indicative of the results to be expected for the entire
year.
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
accruals) necessary to present fairly the financial position of the Company at
June 30, 1996, the results of its operations for the three and nine month
periods ended June 30, 1996 and 1995, the changes in stockholders' equity for
the nine month period ended June 30, 1996, and cash flows for the nine month
periods ended June 30, 1996 and 1995.
NOTE 2 - CASH AND SHORT-TERM INVESTMENTS
Approximately $5.7 million of the Company's consolidated cash and short-term
investments is held by PHI and is subject to certain restrictions, including
restrictions on its
6
<PAGE>
availability for distribution to the Company, by the terms of an indenture
pursuant to which $120.0 million principal amount 13-1/2% First Mortgage Bonds
due 1998 ("13-1/2% Notes") of Pioneer Finance Corp. were issued, the proceeds of
which were loaned to PHI.
In November 1995, the Company made an equity contribution of $15 million in cash
to PHI, in accordance with terms of an agreement reached with holders of the 13
1/2% Notes pursuant to which the holders of the 13 1/2% Notes consented to the
sale of the Hacienda and Sahara. In December 1995, the Pioneer used $3 million
of such funds together with cash on hand to make the December 1, 1995 semi-
annual interest payment on the 13 1/2% Notes of $5.6 million. In March 1996, the
Pioneer used $8.6 million of such funds to acquire $10.2 million principal
amount of 13 1/2% Notes and accrued interest thereon. The funds remaining from
the equity contribution represent approximately $3.5 million of the $5.7 million
of cash and short term investments held at the Pioneer and are restricted in use
for debt service on the 13 1/2% Notes, repurchase of 13 1/2% Notes, capital
expenditures at the Pioneer, and contribution to capital of a wholly-owned
subsidiary of PHI that owns real property in Henderson, Nevada.
Approximately $3.6 million of the Company's consolidated cash and short term
investments is held by SFHI and is subject to certain restrictions, including
restrictions on its availability for distribution to the Company, by the terms
of an indenture pursuant to which $115.0 million principal amount 11% First
Mortgage Notes due 2000 ("11% Notes") of SFHI were issued.
NOTE 4 - ASSETS HELD FOR SALE
On October 2, 1995, the Company sold substantially all of the assets of the
Sahara for $128 million in cash and exchanged 22 acres of land, a portion of
which was utilized by the Sahara as a parking lot, for 27 acres of land just
south of the Sahara on Las Vegas Boulevard, on which a water theme park
currently operates. The Company utilized approximately $122 million in proceeds
to retire and defease the approximately $115 million outstanding principal
amount of 12 1/8% Notes issued by Sahara Finance Corp ("12 1/8% Notes") and
secured by the Sahara assets and to pay costs associated with the transaction,
including approximately $6 million of costs associated with the defeasance of
the 12 1/8% Notes. The net proceeds of approximately $6 million were added to
working capital. The Company recorded a pre-tax gain of $40.8 million (net of
the extinguishment of debt charge discussed in Note 7) on the sale in the
quarter ended December 31, 1995.
NOTE 5 - LAND HELD FOR DEVELOPMENT
In connection with the acquisition of the 27 acre parcel, the Company assumed
the operating lease under which a water theme park operates. The lease may be
terminated by the Company at any time after December 1996. The Company has
guaranteed payments by the tenant of a loan to the prior owner of the property
("tenant loan") and has
7
<PAGE>
agreed to pay the outstanding balance of the loan in full in certain situations,
including in the event the lease is terminated for any reason prior to 2004. The
tenant loan, which is amortized through monthly principal and interest payments
through December 2004, had an outstanding balance of $6.0 million as of June 30,
1996. Under the terms of the lease, as amended, the water-theme park remits a
base rent of approximately $16,000 monthly plus an annual rent payment based on
gross receipts. The 27 acre parcel was valued at approximately $22 million for
purposes of the Sahara sale and is reported as land held for development in the
June 30, 1996 consolidated balance sheet.
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET
In October 1995, the Company entered into an agreement to transfer its rights
and obligations under contracts with members of Camperland, an existing
recreational vehicle park (See Note 10 - Subsequent Events). Camperland is a
recreational vehicle park located on approximately 14 acres of Hacienda property
that, since August 31, 1995, has been operated by the Company under a lease with
the new owners of the Hacienda.
In November 1995, the Company sold the Spirit of America barge vessel ("Spirit")
for $3.3 million which approximated the carrying value of the Spirit in the
consolidated balance sheet. The Spirit was acquired in connection with the
Company's proposed development of a casino entertainment complex in Parkville,
Missouri. Net proceeds of $3.2 million from the sale were added to general
working capital.
In May 1996, the Company purchased from SFHI a 22 acre parcel of undeveloped
land held by SFHI for approximately $2.85 million, which the Company and SFHI
believe to be the fair market value of the property. The Company paid $2.0
million in cash and assumed an existing $850,000 note secured by the property.
The $850,000 note maturity date of November 1996 was extended two years until
November 1998. SFHI acquired the property in
8
<PAGE>
November 1994 for a purchase price of $1.6 million. The intercompany gain on
sale recorded by SFHI has been eliminated in the consolidated financial
statements.
NOTE 7 - DEBT DUE UPON SALE OF ASSETS
In connection with the sale of the Sahara, the Company made a tender offer to
purchase for cash all outstanding 12 1/8% Notes at a price of $1,047 per $1,000
principal amount, plus accrued interest. The Company accepted for payment and
retired $89.2 million original principal amount of 12 1/8% Notes tendered in the
offer and the Company defeased the remaining approximately $27 million balance
of 12 1/8% Notes. In November 1995, the Company purchased and retired the
remaining $27 million original principal amount of 12 1/8% Notes that were
defeased upon consummation of the sale. The Company recorded an approximate $6.0
million charge for extinguishment of debt against the gain on the sale of the
Sahara in the quarter ended December 31, 1995.
NOTE 8 - LONG-TERM DEBT
In December 1995, the Company acquired $2.6 million principal amount of 10 1/4%
Subordinated Debentures due 1998 (the "10 1/4% Debentures"). The Company retired
$2.3 million principal amount of 10 1/4% Debentures to meet a sinking fund
payment due in June 1996 and $300,000 to partially satisfy the sinking fund
payment due in June 1997.
In January 1996, the Company completed the repurchase of an aggregate of $38.1
million principal amount of long-term debt, comprised of $25.6 million principal
amount of 11% Notes and $12.5 million principal amount 13 1/2% Notes. The
Company retired $5.6 million principal amount of the 11% Notes and the entire
$12.5 million principal amount of the 13 1/2% Notes acquired. The Company
financed the repurchase of debt with $7.5 million of working capital and the net
proceeds of a private placement of $20 million principal amount of 12% Notes due
1999 (the "12% Notes") issued by the Company's subsidiary, Sahara Las Vegas
Corp. In connection with these transactions, the Company satisfied a contingent
obligation to make additional equity contributions to its subsidiary, PHI. In
addition, in March 1996, the Company completed the repurchase of $10.2 million
principal amount of 13 1/2% Notes and accrued interest thereon for $8.6 million.
As a result of the January and March repurchases, at June 30, 1996 the
outstanding balances of the 11% Notes and of the 13 1/2% Notes were
approximately $99.4 million and $60.0 million, respectively. The Company
recorded an extraordinary gain of approximately $7.9 million after tax related
to the debt repurchases in the quarter ended March 31, 1996.
The 12% Notes are secured by, among other things, the Company's 27 acre parcel
of real property on the Las Vegas Strip and $20 million principal amount of the
11% Notes acquired. The 12% Notes are guaranteed by the Company. Interest is
payable semi-annually on June 30 and December 31, and principal payments of
$500,000 are due December 31, 1996, 1997 and 1998. In addition, pursuant to the
12% Note Agreement, if, as of the end of any quarter commencing with the quarter
ending
9
<PAGE>
December 31, 1997, SFHI Cash Flow (as defined in the 12% Note Agreement) for the
preceding four quarter period is less than $13.5 million, the Company will be
required to redeem $3.5 million principal amount of 12% Notes at a redemption
price of 100% of the principal amount, plus accrued and unpaid interest thereon.
Such obligation, if it arises, will be reduced-on-a-dollar for dollar basis to
the extent that, during the period in which the Company is so required to
repurchase 12% Notes, the Company acquires 11% Notes and pledges such acquired
11% Notes as additional collateral for the 12% Notes or contributes the acquired
11% Notes to SFHI and causes the contributed SFHI Notes to be canceled. The
Company may, at its option, exclude a fiscal quarter from the calculation of
SFHI Cash Flow if SFHI undertakes certain capital expenditures in such quarter
and provides notification under the 12% note agreement.
In May 1996 pursuant to the 12% Note Agreement under which Sahara Las Vegas
Corp. issued the 12% Notes, the Company made a capital contribution to the SFHI
in the amount of $3 million.
In February 1996, SFHI prepaid in full the $1.6 million principal balance on its
working capital loan agreement. The working capital loan agreement required
monthly principal and interest payments of $157,000 and matured in December
1996.
In May 1996, the Company purchased from SFHI a 22 acre parcel of undeveloped
land held by SFHI for approximately $2.85 million, which the Company and SFHI
believe to be the fair market value of the property. The Company paid $2.0
million in cash and assumed an existing $850,000 note secured by the property.
The $850,000 note maturity date of November 1996 was extended two years until
November 1998.
SFHI and SNC have modified the 12 1/8% affiliate note due August 1996 from SFHI
in favor of SNC, pursuant to which the maturity date is extended to December 31,
1997, monthly principal and interest payments are eliminated and partial
prepayments are allowed. The outstanding principal amount of the affiliate note
at June 30, 1996 was $5.0 million.
NOTE 8 - LEASES
In February 1996, the Company completed a $1.75 million sale leaseback
transaction with respect to gaming equipment at the Santa Fe. The lease requires
an approximate $70,000 per month rental payment over a 24 month term. In May
1996, the Company completed a $1.835 million sale leaseback transaction with
respect to gaming equipment at the Santa Fe. The lease requires an approximate
$75,000 per month payment over a 24 month term. In conjunction with the
transactions, the Company deferred a $950,000 net gain which will be recognized
over the lease term.
In June 1996, the Company completed a $1.4 million lease transaction with
respect to a new slot tracking system at the Santa Fe. The lease requires an
approximate $39,500 per month over a 36 month term.
10
<PAGE>
NOTE 9 - INVESTMENT
In February 1996, the Company acquired a 50% equity interest for $175,000 in a
restaurant/tavern operation in northwest Las Vegas, Santa Fe Mining Company,
L.L.C. ("Santa Fe Mining"). The Company and its partner have guaranteed a
$850,000 loan incurred to finance construction and equipment and a $100,000
working capital line of credit. The restaurant/tavern opened July 1, 1996. In
August 1996, the Company received final approval for a restricted gaming license
for the Santa Fe Mining location.
NOTE 10 - SUBSEQUENT EVENTS
In July 1996, the Company entered into an amended agreement with an existing
recreational vehicle park relating to the relocation of Camperland operations.
Pursuant to the amended agreement, the Company paid approximately $2.3 million
to transfer its rights and obligations under contracts with members of
Camperland. The Company is obligated to make an additional payment of $750,000
in the event the owners of the existing park relocate the Camperland membership
to a mutually acceptable new location. The Company received a First Deed of
Trust on 14 acres of vacant land owned by the existing park to secure
performance of the existing park's operators in connection with the assumption
of the Camperland contracts. By July 31, 1996 the Camperland operations were
moved to the new park and the lease with the new owners of Hacienda was
terminated. As a result of the termination of the Hacienda lease prior to
February 1997, the Hacienda owners paid the Company approximately $350,000.
In July 1996, the Company entered into an agreement to sell for $3.6 million in
cash an undeveloped 40 acre parcel of land located approximately eight miles
south of the Hacienda on Las Vegas Boulevard South. This land was acquired for
$2.4 million in September 1995 as a potential location to relocate the
Camperland membership. The sale is subject to certain conditions which must be
met by August 31, 1996 with final closing to occur on or before September 10,
1996.
NOTE 11 - SUPPLEMENTAL INFORMATION
Supplemental statement of cash flows information for the nine-month period ended
June 30, 1996 and 1995 is presented below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Operating Activities:
Cash paid during the period
for interest, net of amount
capitalized of $4,194,406
for 1995 $25,400,475 $39,669,169
=========== ===========
Investing and Financing Activities:
Land acquired in exchange of assets $21,504,400
===========
</TABLE>
11
<PAGE>
13. Supplemental Statement of Subsidiary Information-
For The Nine Months Ended June 30, 1996 and 1995
The Company's primary operations are in the hotel/casino industry and in
fiscal year 1996 are conducted through PHI and SFHI, and in fiscal 1995 were
conducted through SNC, HHI, PHI and SFHI. The Company sold substiantially all
the assets of the Hacienda in August 1995 and the Sahara in October 1995.
"Other" below includes financial information for SNC, HHI and the Company's
other operations before eliminating entries. In addition to the financial
information for the nine months ended June 30, 1996 and 1995, as set forth in
the table below (dollars in thousands), see notes 2, 5, 7 and 8 for additional
discussion of subsidiary operations.
<TABLE>
<CAPTION>
Year PHI SFHI Other Eliminations TOTAL
---- --- ---- ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Operating revenues 1996 $ 34,543 $ 47,101 $ 45,632 ($3,419) $123,857
======== ======== ======== ======= ========
1995 $ 35,244 $ 50,095 $108,185 ($4,009) $189,515
======== ======== ======== ======= ========
Operating Income (loss) 1996 $ 2,488 $ 3,323 $ 41,065 ($1,916) $ 44,960
======== ======== ======== ======= ========
1995 $ 4,877 ($6,810) $ 5,214 ($240) $ 3,041
======== ======== ======== ======= ========
Interest Expense 1996 $ 7,295 $ 10,231 $ 1,861 ($671) $ 18,716
======== ======== ======== ======= ========
1995 $ 10,405 $ 10,125 $ 13,440 ($239) $ 33,731
======== ======== ======== ======= ========
Depreciation and Amortization 1996 $ 4,518 $ 6,254 $ 96 0 $ 10,868
======== ======== ======== ======= ========
1995 $ 3,836 $ 6,863 $ 10,675 0 $ 21,374
======== ======== ======== ======= ========
Capital Expenditures 1996 $ 1,025 $ 3,079 $ 266 0 $ 4,370
======== ======== ======== ======= ========
1995 $ 3,644 $ 17,174 $ 2,488 0 $ 23,306
======== ======== ======== ======= ========
Identifiable Assets 1996 $134,524 $ 84,320 $ 19,688 ($1,245) $237,287
======== ======== ======== ======= ========
1995 $ 98,233 $117,131 $227,848 0 $443,212
======== ======== ======== ======= ========
</TABLE>
12
<PAGE>
14. Supplemental Statement of Subsidiary Information
For The Three Months Ended June 30, 1996 and 1995
The Company's primary operations are in the hotel/casino industry and in
fiscal year 1996 are conducted through PHI and SFHI, and in fiscal 1995 were
conducted through SNC, HHI, PHI and SFHI. The Company sold substiantially all
the assets of the Hacienda in August 1995 and the Sahara in October 1995.
"Other" below includes financial information for SNC, HHI and the Company's
other operations before eliminating entries. In addition to the financial
information for the three months ended June 30, 1996 and 1995, as set forth in
the table below (dollars in thousands), see notes 2, 5, 7 and 8 for additional
discussion of subsidiary operations.
<TABLE>
<CAPTION>
Year PHI SFHI Other Eliminations TOTAL
---- --- ---- ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Operating revenues 1996 $11,107 $ 15,597 $ 1,314 ($2,068) $ 25,950
======= ========= ======= ======= =========
1995 $11,734 $ 16,945 $36,184 ($1,322) $ 63,541
======= ========= ======= ======= =========
Operating Income (loss) 1996 $ 365 $ 913 ($162) ($1,486) ($370)
======= ========= ======= ======= =========
1995 $ 1,184 ($12,448) $ 958 ($81) ($10,387)
======= ========= ======= ======= =========
Interest Expense 1996 $ 2,076 $ 3,322 $ 609 ($241) $ 5,766
======= ========= ======= ======= =========
1995 $ 3,468 $ 3,456 $ 4,517 ($80) $ 11,361
======= ========= ======= ======= =========
Depreciation and Amortization 1996 $ 1,507 $ 1,994 $ 32 0 $ 3,533
======= ========= ======= ======= =========
1995 $ 1,372 $ 2,382 $ 3,577 0 $ 7,331
======= ========= ======= ======= =========
Capital Expenditures 1996 $ 197 $ 750 $ 0 0 $ 947
======= ========= ======= ======= =========
1995 $ 357 $ 2,375 $ 807 0 $ 3,539
======= ========= ======= ======= =========
</TABLE>
13
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Santa Fe Gaming Corporation:
We have reviewed the accompanying consolidated condensed balance sheet of Santa
Fe Gaming Corporation ( formerly Sahara Gaming Corporation) and subsidiaries
(the "Company") as of June 30, 1996, the related consolidated condensed
statements of operations for three-month and nine-month periods ended June 30,
1996 and 1995, stockholders' equity for the nine-month period ended June 30,
1996 and of cash flows for the nine-month periods ended June 30, 1996 and 1995,
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
Company's management.
A review of interim financial information consists principally of inquiries of
Company personnel and analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated condensed financial statements in order for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Santa Fe Gaming Corporation and
subsidiaries as of September 30, 1995, and the related consolidated statements
of operations, stockholders' equity and of cash flows for the year then ended
(not presented herein); and in our report dated December 16, 1995 we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated condensed
balance sheet as of September 30, 1995 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 12, 1996
14
<PAGE>
SANTA FE GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Nine Months Ended June 30, 1996 and 1995
- ----------------------------------------------------------------
CONSOLIDATED
Santa Fe Gaming Corporation (the "Company") sold substantially all the assets of
the Hacienda Hotel and Casino (the "Hacienda") in August 1995 and of the Sahara
Hotel and Casino (the "Sahara") in October 1995. Accordingly, consolidated
results of operations for the nine months ended June 30, 1996 are not comparable
to the same period in the prior year.
Consolidated revenues for the nine month period ended June 30, 1996 were $123.9
million, a $65.6 million or 34.6% decrease from $189.5 million for the same
period in fiscal 1995. Revenues in the current period include $40.8 million gain
on the sale of substantially all the assets of the Sahara. The Hacienda and
Sahara contributed $103.9 million in the prior year revenues. Revenues at the
Santa Fe Hotel and Casino (the "Santa Fe") and Pioneer Hotel and Gambling Hall
(the "Pioneer") decreased $3.0 million and $700,000, respectively, when compared
to the prior year period.
Consolidated operating income for the nine month period ended June 30, 1996 was
$45.0 million, a $41.9 million or 1,378.4% increase from $3.0 million for the
same period in fiscal 1995. Included in operating income in the current period
is a $40.8 million gain on the sale of substantially all the assets of the
Sahara and in the prior year is a $14.9 million write-down of development costs.
The Hacienda and Sahara contributed $5.8 million in the prior year to operating
income. Operating income at the Santa Fe, excluding the write-down of
development costs, decreased $4.8 million and at the Pioneer decreased $2.4
million, in the nine months ended June 30, 1996 compared to the nine months
ended June 30, 1995.
Consolidated interest expense for the nine month period ended June 30, 1996 was
$18.7 million, a $15.0 million decrease compared to $33.7 million for the same
period in fiscal 1995. The Hacienda and Sahara contributed $11.1 million to the
prior year interest expense. Interest expense increased by $100,000 at the Santa
Fe and decreased by $3.1 million at the Pioneer in the 1996 period.
Consolidated income before income taxes and extraordinary item for the nine
month period ended June 30, 1996 was $26.2 million, a $56.9 million increase
compared to a loss of $30.7 million in the same period in the prior year.
The increase in the current period resulted from a $40.8 million gain on the
sale of substantially all the assets of the
15
<PAGE>
Sahara in the current year and a $14.9 million write-down of development costs
reported in the prior year. The Hacienda and Sahara were responsible for $5.8
million of the $30.7 million net loss before income taxes and extraordinary item
in the prior year. The loss before income taxes and extraordinary item at the
Santa Fe decreased $10.0 million to $6.9 million in the nine month period ended
June 30, 1996 compared to the prior year period in which the loss was $16.9
million. The Pioneer recorded a loss before income taxes and extraordinary item
of $4.8 million, a $700,000 improvement from the $5.5 million loss before income
taxes recorded in the prior year period.
In January and March 1996, the Company completed the repurchase of an aggregate
of $48.3 million principal amount of long-term debt, comprised of $25.6 million
principal amount of 11% First Mortgage Notes due 2000 ("11% Notes") and $22.7
million principal amount 13 1/2% First Mortgage Bonds due 1998 ("13 1/2%
Notes"). As a result, the Company recorded an extraordinary gain of $7.9 million
after tax related to the debt repurchase in the quarter ended March 31, 1996.
SANTA FE
Revenues at the Santa Fe decreased 6.0%, or $3.0 million, in the nine months
ended June 30, 1996 to $47.1 million as compared to $50.1 million in the same
period in the prior year. Included in revenues in the current period is
approximately a $1.2 million intercompany gain on the sale of land. Casino
revenues decreased 9.0%, or $3.4 million, to $34.7 million from $38.1 million,
comprised of decreases in slot revenue of 8.4%, or $2.7 million, and table game
revenue of 16.7%, or $700,000. Management believes the decrease is due primarily
to increased competition resulting from the opening of two competing facilities
within five miles of the Santa Fe in December 1994 and July 1995, the expansions
of the two competing facilities which opened in April and May 1996 and by
restricted access to the property, beginning in April 1996, during construction
of an interchange next to the property that is expected ultimately to improve
traffic flow to the property.
Operating expenses decreased by 23.1%, or $13.1 million. In the prior year, the
Santa Fe recorded a $14.9 million write-down of development costs. Excluding the
write-down, operating expenses increased 4.2% or $1.8 million. Casino expenses
increased by 8.4%, or $1.3 million, primarily due to increased payroll and other
costs, in the first three months of the current year, associated with operating
an additional 15,000 square feet of casino space and increased promotional costs
incurred as a result of the expanding competition in the area. Selling, general
and administrative expenses increased 14.0%, or $800,000, primarily as a result
of increased advertising and promotional costs. Rent expense increased $300,000
due to the lease of slot equipment. A decrease in depreciation and amortization
of 8.9% or $600,000, was due to equipment placed in service at the opening of
the Santa Fe in February 1991 being fully depreciated, and the sale of slot
equipment. Operating income decreased $4.8 million or 58.9% to $3.3 million in
1996 from $8.1 million in 1995 excluding a $14.9 million write-down of
development costs.
Interest expense increased $100,000, or 1.0% to $10.2 million in 1996 compared
to $10.1 million in 1995. The increase is primarily due to the expensing of
interest costs on approximately $32 million of debt commencing in July 1995,
which were previously
16
<PAGE>
capitalized in connection with the development of the Company's proposed
Parkville project. This increase was partially offset by the retirement of $21
million principal amount of 11% Notes in July 1995 pursuant to the terms of a
repurchase offer and the retirement of $5.6 million principal amount of 11%
Notes acquired in January 1996.
PIONEER
Revenues at the Pioneer decreased 2.0%, or $700,000, to $34.5 million. Casino
revenues were $30.3 million in 1996, representing a decrease of 2.7%, or
$900,000, comprised of a decrease in slot revenue of 4.1%, or $1.1 million,
offset by an increase of 3.5% or $100,000 in table games revenues, and 19.3%, or
$100,000 in other gaming revenues. The decrease in the fiscal 1996 period is
believed to be primarily due to the continued competitive gaming market
environment in and around Laughlin, including Indian gaming facilities operating
in Arizona and Southern California.
Operating expenses increased $1.7 million or 5.6% to $32.1 million. Casino
expenses increased 2.6%, or $400,000, primarily due to increased promotional
expenses. Selling, general and administrative expenses increased 16.0%, or
$500,000, primarily as a result of increased advertising and promotional costs.
Increases in depreciation and amortization expenses of 17.8% or $700,000 were
related to the expansion project completed in December 1994. Accordingly,
operating income decreased by 49.0% or $2.4 million, to $2.5 million in fiscal
1996 from $4.9 million in fiscal 1995.
Interest expense decreased $3.1 million or 29.9% to $7.3 million in 1996
compared to $10.4 million in 1995, primarily due to the repurchase of $20.0
million principal amount of 13 1/2% Notes in September 1995, and $22.8 million
principal amount of 13 1/2% Notes in January and March 1996.
Three Months Ended June 30, 1996 and 1995
- -----------------------------------------
CONSOLIDATED
As a result of the sale of substantially all the assets of Hacienda in August
1995 and of the Sahara in October 1995, consolidated results of operations for
the three months ended June 30, 1996 are not comparable to the same period in
the prior year.
Consolidated revenues for the three month period ended June 30, 1996 were $26.0
million, a $37.6 million or 59.1% decrease from $63.5 million for the same
period in fiscal 1995. The Hacienda and Sahara contributed $34.7 million to the
prior year revenues. Revenues at the Santa Fe and Pioneer decreased $1.3 million
and $600,000, respectively, when compared to the prior year period.
Consolidated operating loss for the three month period ended June 30, 1996 was
17
<PAGE>
$400,000, a $10.0 million or 96.4% decrease from $10.4 million for the same
period in fiscal 1995. The Hacienda and Sahara contributed $1.0 million in the
prior year to operating income. Operating income increased $13.4 million or
107.3% to $900,000 at the Santa Fe and decreased $800,000 or 69.1% to $400,000
at the Pioneer in the three months ended June 30, 1996 compared to the three
months ended June 30, 1995.
Consolidated interest expense for the three month period ended June 30, 1996 was
$5.8 million, a $5.6 million decrease compared to $11.4 million for the same
period in fiscal 1995. The Hacienda and Sahara contributed $3.8 million to the
prior year interest expense. Interest expense decreased by $1.4 million and
$100,000 at the Pioneer and Santa Fe, respectively, in the 1996 period.
Consolidated loss before income taxes and extraordinary item for the three
month period ended June 30, 1996 was $6.1 million, a $15.6 million improvement
compared to the loss of $21.7 million in the same period in the prior year.
The improvement in the current period resulted from a $14.9 million write-down
of development costs in the prior year's quarter. The Hacienda and Sahara were
responsible for $2.7 million of the $21.7 million loss before income taxes and
extraordinary item in the prior year. The loss before income taxes and
extraordinary item at the Santa Fe decreased by $13.5 to $2.4 million in the
quarter ended June 30, 1996 compared to the prior year period in which the loss
was $15.9 million due to the $14.9 million in write-down in the 1995 period. The
Pioneer recorded a loss before income taxes and extraordinary item of $1.7
million, a $600,000 improvement from the $2.3 million loss before income taxes
recorded in the prior year period.
SANTA FE
Revenues at the Santa Fe decreased 8.0%, or $1.3 million, in the three months
ended June 31, 1996 to $15.6 million as compared to $16.9 million in the same
period in the prior year. Included in revenues in the current period is
approximately a $1.2 million intercompany gain on sale of land. Casino revenues
decreased 15.9%, or $2.0 million, to $10.8 million from $12.9 million, comprised
of decreases in slot revenue of 15.2%, or $1.7 million, of table game revenue of
16.5%, or $200,000, and of $200,000, or 26.3%, in other gaming revenues. The
food and beverage departments posted a decrease in revenues of $300,000 or 13.2%
over the same period in the prior year. Management believes the decreases are
due primarily to increased competition and restricted access to the property due
to construction of an interchange adjacent to the property.
Operating expenses decreased by 50.0%, or $14.7 million, to $14.7 million. In
the prior year's quarter, the Santa Fe recorded a $14.9 million write-down of
development costs. Excluding the write-down, operating expenses increased 1.3%
or $200,000. Casino expenses increased by 3.8%, or $200,000, primarily due to
increased promotional costs as a result of the expanding competition in the
area. General and administrative expenses increased 3.3%, or $100,000 over the
prior year period, primarily as a result of increased advertising and
promotional costs. Rent expense increased $300,000 due to the lease of
18
<PAGE>
slot equipment. A decrease in depreciation and amortization of 16.3% or
$400,000, was due to the full depreciation of equipment placed in service at the
opening of the Santa Fe in February 1991, and the sale of slot equipment.
Accordingly, operating income increased $13.4 million or 107.3% to $900,000 in
1996 from a loss of $12.4 million in 1995.
PIONEER
Revenues at the Pioneer decreased 5.3%, or $600,000, to $11.1 million. Casino
revenues were $9.5 million in 1996, representing a decrease of 6.7%, or
$700,000. Slot revenue decreased $600,000 or 6.9% and table game revenues
decreased $100,000 or 10.0%. The decrease in 1996 is believed to be primarily
due to the continuing competitive gaming market environment in and around
Laughlin, including Indian gaming facilities opened in Arizona and Southern
California.
Operating expenses increased $200,000 or 1.8% to $10.7 million. Casino expenses
increased 1.8%, or $100,000, primarily due to increased promotional expenses.
Selling, general and administrative expenses increased 12.9%, or $100,000,
primarily as a result of increased advertising and promotional costs.
Accordingly, operating income decreased by 69.1% or $800,000, to $400,000 in
fiscal 1996 from $1.2 million in fiscal 1995.
Interest expense decreased $1.4 million or 40.1% to $2.1 million in 1996
compared to $3.5 million in 1995, primarily due to the repurchase of $20 million
principal amount of 13 1/2% Notes in September 1995, and $22.8 million principal
amount of 13 1/2% Notes in January and March 1996.
LIQUIDITY AND CAPITAL RESOURCES; TRENDS AND FACTORS RELEVANT TO FUTURE
OPERATIONS
The Company's earnings before interest, taxes, depreciation and amortization
("EBITDA") were $3.2 million and $15.1 million for the three and nine months
ended June 30, 1996, excluding a $40.8 million gain from the sale of the Sahara
in the nine month period. In the prior year, EBITDA was an $11.8 million and
$39.3 million for the three and nine month periods, excluding the $14.9 million
write-down of development costs. In the prior year the Hacienda and Sahara
contributed EBITDA of $4.4 million and $16.0 million for the three and nine
month periods, respectively. The Company expects EBITDA for the balance of
fiscal 1996 to be reduced compared to the prior year periods due to the sale of
the Hacienda and Sahara, which contributed $17.9 million in the aggregate to
EBITDA in fiscal 1995, exclusive of the gain on the sales of the Sahara and the
Hacienda. Excluding EBITDA attributable to the Sahara and Hacienda, the
Company's EBITDA in the current year declined $4.3 million
19
<PAGE>
and $10.0 million, respectively, in the three and nine month periods ended June
30, 1996. The current year decline is primarily due to the increased competition
near the Santa Fe from a hotel casino that opened in July 1995. Additionally,
management believes that Santa Fe's EBITDA in future periods may be adversely
impacted as a result of expansions at its two closest competitors which
expansions opened in April and May 1996. Furthermore, management believes that
Santa Fe's results will be adversely impacted by restricted access to the
property, during construction of an interchange (at US 95 and Rancho) next to
the property. North bound access from US 95 was opened at the end of July 1996
and, the Company was advised by the Nevada Department of Transportation that
south bound access is anticipated to reopen in the early part of 1997. Also, the
Company was advised that construction work is planned during 1996 and 1997 at
the intersection of Lone Mountain Road and US 95. The Company believes that when
completed the construction work will ultimately improve traffic flow to the
property.
EBITDA is presented to enhance the understanding of the financial performance of
the Company and its ability to service its indebtedness, but should not be
construed as an alternative to operating income as an indicator of the Company's
operating performance, or to cash flows from operating activities as a measure
of liquidity.
Indenture restrictions on SFHI and PHI restrict the distribution of cash to the
Company by these subsidiaries, and cash flow of these subsidiaries is not
currently, and is not expected in the foreseeable future to be, available for
distribution to the Company. Therefore, the Company and its subsidiaries other
than PHI and SFHI (collectively "Corporate") must rely on existing cash
resources to provide liquidity to fund cash requirements of the parent company.
Liquidity - Corporate - Approximately $10.0 million of the Company's current
- ---------------------
assets at June 30, 1996, including approximately $7.3 million of cash and short-
term investments, was held by Corporate. Corporate had working capital of
approximately $2.7 million at June 30, 1996.
Corporate's principal uses of cash are to satisfy the debt service on $9.0
million principal amount outstanding of the 10 1/4% Subordinated Debentures due
1998 (the "10 1/4% Debentures"); on a $5.8 million note payable to Sierra
Construction due 1998 and on $20 million principal amount of 12% Notes due 1999
(the "12% Notes"). In addition, Corporate expects to incur costs in connection
with evaluation and development of proposed projects and for professional
services rendered to the parent company.
The Company has in the past and expects in fiscal 1996 to satisfy the semi-
annual dividend payments on its preferred stock through the issuance of paid-in-
kind dividends. Commencing in fiscal 1997, dividends paid on the preferred
stock, to the extent declared, must be paid in cash. In the event not declared,
dividends would accrue on the preferred stock. The Company and its subsidiaries
are parties to indentures and other financing arrangements that restrict the
Company's ability to declare and pay dividends or make distributions with
respect to the Company's capital stock which would prevent the payment of cash
dividends on the preferred stock.
In October 1995, the Company entered into an agreement to transfer its rights
and
20
<PAGE>
obligations under contracts with members of Camperland, a recreational vehicle
park located on approximately 14 acres of Hacienda property that is operated by
the Company under a lease with the new owners of the Hacienda, to an existing
recreational vehicle park. In July 1996, the Company entered into an amended
agreement with the existing recreational vehicle park. Pursuant to the amended
agreement, the Company paid approximately $2.3 million to transfer its rights
and obligations under contracts with members of Camperland. The Company is
obligated to make an additional payment of $750,000 in the event the owners of
the existing park relocate the Camperland membership to a mutually acceptable
new location. The Company received a first deed of trust on 14 acres of vacant
land owned by the existing park to secure performance of the existing park's
operators in connection with the assumption of the Camperland contracts. By July
31, 1996 the Camperland operations were moved to the new park and the lease with
the new owners of Hacienda was terminated. As a result of the termination of the
Hacienda lease prior to February 1997, the Hacienda owners paid the Company
approximately $350,000.
In July 1996, the Company entered into an agreement to sell for $3.6 million in
cash an undeveloped 40 acre parcel of land located approximately eight miles
south of the Hacienda on Las Vegas Blvd. South. This land was acquired for $2.4
million in September 1995 as a potential location to relocate the Camperland
membership. The sale is subject to certain conditions which must be met by
August 31, 1996 with final closing to occur on or before September 10, 1996.
In November, 1995, the Company filed an amended plan of reorganization and
disclosure statement (the "Plan") for Treasure Bay Gaming and Resorts ("Treasure
Bay") in the United States Bankruptcy Court (the "Court") for the Southern
District of Mississippi. On May 10, 1996, the Court approved the Company's plan
and disclosure statement for submission to a vote of creditors. At the same
time, the Court approved two other competing plans, one by the noteholders of
Treasure Bay Gaming and Resorts and one by Treasure Bay's management (the
debtors). The Company's plan of reorganization for Treasure Bay contemplates
that, subject to various conditions, the various classes of secured and
unsecured creditors of Treasure Bay agree to accept modifications to, and
reductions in outstanding amounts of, Treasure Bay's outstanding obligations and
the Company make a cash equity contribution to acquire 100% of the equity
interests in Treasure Bay. After submission of the three reorganization plans to
creditors for a vote, both the debtor's reorganization plan and the Company's
reorganization plan received sufficient votes in the appropriate classes to be
submitted to the Court for possible confirmation. The noteholder plan was held
in abeyance. The Court scheduled a hearing on August 5, 1996, to consider
confirmation of the debtors' plan. In the event that the debtors' plan is
confirmed, the Court would adjourn the proceeding without considering the
Company's plan. The confirmation hearing began on August 5, 1996 and continued
through August 9, 1996. On August 9, 1996, the Court continued the hearing for
further proceedings scheduled to begin on August 22, 1996. No assurance can be
given that the debtors' plan will not be confirmed or that the Company's plan
will be considered for confirmation by the Court. Additionally, the Company may
elect not to proceed with its plan or the Company may amend its plan resulting
in changes to the amount and terms of debt of the reorganized debtor and equity
ownership acquired. The Company is incurring and expects to continue to incur
professional expenses and other expenses associated with legal proceedings
involving Treasure Bay and the Company's investment in Treasure Bay.
21
<PAGE>
Pursuant to the Note Purchase Agreement (the "12% Note Agreement") under which
Sahara Las Vegas Corp. issued $20 million principal amount of 12% notes due
November 15, 1999 (the "12% Notes"), if, as of the end of any quarter commencing
with the quarter ending December 31, 1997, SFHI Cash Flow (as defined in the 12%
Note Agreement) for the preceding four quarter period is less than $13.5
million, the Company will be required to redeem $3.5 million principal amount of
12% Notes at a redemption price of 100% of the principal amount, plus accrued
and unpaid interest thereon. Such obligation, if it arises, will be reduced on
the dollar for dollar basis to the extent that, during the period in which the
Company is so required to repurchase 12% Notes, the Company acquires 11% Notes
and pledges such acquired 11% Notes as additional collateral for the 12% Notes
or contributes the acquired 11% Notes to SFHI and causes the contributed SFHI
Notes to be canceled. The Company may, at its option, exclude a fiscal quarter
from the calculation of SFHI Cash Flow if SFHI undertakes certain capital
expenditures in such quarter and provides notification under the 12% Note
Agreement.
SFHI and SNC have modified the 12 1/8% affiliate note due August 1996 from SFHI
in favor of SNC, pursuant to which the maturity date is extended to December 31,
1997, monthly principal and interest payments are eliminated and partial
prepayments are allowed. The outstanding principal amount of the affiliate note
at June 30, 1996 was $5.0 million.
In the event that cash resources at the Santa Fe or Pioneer are insufficient to
meet operating or debt service requirements, Corporate may elect to make
contributions or loans to either SFHI or PHI to prevent an event of default
under debt instruments to which SFHI or Pioneer Finance Corp. is a party.
Additionally, the Company may purchase 11% Notes, 13 1/2% Notes and 10 1/4%
Debentures from time to time in the market and in privately negotiated
transactions or refinance existing indebtedness in order to reduce outstanding
indebtedness and debt service obligations.
22
<PAGE>
Liquidity - Santa Fe - The indenture under which the 11% Notes were issued
- --------------------
contains restrictions on payments to and investments in affiliates by SFHI,
including the Company. As a result of these restrictions, all of the cash flow
generated by SFHI is not currently and is not expected during the next twelve
months to be available for distribution to the Company. Approximately $7.8
million of the Company's current assets, including approximately $3.6 million of
cash and short term investments, were held by SFHI at June 30, 1996.
SFHI's principal uses of funds generated from operations are for interest
payments on indebtedness and capital expenditures to maintain and improve the
facility. Interest expense (net of debt discount amortization) for the nine
month periods ended June 30, 1996 and 1995 was $9.2 million and $9.2 million,
respectively. Santa Fe generated EBITDA of $9.8 million, including a $1.2
million intercompany gain on sale of land, for the nine months ended June 30,
1996, approximately 1.04 times interest expense (net of debt discount
amortization), during the same period. (See Results of Operations -Revenues;
Operating Expenses.) Management believes that EBITDA in future periods at the
Santa Fe may be adversely impacted by recent expansions of two competitors which
opened in April and May 1996 and by restricted access to the property beginning
April 1996, during construction of an interchange (at US 95 and Rancho) next to
the property. North bound access from US 95 was opened at the end of July 1996
and, the Company was advised by the Nevada Department of Transportation that
south bound access is anticipated to reopen in the early part of 1997. Also, the
Company was advised that construction work is planned during 1996 and 1997 at
the intersection of Lone Mountain Road and US95. The Company believes that when
completed the construction work will ultimately improve traffic flow to the
property. In addition, EBITDA in future periods will be impacted by increased
rental expense attributable to the leasing transactions (See Results of
Operations).
Interest expense attributable to the 11% Notes is expected to increase in fiscal
1996 compared to fiscal 1995 as a result of the expensing of interest costs on
approximately $32 million of debt commencing in July 1995, which were previously
capitalized in connection with the development of the Company's proposed
Parkville project. This increase was partially offset by the retirement of $21
million principal amount of 11% Notes in July 1995 pursuant to the terms of a
repurchase offer and by the retirement of an additional $5.6 million principal
amount of 11% Notes acquired in January 1996. (See Liquidity-Corporate, above).
Capital expenditures for the nine month period ended June 30, 1996 and 1995 were
$3.1 million and $14.4 million, respectively. The decrease is due to the
expansion project completed in December 1994. (See Capital Expenditures below).
23
<PAGE>
SFHI and SNC have modified the 12 1/8% affiliate note due August 1996 by SFHI in
favor of SNC, pursuant to which the maturity date is extended to December 31,
1997, monthly principal and interest payments are eliminated and partial
prepayments are allowed. The outstanding principal amount of the affiliate note
at June 30, 1996 was $5.0 million.
Management believes that, based on operations for the nine months ended June 30,
1996 and available resources, barring unforeseen circumstances, SFHI will have
sufficient cash resources to meet its operating requirements and debt service
requirements through the twelve month period ending June 30, 1997. However,
results for the three months ended June 30, 1996 were not as favorable as those
for the nine month period. If operating results do not improve in the future
compared to the third quarter ended June 30, 1996, management believes that SFHI
may not have sufficient resources to meet its operating requirements and debt
service requirements. In the event SFHI is unable to meet debt service payments
through current operations and available resources, SFHI will explore financing
alternatives, including but not limited to refinancing or modification of
existing indebtedness, and the incurrence of additional permitted indebtedness.
Liquidity - Pioneer - The indenture under which the $120.0 million principal
- -------------------
amount of First Mortgage Notes due 1998 ("13-1/2% Notes") were issued contains
restrictions on payments to and investments in affiliates by Pioneer Hotel Inc.,
including to the Company. As a result of these restrictions, all of the cash
flow generated by PHI is not currently, and is not expected during the next
twelve months to be, available for distribution to the Company. Approximately
$8.0 million of the Company's current assets, including approximately $5.7
million of cash and short term investments, were held by PHI at June 30, 1996.
PHI's principal uses of funds are for interest payments on indebtedness and
capital expenditures to maintain the facility. Interest expense for the nine
month period ended June 30, 1996 and 1995 was $7.3 million and $10.4 million,
respectively. The Pioneer generated EBITDA of $7.0 million for the nine months
ended June 30, 1996, approximately .96 times interest expense during the same
period. (See Results of Operations -Revenues and Operating Expenses.) Interest
expense attributable to the 13 1/2% Notes has decreased in 1996 compared to 1995
as a result of the retirement of an aggregate $42.8 million principal amount of
13 1/2% Notes. (See Liquidity - Corporate, above). Capital expenditures for the
nine month period ended June 30, 1996 and 1995 were $1.0 million and $3.6
million, respectively. The decrease is due to the expansion project completed in
December 1994. (See Capital Expenditures below).
24
<PAGE>
Management believes that, based on current operations, and available resources,
primarily equipment financing permitted under the 13-1/2% Note indenture,
barring unforeseen circumstances, the Pioneer will have sufficient cash
resources to meet its operating requirements and debt service requirements
through the twelve month period ending June 30, 1997, although no assurance can
be given to that effect. In the event PHI is unable to meet debt service
payments through current operations and available resources, PHI will explore
financing alternatives, including but not limited to refinancing or modification
of existing indebtedness, and the incurrence of additional permitted
indebtedness.
Capital Expenditures - In the nine-month period ended June 30, 1996, the
- --------------------
Company incurred approximately $4.4 million of capital expenditures, of which
approximately $1.2 million is attributable primarily to corporate administrative
office improvements at the Santa Fe and $175,000 is attributable to improvements
to the river side walk at the Pioneer.
Debt Obligations - For the remaining three months of fiscal 1996 and for fiscal
- -----------------
year 1997, scheduled maturities of long-term debt due to third parties are
$300,000 and $3.8 million, respectively, representing primarily principal
amortization payments under notes payable and capital leases. The scheduled
maturities applicable in fiscal 1996 and 1997 are $100,000 and $400,000 at the
Santa Fe and $100,000 and $300,000 at the Pioneer respectively.
Additionally, approximately $8.3 million of long-term debt due to third parties
is scheduled to mature during fiscal 1998 consisting primarily of $6.9 million
due in June 1998 at maturity of the 10 1/4% Debentures. Although management has
in the past and is currently exploring refinancing alternatives, as well as
possible dispositions of certain assets, in order to satisfy long-term debt
obligations as they become due, no assurance can be given that the Company will
be able to refinance some or all of its indebtedness or dispose of any assets.
Any such refinancing would be subject to the Company's future operations and the
prevailing market conditions at the time of such proposed refinancing and would
require the approval of the Nevada Gaming Authorities and potentially other
state gaming authorities. If the Company is ultimately unable to refinance such
debt prior to maturity, and/or obtain sufficient proceeds from asset
dispositions to repay the debt, and if the holders of the various debt
instruments were to demand payment upon the maturity dates, events of default
would occur which would lead to cross-defaults in other material agreements of
the Company including, without limitations, agreements relating to substantially
all of the outstanding long-term debt of the Company and its subsidiaries.
Related Parties - LICO, a company wholly-owned by Mr. Lowden, Chairman of the
- ---------------
Board, Chief Executive Officer and 51% stockholder of the Company, borrowed
$476,000 from
25
<PAGE>
Hacienda Hotel Inc., pursuant to an unsecured demand loan. The outstanding
balance of the loan including accrued interest was $623,000 as of June 30, 1996.
The demand loan to LICO bears interest at 2% over the prime rate.
In November 1993, Mr. Lowden and Bank of America entered into a personal loan
agreement under which the principal balance of the loan is amortized through
quarterly principal payments through April 1998, with any remaining principal
balance due July 31, 1998. In July 1996, Mr. Lowden prepaid $1.9 million
principal amount of the loan balance. At July 31, 1996, the principal balance of
the loan was approximately $927,000. The loan is secured by substantially all of
the common stock of the Company owned by Mr. Lowden (the "Pledged Shares"). Mr.
Lowden's loan agreement provides that in the event the market value of the
Pledged Shares is less than three times the outstanding loan balance, the bank,
at its sole option, may require either an immediate reduction in the outstanding
balance or the pledging of additional collateral acceptable to the bank such
that the value of the pledged collateral is at least three times the outstanding
loan balance. If an event of default were to occur under Mr. Lowden's personal
loan with the bank, and if the bank acquired the Pledged Shares upon
foreclosure, Mr. Lowden's ownership of the Company's outstanding common stock
would be reduced to below 50%. If Mr. Lowden ceases to own more than 50% of the
outstanding shares of the Company's common stock, an event of default would
result under certain of the Company's long-term indebtedness, which could result
in cross-defaults under substantially all of the Company's other long-term
indebtedness.
Private Securities Litigation Reform Act
- ----------------------------------------
Certain statements in this Quarterly Report on Form 10-Q which are not
historical facts are forward looking statements, such as statements relating to
future operating results, existing and expected competition, financing and
refinancing sources and availability, plans for future development or expansion
activities and capital expenditures. Such forward looking statements involve a
number of risks and uncertainties that may significantly affect the Company's
liquidity and results in the future and, accordingly, actual results may differ
materially from those expressed in any forward looking statements. Such risks
and uncertainties include, but are not limited to, those related to effects of
competition, leverage and debt service and ability, financing and refinancing
efforts, general economic conditions, changes in gaming laws or regulations
(including the legalization of gaming in various jurisdictions) and risks
related to development and construction activities.
Effects of Inflation
- --------------------
The Company has been generally successful in recovering costs associated with
inflation through price adjustments in its hotel and contract sales operations.
Any such increases in costs associated with casino operations and maintenance of
properties may not be completely recovered by the Company.
26
<PAGE>
SANTA FE GAMING CORPORATION
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company has previously reported that from August 1994 to October 1995,
complaints alleging unlawful interference by the Company with employee and union
rights under the National Labor Relations Act were filed with the National Labor
Relations Board (the "NLRB") by several unions relating to the Sahara, Hacienda,
Santa Fe and Pioneer, including allegations of unilateral changes in terms and
conditions of employment at Santa Fe. Hearings before administrative law judges
of the NLRB involving the Santa Fe commenced January 29, 1996. In order to avoid
the substantial cost of continuing the hearings, the Company, the NLRB and the
unions at the Santa Fe reached the following settlement with respect to the
various complaints. Complaints that the Santa Fe interfered with protected union
activity have been informally settled. The settlement agreement states the Santa
Fe does not admit it has violated the law, but provides for the posting of a
Notice to Employees for 60 days at the Santa Fe, stating in substance that the
employer will not interfere with the employees rights to engage in concerted or
union activities and does not require payment by the Santa Fe of any monies.
Another complaint based upon the unions' disputed claim to be the bargaining
representative of certain Santa Fe employees has by agreement with the NLRB and
the unions been put on hold pending the resolution of SFHI's appeal to the
United States Court of Appeals for the District of Columbia (Washington, D.C.).
If that appeal is decided in SFHI's favor, the complaint will be dismissed with
respect to that matter, the results of the election will be voided and SFHI will
not be required to bargain with the unions. If the appeal is decided in the
unions' favor, their right to bargain will be acknowledged by SFHI. In that
event, SFHI will restore wages or benefits employees may have lost, if any, in
connection with events referred to in that complaint.
It is possible that after reviewing the record and hearing oral arguments which
are scheduled for October 7, 1996, the Court of Appeals may remand the case to
the NLRB with directions that the NLRB decide whether the unions' use of a voter
eligibility list during the election was lawful or unlawful. That conduct by the
unions and the NLRB's failure to review it are the bases for the Santa Fe's
appeal.
The only Complaints that continue to be litigated deal with the Santa Fe's
contention that the solicitation, including handbilling by off-duty employees at
certain entrance to the Santa Fe, is prohibited by Santa Fe's no solicitation
policies; and the unions' claim that their handbills can be distributed by off-
duty employees anywhere on the Santa Fe property.
On February 13, 14, 15 and May 28, 1996, a hearing was conducted by a NLRB
Administrative Law Judge in respect to complaints alleging interference by the
Pioneer Hotel & Gambling Hall with employee rights protected by federal law
which are in substance that the employer will not interfere with the employees
federal protected rights to engage in concerted or union activities. Management
believes the complaints are without merit, and intends to vigorously defend
against the allegations. During the course of the hearing, one complaint was
amended to include the
27
<PAGE>
discharge of a manager. Should the complaints ultimately be decided adversely to
the Pioneer, the Pioneer would be required to make certain employees whole for
wages and benefits they may have lost related to the allegations of the
complaints and the manager would be entitled to reinstatement, backpay and
benefits, less monies he earned from the date of discharge to reinstatement or
rejection of an unconditional offer thereof. Post hearing briefs were filed and
the case has been submitted for decision and recommended order which has not as
yet been issued.
NLRB complaints involving the Sahara and Hacienda alleging interference with
employees' protected rights were withdrawn shortly after the sale by the Company
of those properties. However, pursuant to agreements with the purchasers, the
Company is responsible for NLRB complaints issued against the Sahara and
Hacienda alleging the decision by those properties several months prior to the
sales to discontinue wage deductions for dues payable by employees to Culinary
Workers Local 226 and Bartenders Local 165, was unlawful. Management believes
those Complaints are without merit and is vigorously defending against the
allegations. On May 13, and 14, 1996, a hearing on the Complaint was conducted
by a NLRB Administrative Law Judge. Post hearing briefs were filed and the case
has been submitted for decision and recommended order which has not as yet been
issued. If it is ultimately determined the Company improperly ceased such
deductions, the Company would be required to pay the difference between dues
owed by employees and dues voluntarily paid during the periods in question.
In the previously disclosed consolidated legal proceedings of Poulos v. Caesar's
World, Inc., et al. and Ahern v. Caesar's World, Inc., et al. and the separate
legal proceeding of Schrier v. Caesar's World, Inc., et al., the plaintiffs'
class certification motion has been denied, with no leave to amend, and the
complaints in the consolidated Poulos and Ahern cases were dismissed without
prejudice. The plaintiffs have filed amended complaints in the consolidated
cases.
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a vote of Security Holders
None
28
<PAGE>
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
A. Exhibits:
10.129 Master lease agreement by and between PDS Financial
Corporation and Santa Fe Hotel, Inc. dated May 30,
1996.
10.130 Lease schedule No. 1 by and between PDS Financial
Corporation and Santa Fe Hotel, Inc. dated May 30,
1996.
10.131 Purchase/Renewal option by and between PDS
Financial Corporation and Santa Fe Hotel, Inc.
dated May 30, 1996.
10.132 Amended and Restated Hacienda Adventure Club
Acquisition and Assignment Agreement by and among
Hacienda Hotel Inc., Resorts Marketing
International, Alpine - Oasis Membership, LLC. and
Brett Torino date July 18, 1996.
10.133 Guaranty of Payment and Performance (Sahara Gaming
Corporation) dated July 18, 1996.
10.134 Guaranty of Payment and Performance (Oasis Las Vegas
Motor Coach Park, L.P.) dated July 24, 1996.
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
B. Reports
None
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 authorized.
SANTA FE GAMING CORPORATION, Registrant
By: /s/ Thomas K. Land
-----------------------------------------
Thomas K. Land, Chief Financial Officer
Dated: August 13, 1996
29
<PAGE>
Santa Fe Gaming Corporation
Las Vegas, Nevada
We have made a review, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants, of the unaudited interim financial information of Santa Fe Gaming
Corporation and subsidiaries for the periods ended June 30, 1996 and 1995, as
indicated in our report dated August 12, 1996 because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 is
incorporated by reference in Registration Statement No. 33-44700 on Form S-8 and
in post-effective Amendment No. 1 to Registration Statement No. 33-7053 on Form
S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that act.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 12, 1996
30
<PAGE>
Exhibit 10.129
MASTER LEASE AGREEMENT
----------------------
THIS MASTER LEASE AGREEMENT ("Lease") is made and entered into this 30th
day of May, 1996, by and between PDS Financial Corporation, a Minnesota
corporation ("Lessor"), whose address is 6442 City West Parkway, Eden Prairie,
MN 55344 and Santa Fe Hotel, Inc., a Nevada corporation ("Lessee"), whose
address is 4949 North Rancho Drive, Las Vegas, NV 89130.
Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor in
accordance with the terms and conditions contained herein, certain equipment
more fully described in the Lease Schedule or Schedules, referred to herein as a
"Lease Schedule," as may from time to time be executed by Lessee. All equipment
described in such Lease Schedules shall be collectively referred to as the
"Equipment" and individually referred to as a "Unit" and is to be installed in
and to be used in connection with the business location described in a
particular Lease Schedule ("Premises").
NOW THEREFORE, Lessor and Lessee agree as follows:
1. LEASE. This Lease establishes the general terms and conditions by which
-----
Lessor shall lease the Equipment to Lessee. Each Lease Schedule shall be in the
form provided by Lessor and shall incorporate by reference the terms of this
Lease.
2. TERM: RENT AND PAYMENT; RENEWAL.
--------------------------------
2.1 TERM. The term of this Lease shall commence on the date set forth in
each Lease Schedule (the "Commencement Date") and continue as specified in such
Lease Schedule ("Term").
2.2 RENT AND PAYMENT. Lessee's obligation to pay rent for the Equipment
shall commence on the Commencement Date and continue for the Term. The Basic
Rent set forth on the Lease Schedule shall be payable on the Commencement Date
and on the same day of each month thereafter ("Rent Date"). Any amounts payable
by Lessee, other than Basic Rent, shall be deemed Additional Charges and shall
be payable on the Rent Date next following the date upon which they accrue or
the last day of the Term, whichever is earlier. Lessee shall make all payments
at the address of Lessor set forth above or at such other address as Lessor may
designate in writing. As used herein, the term "Rent" shall mean all Basic Rent
and Additional Charges.
2.3 LATE CHARGE. If any Rent is not received by Lessor or its assignees
within ten (10) days of when due, a late charge on such Rent shall be due and
payable with such Rent in an amount equal to four percent (4%) of the amount
past due or any part thereof, as reimbursement for administrative costs and not
as a penalty.
<PAGE>
2.4 LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
comply with any of its covenants or obligations herein, Lessor may, at its
option, perform such covenants or obligations on Lessee's behalf without thereby
waiving such conditions or obligations or the failure to comply therewith and
all sums advanced by Lessor in connection therewith shall be repayable by Lessee
as Additional Charges. No such performance shall be deemed to relieve Lessee of
its obligations herein.
3. CERTIFICATE OF ACCEPTANCE. Lessee shall deliver to Lessor a certificate of
-------------------------
delivery, installation and acceptance ("Certificate of Acceptance") in the form
provided by the Lessor.
4. NET LEASE. This Lease including each Lease Schedule is a net lease and
---------
Lessee's obligation to pay all Rent due and the rights of Lessor or its
assignees in, and to, such Rent shall be absolute and unconditional under all
circumstances, notwithstanding: (i) any setoff, abatement, reduction,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, its assignees, the manufacturer or seller of any Unit, or any other
person for any reason whatsoever, including, without limitation, any breach by
Lessor of this Lease; (ii) any defect in title, condition, operation, fitness
for use, or any damage to or destruction of, the Equipment; (iii) any
interruption or cessation of use or possession of the Equipment for any reason
whatsoever; or (iv) any insolvency, bankruptcy, reorganization or similar
proceedings instituted by or against Lessee.
5. LOCATION: USE: MAINTENANCE; IDENTIFICATION AND INSPECTION.
---------------------------------------------------------
5.1 LOCATION, USE, MAINTENANCE AND REPAIRS. (a) Lessee shall keep and use
the Equipment on the Premises and shall not relocate or remove any Unit unless
Lessor consents, in writing, prior to its relocation or removal. (b) Lessee
shall at all times and, at its sole cost and expense, properly use and maintain
the Equipment in good operating condition, other than the normal wear and tear,
and make all necessary repairs, alterations and replacements thereto
(collectively, "Repairs"), all of which shall immediately become the property of
Lessor and subject to this Lease. Lessee shall comply with manufacturer
instructions relating to the Equipment, and any applicable laws and governmental
regulations. (c) Lessee shall pay all costs and expenses associated with removal
and return of the Equipment.
5.2 IDENTIFICATION AND INSPECTION. Upon request by Lessor, Lessee shall
mark each Unit conspicuously with appropriate labels or tags furnished by
Lessor and maintain such markings through the Term to clearly disclose that said
Unit is being leased from Lessor. Subject to Lessee's reasonable security
requirements, Lessee shall permit Lessor's representatives to enter the Premises
where any Unit is located to inspect such Unit.
6. LOCATION: LIENS AND ENCUMBRANCES.
--------------------------------
6.1 PERSONAL PROPERTY. Each Unit is personal property and Lessee shall not
affix any Unit to realty so as to change its nature to a fixture or real
property and agrees that each Unit shall remain personal property during the
Term. LESSOR
2
<PAGE>
EXPRESSLY RETAINS OWNERSHIP AND TITLE TO THE EQUIPMENT. LESSEE HEREBY AGREES
THAT IT SHALL BE RESPONSIBLE FOR ALL OF LESSORS OBLIGATIONS AS REQUIRED BY THE
STATE GAMING LAWS AND REGULATIONS REGARDING MAINTENANCE, USE, POSSESSION AND
OPERATION OF THE EQUIPMENT. Lessee hereby authorizes, empowers, and grants a
limited power of attorney to Lessor to record and/or execute and file, on
Lessee's behalf, any certificates, memorandums, statements, refiling, and
continuations thereof as Lessor deems reasonably necessary or advisable to
preserve and protect its interest hereunder. The parties intend to create a
lease agreement and the relationship of lessor and lessee between themselves.
Nothing in this Lease shall be construed or interpreted to create or imply the
existence of a finance lease or installment lease contract. Lessor makes no
representation regarding the treatment of this Lease, the Equipment or the
payment of obligations under this Lease for financial statement reporting or tax
purposes.
6.2 LIENS AND ENCUMBRANCES. Unless otherwise provided herein, Lessee shall
not directly or indirectly create, incur or suffer a mortgage, claim, lien,
charge, encumbrance or the legal process of a creditor of Lessee of any kind
upon or against this Lease or any Unit. Lessee shall at all times protect and
defend, at its own cost and expense, the title of Lessor from and against such
mortgages, claims, liens, charges, encumbrances and legal processes of creditors
of Lessee and shall keep all the Equipment free and clear from all such claims,
liens and legal processes. If any such lien or encumbrance is incurred, Lessee
shall immediately notify Lessor and shall take all actions required by Lessor to
remove the same.
7. RETURN OF EQUIPMENT.
-------------------
7.1 DUTY OF RETURN. At the expiration of the Term or upon termination of
the Lease, Lessee at its expense shall return each Unit to Lessor or its
designee at the destination specified by Lessor, in accordance with appropriate
gaming laws and regulations. Each Unit shall conform to all of the
manufacturer's specifications and gaming laws and regulations with respect to
normal function, capability, design and condition (less normal wear and tear).
7.2 FAILURE TO RETURN. If Lessee fails to return the Equipment or any
portion thereof, as provided above, within fourteen (14) days following
expiration of the term or termination of the Lease, then Lessee shall pay to
Lessor an additional month's Rent for each month, or any portion thereof, that
Lessee fails to comply with the terms of this return provision, until all of the
Equipment is returned, as provided herein.
8. RISK OF LOSS: INSURANCE.
-----------------------
8.1 RISK OF LOSS. Lessee shall bear the risk of all loss or damage to any
Unit or caused by any Unit during the period from the time the Unit is shipped
by its vendor until the time it is returned as provided herein.
8.2 UNIT REPLACEMENT. If any Unit is lost, stolen, destroyed, seized by
governmental action or, in Lessee's opinion or Lessor's opinion, damaged ("Event
of Loss"), this Lease shall remain in full force and effect without abatement of
Rent and Lessee shall promptly replace such Unit at its sole expense with a Unit
3
<PAGE>
of equivalent value and utility, and similar kind and in substantially the same
condition as the replaced Unit immediately prior to the Event of Loss. Title to
such replacement unit immediately shall vest and remain in Lessor, and such unit
shall be deemed a Unit under this Lease. Upon such vesting of title and
provided Lessee is not in default under this Lease, Lessor shall cause to be
paid to Lessee or the vendor of the replacement unit any insurance proceeds
actually received by Lessor for the replacement Unit. Lessee shall promptly
notify Lessor of any Event of Loss and shall provide Lessor with and shall enter
into, execute and deliver such documentation as Lessor shall request with
respect to the replacement of any such Unit.
8.3 INSURANCE. Lessee shall obtain and maintain in full force and effect
all risk, full replacement cost property damage insurance on the Premises: (i)
comprehensive personal liability, (ii) all risk property damage on the Equipment
in amounts reasonably acceptable to Lessor, and (iii) workers compensation
insurance. Such insurance shall: (i) name Lessor and its Assignees, if any, as
additional insureds and first loss payees as their interests may appear; and
(ii) provide that the policy may not be canceled or materially altered without
thirty (30) days prior written notice to Lessor and its Assignees. All such
insurance shall be placed with companies having a rating of at least A, Class
XII or better by Best's rating service. Lessee shall furnish to Lessor, upon
request and throughout the Term, insurance certificates of a kind satisfactory
to Lessor and its Assignees showing the existence of the insurance required
hereunder and premium paid.
9. LESSOR'S PURCHASE AND PERFORMANCE. Upon receipt of a Lease Schedule
---------------------------------
executed and delivered by Lessee, Lessee shall bear all responsibilities and
perform all obligations of Lessor thereunder other than payment of the purchase
price.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
4
<PAGE>
10. TAXES.
-----
10.1 TAXES. Lessee agrees to report, file, pay promptly when due to the
appropriate taxing authority and indemnify, defend, and hold Lessor harmless
from and against any and all taxes (including gross receipts), assessments,
license fees and other federal, state or local governmental charges of any kind
or nature, together with any penalties, interest or fines related thereto
(collectively, "Taxes") that pertain to the Equipment, its purchase, or this
Lease, except such Taxes based solely upon the net income of Lessor.
10.2 LESSOR'S FILING OF TAXES. Notwithstanding the foregoing, Lessor at
its election may report and file sales and/or use taxes which are filed and paid
periodically through the Term, and the amounts so due may be invoiced to Lessee
and payable as specified therein.
11. INDEMNIFICATION. Except for the gross negligence of Lessor, its employees,
---------------
agents or assignees, Lessee hereby assumes liability for and agrees to
indemnify, defend, protect, save and hold harmless the Lessor, its agents,
employees, directors and assignees from and against any and all losses, damages,
injuries, claims, penalties, demands and all expenses, legal or otherwise
(including reasonable attorneys' fees) of whatever kind and nature arising from
the purchase, ownership, use, condition, operation or maintenance of the
Equipment, until the Equipment is returned to Lessor. Any claim, defense,
setoff, or other right of Lessee against any such indemnified party shall not in
any way affect, limit, or diminish Lessee's indemnity obligations hereunder.
Lessee shall notify Lessor immediately as to any claim, suit, action, damage, or
injury related to the Equipment of which Lessee has actual or other notice and
shall, at its own cost and expense, defend any and all suits which may be
brought against Lessor, shall satisfy, pay and discharge any and all judgments
and fines that may be recovered against Lessor in any such action or actions,
provided, however, that Lessor shall give Lessee written notice of any such
claim or demand. Lessee agrees that its obligations under this Section 11 shall
survive the expiration or termination of this Lease.
12. REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to Lessor
------------------------------
that: i) the making of this Lease and any Lease Schedule executed by Lessee is
duly authorized on the part of Lessee and that upon due execution thereof by
Lessee and Lessor they shall constitute valid obligations binding upon, and
enforceable against, Lessee in accordance with their terms; ii) neither the
making of this Lease or such Lease Schedule, nor the due performance by Lessee,
including the commitment and payment of the Rent, shall result in any breach of,
or constitute a default under, or violation of, Lessee's Articles of
Incorporation, Bylaws, or any agreement to which Lessee is a party or by which
Lessee is bound; iii) no approval or consent not already obtained or withholding
of objection is required from any governmental authority with respect to the
entering into, or performance of this Lease or any Lease Schedule by Lessee; iv)
Lessee has obtained all licenses and permits required under applicable laws or
regulations (the "Gaming Laws") for the operation of its business.
13. DISCLAIMERS; MANUFACTURERS WARRANTIES. LESSEE ACKNOWLEDGES THAT EACH UNIT
-------------------------------------
IS OF THE DESIGN, CAPACITY AND MANUFACTURE SPECIFIED FOR AND BY THE LESSEE AND
5
<PAGE>
THAT LESSEE IS SATISFIED THAT THE SAME IS SUITABLE FOR LESSEE'S PURPOSES.
LESSEE AGREES, REGARDLESS OF CAUSE, NOT TO ASSERT ANY CLAIM WHATSOEVER AGAINST
LESSOR FOR LOSS OF ANTICIPATORY PROFITS OR CONSEQUENTIAL DAMAGES. LESSOR
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE EQUIPMENT WHETHER
EXPRESSED OR IMPLIED. Without limiting the generality of the foregoing it is
intended by the parties to exclude any and all implied warranties of
merchantability and fitness for particular purposes. NO SALESMAN OR AGENT OF
LESSOR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OF THIS LEASE OR MAKE ANY
REPRESENTATION REGARDING THE EQUIPMENT.
14. ASSIGNMENT OF LEASE.
-------------------
14.1 ASSIGNMENT BY LESSOR. Lessee acknowledges and agrees that Lessor may
assign, mortgage, or otherwise transfer its interest thereunder and/or in the
Equipment to others ("Assignees") without consent of Lessee, provided however
that Lessee and the Nevada Gaming Control Board ("Control Board") shall be
notified of any assignment. Accordingly, Lessee and Lessor agree that upon such
assignment, Lessee (i) shall acknowledge such assignment in writing by executing
a Notice, Consent and Acknowledgment of Assignment furnished by Lessor; (ii)
shall promptly pay all Rent when due to the designated Assignees,
notwithstanding any defense, setoff, abatement, recoupment, reduction or
counterclaim whatsoever that Lessee may have against Lessor; (iii) shall not
permit the Lease or Lease Schedule so assigned to be amended or the terms
thereof waived without the prior written consent of the Assignees; (iv) shall
not require the Assignees to perform any obligations of Lessor under such Lease
Schedule; (v) shall not terminate or attempt to terminate the Lease or Lease
Schedule on account of any default by Lessor; and (vi) acknowledges that any
Assignee may reassign its rights and interest with the same force and effect as
the assignment described herein.
14.2 ASSIGNMENT OR SUBLEASE BY LESSEE. Lessee shall not assign this Lease
or any Lease Schedule or assign its rights in or sublet the Equipment, or any
interest therein without Lessor's and its Assignee's prior written consent,
which consent shall not be unreasonably withheld.
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<PAGE>
15. FINANCIAL INFORMATION; FURTHER ASSURANCES.
-----------------------------------------
15.1 FINANCIAL INFORMATION. Throughout the Term, Lessee shall deliver to
Lessor copies of Santa Fe Gaming Corporation's (Lessee's parent corporation)
current financial information representing the financial condition and
operations of Lessee as well as such other information regarding Lessee
reasonably requested by Lessor or its Assignees.
15.2 FURTHER ASSURANCES. Lessee shall execute and deliver to Lessor, such
other documents, and take such further action as Lessor may request, in order to
effectively carry out the intent and purposes of this Lease and the Lease
Schedules. All documentation shall be in a form acceptable to Lessor and its
Assignees. Lessee shall provide all necessary notices to the Control Board.
15.3 LEASE AGREEMENT. If any court of competent jurisdiction should
determine that this Lease constitutes a security arrangement as opposed to a
true lease, the parties then agree that this Lease shall constitute a security
agreement within the meaning of the Uniform Commercial Code and that the Lessor
shall be considered a secured party under the provisions thereof and shall be
entitled to all the rights and remedies of a secured party and Lessee, as
debtor, grants to Lessor, as secured party, a security interest in the
Equipment; provided nothing herein shall be construed nor shall the inclusion of
this paragraph be interpreted as derogating from the stated intent and
contractual understanding of the parties that this is a true lease.
16. DEFAULT BY LESSEE; REMEDIES.
---------------------------
16.1 DEFAULT BY LESSEE. Lessee shall be in default upon the occurrence of
any one of the following events ("Event of Default"): (a) failure to pay Rent
when due; (b) failure to perform any other term, condition or covenant of this
Lease or any Lease Schedule; (c) Lessee ceases or is enjoined, restrained or in
any way prevented from conducting business as a going concern; (d) if any
proceeding is filed by or against the Lessee for an assignment for the benefit
of creditors, a voluntary or involuntary petition in bankruptcy, or if Lessee is
adjudicated a bankrupt or an insolvent; (e) Lessee attempts to remove, sell,
transfer, encumber, part with possession or sublet the Equipment or any Unit
thereof; (f) any Unit is attached, levied upon, encumbered, pledged, or seized
under any judicial process; (g) any warranty or representation made or furnished
to the Lessor by or on behalf of the Lessee is false in any material respect
when made or furnished; (h) failure to maintain in full force and effect the
licenses and permits required under the Gaming Laws for the operation of
Lessee's business; (i) failure to comply with all gaming regulations; or (j) any
change in control of the Lessee or its business.
16.2 LESSOR REMEDIES. LESSEE ACKNOWLEDGES THAT THE ENFORCEMENT OF THIS
LEASE REQUIRES APPROVAL OF THE CONTROL BOARD AND/OR NEVADA GAMING COMMISSION
("COMMISSION") AND THAT COPIES OF ALL DEFAULT NOTICES, LEGAL PROCEEDINGS, ETC.
WILL BE FORWARDED TO THE APPROPRIATE AGENCY AS REQUIRED BY STATE LAW, REGULATION
OR UPON REQUEST OF THE CONTROL BOARD OR COMMISSION. Lessee further acknowledges
that upon any Event of Default, and at any time thereafter, Lessor, may in
addition to any and all rights and remedies it may have at law or in equity,
7
<PAGE>
without notice to or demand upon Lessee at its sole option: (i) declare the
aggregate Rent then accrued and unpaid together with the balance of any Rent to
be immediately due and payable; (ii) proceed by appropriate court action or
other proceeding, either at law or in equity to enforce performance by Lessee of
any and all covenants of this Lease; (iii) on written notice to Lessee,
terminate any of Lessee's rights under this Lease or Schedule in which event
Lessee shall immediately surrender and return the Equipment to Lessor pursuant
to the provisions hereof; and (iv) subject to appropriate gaming laws and
regulations, and required approvals, take possession, sell and/or re-lease any
Unit as Lessor may desire, in its sole discretion. Lessor's rights and remedies
herein are cumulative and in addition to any rights or remedies available at law
or in equity including the Uniform Commercial Code, and may be exercised
concurrently or separately. Lessee shall pay all costs, expenses, losses,
damages and legal costs (including reasonable attorneys' fees) incurred by
Lessor and its Assignees as a result of enforcing any terms or conditions of the
Lease or any Schedules. A termination hereunder shall occur only upon written
notice by Lessor to Lessee and no repossession or other act by Lessor after
default shall relieve Lessee from any of its obligations to Lessor hereunder
unless Lessor so notifies Lessee in writing.
17. MISCELLANEOUS.
-------------
17.1 NOTICES. Except as otherwise required by law, all notices required
herein shall be in writing and sent by prepaid certified mail or by courier,
addressed to the party at the address of the party specified herein or such
other address designated in writing. Notice shall be effective upon the earlier
of its receipt or four (4) days after it is sent.
17.2 SURVIVAL OF INDEMNITIES. All indemnities of Lessee shall survive and
continue in full force and effect for events occurring prior to the return of
the Equipment to the Lessor, notwithstanding the expiration or termination of
the Term.
17.3 COUNTERPARTS. Each Lease and any Lease Schedule may be executed in
counterparts.
17.4 MULTIPLE LESSEES. If more than one Lessee is named in this Lease or a
Lease Schedule the liability of each shall be joint and several.
17.5 TITLES. Section titles are not intended to have legal effect or limit
or otherwise affect the interpretation of this Lease or any Lease Schedule.
17.6 WAIVER. No delay or omission in the exercise of any right or remedy
herein provided or otherwise available to Lessor, or prior course of conduct,
shall impair or diminish Lessor's rights to exercise the same or any other right
of Lessor; nor shall any obligation of Lessee hereunder be deemed waived. The
acceptance of rent by Lessor after it is due shall not be deemed to be a waiver
of any breach by Lessee of its obligations under this Lease or any Lease
Schedule.
17.7 SUCCESSORS. This Lease and each Lease Schedule shall inure to the
8
<PAGE>
benefit of and be binding upon Lessor and Lessee and their respective successors
in interest.
17.8 NOT AN OFFER. Neither this Lease nor any Lease Schedule shall be
deemed to constitute an offer or be binding upon Lessor until executed by
Lessor's authorized officer.
17.9 SEVERABILITY. If any provisions of this Lease or any Lease Schedule
shall be held to be invalid or unenforceable, the validity and enforceability of
the remaining provision thereof shall not be affected or impaired in any way.
17.10 MODIFICATION. Lessor and Lessee agree that any modifications to this
Lease or any Lease Schedule shall be in writing and shall be signed by both
parties and their last known assignees, if any.
17.11 LEASE IRREVOCABLE. This Lease is irrevocable for the full Term
hereof and the Rent shall not abate by reason of termination of Lessee's right
of possession and/or the taking of possession by the Lessor or for any other
reason.
17.12 GOVERNING LAW. This Lease and each Lease Schedule are entered into
under and shall be construed in accordance with, and governed by the laws of the
State of Nevada.
17.13 RIDERS. In the event that any riders are attached hereto and made a
part hereof and if there is a conflict between the terms and provisions of any
rider, including any Lease Schedule and the terms and provisions herein, the
terms and provisions of the rider or Lease Schedule shall control to the extent
of such conflict.
17.14 ENTIRE AGREEMENT. LESSEE REPRESENTS THAT IT HAS READ, RECEIVED,
RETAINED A COPY OF AND UNDERSTANDS THIS LEASE, AND AGREES TO BE BOUND BY ITS
TERMS AND CONDITIONS. LESSOR AND LESSEE AGREE THAT THIS LEASE, ALL RIDERS,
LEASE SCHEDULES, OR EXHIBITS HERETO, AND THE LEASE SCHEDULES SHALL CONSTITUTE
THE ENTIRE AGREEMENT AND SUPERSEDE ALL PROPOSALS, ORAL OR WRITTEN, ALL PRIOR
NEGOTIATIONS AND ALL OTHER COMMUNICATIONS BETWEEN LESSOR AND LESSEE WITH RESPECT
TO ANY UNIT.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed on the date set forth by their authorized representatives.
LESSEE: LESSOR:
SANTA FE HOTEL, INC., PDS FINANCIAL CORPORATION,
A NEVADA CORPORATION A MINNESOTA CORPORATION
BY:THOMAS K. LAND_____________ BY:_JOHAN FINLEY______________
ITS:__SVP AND CFO_____________ ITS:_PRESIDENT________________
9
<PAGE>
Exhibit 10.130
LEASE SCHEDULE NO. 1
TO MASTER LEASE AGREEMENT
This Lease Schedule No. 1 is attached to and made a part of the Master
Lease Agreement ("Lease") between PDS Financial Corporation, a Minnesota
corporation ("Lessor"), and Santa Fe Hotel, Inc., a Nevada corporation
("Lessee"), dated May 30, 1996.
1. Description of Equipment: The Equipment listed on Attachment "A" to
this Lease Schedule is added to the Equipment leased under the Lease
and made subject to the provisions of the Lease.
2. Commencement Date: The Commencement Date for the Equipment leased
under this Schedule will be the date the Equipment is delivered and
accepted by the Lessee .
3. Term: The Term shall commence on the Commencement Date and shall
continue for 36 consecutive months.
4. The Basic Rent due each month during the Term for the Equipment
described herein is as follows:
a. The first payment in the amount of $2,635.06 ("Interim Rent")
which is an amount equal to $1,317.53 times the number of days
from the Commencement Date to the first of the month following
the Commencement Date shall be due and payable on the
Commencement Date.
b. The first payment of the Basic Rent in the amount of $39,525.93
is due on June 26, 1996. Thereafter, payment of the Basic Rent is
due on the first day of each month for thirty-five (35)
consecutive months.
c. In addition to the monthly Basic Rent and Interim Rent due as set
forth above, Lessee shall pay Lessor an amount equal to all taxes
which may be imposed by any Federal, State or local authority
from time to time.
5. Security Deposit: Lessee shall pay to Lessor, due upon execution of
this Schedule, a Security Deposit in the amount of $39,525.93. The
Security Deposit will be held by the Lessor for the Term of the Lease
and will be returned to Lessee upon satisfactory completion of the
terms and conditions of the Lease.
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<PAGE>
6. All of the provisions of the Lease are incorporated by reference
herein as if set forth fully herein.
Dated: May 30, 1996
SANTA FE HOTEL, INC., PDS FINANCIAL CORPORATION,
A NEVADA CORPORATION A MINNESOTA CORPORATION
BY:THOMAS K. LAND___________ BY:_JOHAN FINLEY_______________
ITS:_SVP AND CFO____________ ITS:__PRESIDENT________________
2
<PAGE>
ATTACHMENT "A"
This Attachment A is attached to and made a part of the Lease Schedule No.
1 to Master Lease Agreement between PDS Financial Corporation, a Minnesota
corporation ("Lessor"), and Santa Fe Hotel, Inc., a Nevada corporation
("Lessee"), dated May 30, 1996.
Qty. Description
---- -----------
One IGT Player Tracking System Complete per IGT order #100134 including:
1415 Player Tracking Units/ IGT Machines
462 Player Tracking Units/ non-IGT Machines
79 DCU's/ part number 91626500
60 Player Tracking Unit/WAP Machines
5 Smart Card Readers
Misc. wiring, spare parts kits (Large and Small)
3
<PAGE>
Exhibit 10.131
PURCHASE/RENEWAL OPTION
TO LEASE SCHEDULE NO. 1
THIS PURCHASE/RENEWAL OPTION IS ATTACHED TO AND MADE A PART OF LEASE SCHEDULE
NO. 1 AND THE MASTER LEASE AGREEMENT ("LEASE") BETWEEN PDS FINANCIAL
CORPORATION, A MINNESOTA ("LESSOR"), AND SANTA FE HOTEL, INC., A NEVADA
CORPORATION ("LESSEE") EACH DATED MAY 30, 1996.
If Lessee has not been in default under the terms of the Lease, at the
expiration of the Term, Lessor grants Lessee an option to (a) purchase (the
"Purchase Option") all but not less than all of the Equipment described on the
above Lease Schedule for the sum equal to the fair market value of the Equipment
as of the date of expiration of the Term as determined by an independent
appraiser mutually selected by Lessor and Lessee (the "Exercise Price") or (b)
renew the Lease Term for a period of one year (the "Renewal Option"). A written
notice of exercise of the Purchase Option or the Renewal Option must be given by
Lessee 120 days prior to the expiration of the Term or any renewal term. Upon
timely receipt of such notice of exercise, receipt of the payment of all Rent
due under the Lease and/or payment of the Exercise Price, Lessor will, with
exercise of the purchase option, execute and deliver to Lessee a Bill of Sale
for the Equipment described in the Lease Schedule. Upon failure of the Lessor to
so deliver a Bill of Sale, this Purchase/Renewal Option to Lease Schedule No. 1
shall then constitute a conveyance of the Equipment in accordance herewith.
Payment in full of the Exercise Price shall be due and payable on or before the
expiration of the Term. If Lessee fails to exercise the Purchase Option or the
Renewal Option, Lessee shall, at Lessor's expense, return the Equipment to
Lessor at a facility designated by Lessor, according to the terms of the Lease.
Lessee shall in all respects remain obligated under the Lease for payment of
Rent, care, maintenance, delivery, use and insurance of the Equipment until
Lessor inspects and accepts the Equipment. In the event it shall at any time be
determined that by reason of the options hereby given or otherwise that the
lease of the Equipment to which the Purchase Option or the Renewal Option
applies was in fact a sale to the Lessee of the Equipment, the Lessee agrees
that neither it nor its successors or assigns has or will have any claim or
cause of action against Lessor, its successors or assigns, for any reason for
loss sustained by virtue of such determination.
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<PAGE>
Lessee acknowledges that the Equipment sold by Lessor under the Purchase Option
is being sold in an "as is, where is" condition. Lessor makes, and will make, no
representations or warranties regarding the Equipment, its suitability for
Lessee's purpose, or its compliance with any laws. Lessee hereby assumes all
liability for the Equipment and agrees to indemnify Lessor per the terms of the
Lease for any claims arising out of the purchase of the Equipment.
LESSEE: LESSOR:
SANTA FE HOTEL, INC., PDS FINANCIAL CORPORATION,
a Nevada corporation a Nevada Corporation
By:__Thomas K. Land________ By:___Johan Finley_____________
Its:__SVP and CFO___________ Its:___President_______________
2
<PAGE>
EXHIBIT 10.132
AMENDED AND RESTATED HACIENDA ADVENTURE CLUB
--------------------------------------------
ACQUISITION AND ASSIGNMENT AGREEMENT
------------------------------------
This Amended and Restated Hacienda Adventure Club Acquisition and
Assignment Agreement ("Agreement") is dated as of the 18 day of July, 1996, by
and among the following parties: HACIENDA HOTEL, INC., a Nevada corporation, and
RESORT MARKETING INTERNATIONAL, a Nevada corporation (the two foregoing entities
being sometimes referred to hereinafter collectively as "Hacienda"); ALPINE-
OASIS MEMBERSHIP, L.L.C., a Delaware limited liability company ("Alpine-Oasis");
and (but only as to the consent given at the end of this Agreement) BRETT
TORINO, a single man ("Torino"). This Agreement is made with reference to the
following facts:
RECITALS
A. Torino and Hacienda have entered into that certain Hacienda Adventure
Club Acquisition and Assignment Agreement dated as of September 29, 1995
("Hacienda Agreement"). The Hacienda Agreement provides, among other things, for
Hacienda to transfer to Torino or Torino's assignee certain recreational vehicle
vacation club obligations, which obligations Torino was anticipated to satisfy
by means of a 287-space recreational vehicle park to be developed on a 13.8 acre
parcel ("Torino Parcel") in Clark County, Nevada, legally described as:
THE SOUTH ONE-HALF (S 1/2) OF THE SOUTHWEST ONE-QUARTER (SW 1/4) OF THE
NORTHEAST ONE-QUARTER (NE 1/4) OF SECTION 17, TOWNSHIP 22 SOUTH, RANGE 61
EAST, M.D.B. & M.
SAID LAND IS ALSO DESCRIBED AS LOT 2 SHOWN ON THAT CERTAIN CERTIFICATE OF
LAND DIVISION DESIGNATED LD NO. 100-95, RECORDED JUNE 28, 1995 IN BOOK
950628 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA RECORDS, AS DOCUMENT NO.
01092, IN FILE 1 OF LAND DIVISIONS AT PAGE 1.
B. Oasis Las Vegas Motor Coach Park, L.P. ("Oasis L.P."), a California
limited partnership affiliated with Alpine-Oasis, owns and operates a
recreational vehicle park ("Existing Oasis Park") containing approximately 700
spaces on a 44-acre parcel adjacent to and northerly of the Torino Parcel.
C. The parties desire to amend and restate the Hacienda Agreement to
provide for Alpine-Oasis to take the place of Torino thereunder, with certain
conditions and modifications as provided below.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, Alpine-Oasis and Hacienda hereby provide and agree as follows:
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1. SUBSTITUTION OF ALPINE-OASIS FOR TORINO. Subject to the terms and
---------------------------------------
modifications provided herein, Alpine-Oasis hereby assumes the rights and
obligations of Torino under the Hacienda Agreement as attached hereto as Exhibit
3.
2. KEY AMENDED AND RESTATED TERMS. The Hacienda Agreement is hereby amended
------------------------------
to reflect the following terms:
A. ASSIGNMENT PRICE. Hacienda will pay Alpine-Oasis $3,040,000 as
----------------
follows:
(i) $2,250,000 at Closing.
(ii) $40,000 payable at Closing for outside planning and
engineering costs.
(iii) $750,000 payable into a construction escrow account upon
commencement of construction of an RV park on the Torino
Parcel.
(iv) Alpine-Oasis will secure performance and repayment of the
$2.29 million (or $3.04 million,/1/ whichever applies) by
means of a deed of trust on the 13.8 acre Torino Parcel.
Should Alpine-Oasis elect to proceed with construction of a
New RV Park, the deed of trust will be subordinated to any
financing Alpine-Oasis may use to fund land acquisition and
project costs (which include all hard and soft costs,
general, administrative and start-up costs) for the New RV
Park in excess of $3.04 million.
(v) At the election of Alpine-Oasis, the deed of trust can be
relocated to (i) any other property in Clark County, Nevada,
capable of equally accommodating the provision of facilities
as equal or similar to the facilities provided at the
present Hacienda Adventure Club location if the New RV Park
is to be constructed thereon; or (ii) to an existing
recreational vehicle park in Clark County, Nevada capable of
equally accommodating the provision of facilities as equal
or similar to the facilities provided at the present
Hacienda Adventure Club location. In either case the
relocated deed of trust will be subordinated to any
financing Alpine-Oasis may use to fund land acquisition and
development costs for the New RV Park (or acquisition costs,
in the case of an existing park) in excess of the amount of
the deed of trust.
- ----------------------
/1/ The $3.04 million is to be applied if the New RV Park is to be
constructed with the additional $750,000 per paragraph 2.A.(iii) of the
agreement on the Torino parcel.
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<PAGE>
(vi) Upon the Adventure Club membership being reduced to 500 or
fewer, the deed of trust shall be reconveyed and/or the
Oasis, L.P. guaranty will be terminated and the deposit will
be earned by Alpine-Oasis, which will remain obligated under
the contract to continue to serve such lesser number of
members. For purposes of calculating memberships, a
membership shall be deemed terminated when either (i) the
member agrees to the termination; or (ii) when Alpine-Oasis
or Hacienda give the member a notice of termination pursuant
to paragraph 10 of the Hacienda Adventure Club membership
agreement; the termination shall be effective upon the
giving of the notice of termination without need for any
further action by the noticing entity.
(vii)a. Subject to reinstatement as set forth in (vii).b. below,
Hacienda shall cancel Club memberships for: (1) Membership
Notes which are delinquent for more than 180 days in payment
of principal and interest ("Delinquent Notes"), or (2) dues
which are delinquent for more than one year ("Delinquent
Dues"). Hacienda shall not send any notice of termination or
otherwise communicate with a member without prior written
approval by Alpine-Oasis of the specific form and content of
the notice or communication.
(vii)b. Club members who are canceled by Hacienda pursuant to the
foregoing, but who subsequently bring their memberships
current (i.e., who remove all delinquencies in their
Delinquent Notes and Delinquent Dues within 120 days after
cancellation or such longer reinstatement period, if any, as
is required by applicable law) shall be reinstated as Club
members.
(viii) Notwithstanding the foregoing, it is agreed that Alpine-
Oasis, L.L.C., can provide equal and substitute collateral
for the deed of trust and/or the Oasis guaranty upon the
approval of Hacienda, which approval will not be
unreasonably withheld.
B. ALPINE-OASIS ELECTION RE DEVELOPMENT OF TORINO PARCEL.
-----------------------------------------------------
(i) Feasibility period -- None.
(ii) Commencing upon the Closing, Alpine-Oasis will cause Oasis
L.P. to make available up to 287 spaces in the Existing
Oasis Park for use by Hacienda Adventure Club members.
-3-
<PAGE>
(iii) Within 24 months of the Closing, Hacienda will at Hacienda's
sole expense and liability cause the Hacienda Adventure Club
membership to be permanently reduced to 3375 or less,
requiring no more than 225 spaces. Hacienda will use its
best efforts to accomplish the reduction as soon as possible
in advance of the 24-month deadline.
(iv) Alpine-Oasis will in its sole discretion elect whether or
not and when to develop the Torino Parcel with an RV park,
and whether or not or when to transfer Hacienda Adventure
Club members to such a park.
(v) If Alpine-Oasis elects to develop an RV park for Hacienda
Adventure Club members on the Torino Parcel, the park will
conform generally to the plans previously submitted to Clark
County, except that the number of spaces will be reduced to
225.
C. HACIENDA INDEMNIFICATION. Hacienda will indemnify and hold harmless
------------------------
Alpine-Oasis from:
(i) Any and all claims concerning or relating to the Hacienda
Adventure Club or its members arising or accruing prior to
the Closing.
(ii) Any and all claims arising out of assignment of ownership of
the Hacienda Adventure Club to Alpine-Oasis.
(iii) Any and all claims arising out of relocation of the Club's
facilities and operations (i) to the existing Oasis park; or
(ii) from the existing Oasis park to either the Torino
parcel or any other property in Clark County, Nevada,
capable of equally accommodating the provision of facilities
as equal or similar to the facilities provided at the
present Hacienda Adventure Club location.
(iv) Any and all claims arising out of Hacienda's efforts to
reduce, or the actual reduction of, the Club membership,
both before and after Closing.
(v) Any and all claims arising out of other actions by Hacienda
relating to the Club or its members following the Closing.
D. ALPINE-OASIS INDEMNIFICATION. Alpine-Oasis will indemnify and hold
----------------------------
Hacienda harmless from any claims by Hacienda Adventure Club members,
or any other parties, against the Club, or its sponsor, which result
from the actions of Alpine-Oasis, or Alpine-Oasis' management of the
Club, during the time after Closing
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<PAGE>
(other than relocation and other acts for which Hacienda is
indemnifying Alpine-Oasis under this Agreement).
E. SAHARA CORPORATE GUARANTY. All obligations of Hacienda will be
-------------------------
guaranteed by Sahara Gaming Corporation. The guaranty will be
reflected in a separate signed instrument delivered to Alpine-Oasis
within 5 business days of the date hereof, in the form attached hereto
as Exhibit "1".
F. OASIS L.P. GUARANTY. All obligations of Alpine-Oasis will be
-------------------
guaranteed by Oasis L.P. The guaranty will be reflected in a separate
signed instrument delivered to Hacienda within 5 business days of the
date hereof, in the form attached hereto as Exhibit "2".
3. OTHER PROVISIONS. Other modifications hereby made to the Hacienda
----------------
Agreement are reflected in the markup of the original Hacienda Agreement
attached hereto as Exhibit "3" and incorporated herein by this reference. In
the event of any conflict between the terms of the markup and the terms of this
document, this document shall be controlling.
4. REPRESENTATIONS AND WARRANTIES. Hacienda hereby remakes and reaffirms its
------------------------------
representations and warranties in the Hacienda Agreement, as of the date hereof
and as of the Closing date, for the benefit of Alpine-Oasis. Hacienda hereby
further represents and warrants to Alpine-Oasis that, as of the date hereof and
as of the Closing date, (i) there are no Club members, including delinquent or
defaulting members having reinstatement rights, other than those listed on
Exhibit "C" to the Hacienda Agreement markup attached hereto; and (ii) except as
disclosed in all relevant detail on Exhibit "E" to the Hacienda Agreement markup
attached hereto, no Club membership agreements deviate from the standard Club
contract form attached as Exhibit "B" to the Hacienda Agreement markup attached
hereto. Alpine-Oasis hereby confirms the representations and warranties of
Torino in the Hacienda Agreement (as modified herein), as of the date hereof and
as of the Closing date, for the benefit of Hacienda.
5. ASSIGNMENT BY ALPINE-OASIS. Alpine-Oasis may without further approval by
--------------------------
Hacienda assign this amended and restated agreement and the benefit of the
Hacienda and Sahara guarantees to Oasis L.P. or any future owner of the Existing
Oasis Park; provided, however, that the Oasis L.P. guaranty issued pursuant to
Section 2.F. above shall not be assigned and assumed without Hacienda's approval
of the new guaranty.
6. NO DEFAULT OR OFFSET. Notwithstanding any other provision, Alpine-Oasis
--------------------
shall have no liability for any defaults by Torino under the Hacienda Agreement,
and any such default is hereby
-5-
<PAGE>
deemed cured and released by Hacienda. Sums payable to Alpine-Oasis hereunder
shall in no event be reduced or offset by amounts owed by or paid heretofore or
hereafter to Torino. However, advances by Hacienda to Clark Co. Public Works
and the LVVWD, in the aggregate amount of $10,425.92, a credit to Hac. under the
Torino Agreement and in the escrow at First Amer. Title, shall remain a credit
to Hacienda under the terms of this Agreement.
7. NOTICES DONE IN MUTUALLY AGREEABLE FASHION. That legal counsel for
------------------------------------------
Hacienda will work with Tom Winfield of Brown, Winfield & Canzoneri, Inc., to
ensure that (1) any and all notices to members or to governmental entities
concerning the relocation of the Park will be done in mutually agreeable
fashion.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
"Hacienda"
DATED: July 18, 1996 HACIENDA HOTELS, INC., a Nevada
corporation
By: /s/
--------------------------------
Paul W. Lowden, Chairman
RESORT MARKETING INTERNATIONAL,
a Nevada corporation
By: /s/
--------------------------------
Paul W. Lowden, Chairman
"Alpine-Oasis"
DATED: July 24, 1996 ALPINE-OASIS MEMBERSHIP, L.L.C.,
a Delaware limited liability company
By: /s/ John S. Long
--------------------------------
Its: President
-------------------------------
CONSENT TO THE FOREGOING IS HEREBY GIVEN BY:
DATED: July 18, 1996 "Torino"
/s/
-----------------------------------
BRETT TORINO
Exhibits:
- ---------
EXHIBIT "1" SAHARA CORPORATE GUARANTY
EXHIBIT "2" OASIS L.P. GUARANTY
-7-
<PAGE>
EXHIBIT "3" MARKUP OF ORIGINAL HACIENDA AGREEMENT (WITH EXHIBITS
THERETO)
-8-
<PAGE>
EXHIBIT 10.133
GUARANTY OF PAYMENT AND PERFORMANCE
(SAHARA GAMING CORPORATION)
Pursuant to approval by the Board of Directors of Santa Fe Gaming
Corporation of that certain Amended and Restated Hacienda Adventure Club
Acquisition and Assignment Agreement ("Agreement") executed by Hacienda Hotels
Inc. and Resort Marketing International (jointly and severally, "Hacienda")
(both subsidiaries of Sahara Gaming Corporation), and Alpine-Oasis Membership,
L.L.C., a Delaware limited liability company ("Alpine Oasis"), and pursuant to
the Agreement itself, Sahara Gaming Corporation hereby executes, acknowledges
and delivers this Guaranty. Capitalized terms used herein and not otherwise
defined herein are used with the meanings set forth in the Agreement.
In further consideration of the provisions set forth in the Agreement, and
for other good and valuable consideration, the sufficiency and receipt of which
hereby are acknowledged, SAHARA GAMING CORPORATION, a Nevada corporation
("Guarantor"), does hereby agree, for the reliance and benefit of Alpine Oasis
("Benefitted Party"), as follows:
1. Guarantor unconditionally guarantees that Hacienda shall timely
perform and observe each agreement, covenant, identity, term and condition of
the Agreement to be performed and observed by Hacienda, and upon Hacienda's
failure to do so, Guarantor shall promptly perform and observe, or shall cause
to be promptly performed and observed, such agreement, covenant, indemnity, term
or condition. Without limiting the generality of the foregoing, Guarantor hereby
unconditionally guarantees the prompt payment of any and all funds due to
Benefitted Party from Hacienda pursuant to the terms of the Agreement.
2. The obligations, covenants, agreements and duties of Guarantor
pursuant to this Guaranty shall in no way be affected or impaired by reason of
the occurrence from time to time of any of the following with respect to the
Agreement, although without notice to, or the further consent of, Guarantor:
(a) The waiver of the performance or observance by Hacienda of any
agreement, covenant, indemnity, term or condition to be performed or observed by
Hacienda;
(b) The extension of time for the payment of any sums owing or
payable pursuant to the Agreement or the time for performance of any other
obligation under, or arising out of, or on account of, the Agreement;
(c) The supplementation, modification or amendment, (whether material
or otherwise) of the Agreement or any obligation of Hacienda set forth in the
Agreement;
EXHIBIT "1"
<PAGE>
(d) The release of Hacienda by operation of law from performance or
observance of any of the agreements, covenants, terms or conditions contained in
the Agreement; or
(e) The bankruptcy or insolvency of Hacienda or any other defense of
Hacienda based on status.
3. Notice of acceptance of this Guaranty, present, demand for payment,
protest, notice of default or nonpayment, notice of dishonor, and all other
notices and demands are hereby waived by Guarantor.
4. All guaranties, covenants, and agreements contained in this Guaranty
shall bind the successors and assigns of Guarantor and Hacienda and shall inure
to the benefit of the Benefitted Party, and its successors and assigns.
5. The obligations of Guarantor hereunder shall be joint and several with
obligations of Hacienda under the Agreement.
6. This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of Nevada.
7. No delay on the part of the Benefitted Party in exercising any power
or right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder, or the failure to exercise the
same in any instance preclude other or further exercise thereof, or exercise of
any other power or right, nor shall the Benefitted Party be liable for
exercising or failing to exercise any such power or right. The rights and
remedies hereunder expressly specified are cumulative and not exclusive of any
rights or remedies the Benefitted Party may or will otherwise have.
8. Any and all notices, demands and/or communications described herein,
or which may be necessary or appropriate hereunder, shall be valid if delivered
personably, or if deposited in the U.S. Mail, postage prepaid, certified mail,
return receipt requested, to the following addresses:
If to Guarantor:
SAHARA GAMING CORPORATION
Attn: Paul Lowden and David Lowden
Santa Fe Hotel and Casino
4949 N. Rancho Drive
Las Vegas, NV 89130
If to Benefitted Party:
-2-
<PAGE>
Alpine-Oasis Membership, L.L.C.
300 North Continental Blvd.
Suite 390
El Segundo, California 90245
with a simultaneous copy to:
BROWN, WINFIELD & CANZONERI, INC.
300 S. Grand Ave., Ste. 1500
Los Angeles, CA 90071
Attn: Thomas F. Winfield, III, Esq.
Any notice, demand or communication deposited in the U.S. Mail as aforesaid
shall be deemed received on the earlier of three business days after deposit in
the U.S. Mail, or upon actual receipt.
9. This document contains the entire Agreement between the Benefitted
Party and Guarantor, and supersedes all prior oral and written negotiations,
agreements and understandings of every kind.
10. Should any dispute arise between the Benefitted Party and the
Guarantor pursuant to, or in connection with, this Guaranty, the prevailing
party shall be entitled to collect from the non-prevailing party reasonable
attorney's fees and costs of suit.
SAHARA GAMING CORPORATION,
a Nevada corporation
By: /s/ Paul Lowden
-------------------------
Paul Lowden, President
-3-
<PAGE>
STATE OF NEVADA )
)
COUNTY OF CLARK )
This instrument was acknowledged before me on this 18 day of July, 1995, by
Paul Lowden, as present of SAHARA GAMING CORPORATION.
/s/ Judy Coder
--------------------------
NOTARY PUBLIC
My Commission Expires: (seal)
11-17-99
- ----------------------
-4-
<PAGE>
EXHIBIT 10.134
GUARANTY OF PAYMENT AND PERFORMANCE
(OASIS LAS VEGAS MOTOR COACH PARK, L.P.)
Pursuant to approval by the partners of Oasis Las Vegas Motor Coach Park,
L.P. ("Oasis L.P.") of that certain Amended and Restated Hacienda Adventure Club
Acquisition and Assignment Agreement ("Agreement") executed by Hacienda Hotels
Inc. and Resort Marketing International (jointly and severally, "Hacienda")
(both subsidiaries of Sahara Gaming Corporation), and Alpine-Oasis Membership,
L.L.C., a Delaware limited liability company ("Alpine-Oasis"), and pursuant to
the Agreement itself, Oasis L.P. hereby executes, acknowledges and delivers this
Guaranty. Capitalized terms used herein and not otherwise defined herein are
used with the meanings set forth in the Agreement.
In further consideration of the provisions set forth in the Agreement, and
for other good and valuable consideration, the sufficiency and receipt of which
hereby are acknowledged, Oasis L.P. ("Guarantor"), does hereby agree, for the
reliance and benefit of Hacienda ("Benefitted Party"), as follows:
1. Guarantor unconditionally guarantees that Alpine-Oasis shall timely
perform and observe each agreement, covenant, identity, term and condition of
the Agreement to be performed and observed by Alpine-Oasis, and upon Alpine-
Oasis' failure to do so, Guarantor shall promptly perform and observe, or shall
cause to be promptly performed and observed, such agreement, covenant,
indemnity, term or condition. Without limiting the generality of the foregoing,
Guarantor hereby unconditionally guarantees the prompt payment of any and all
funds due to Hacienda from Alpine-Oasis pursuant to the terms of the Agreement.
2. The obligations, covenants, agreements and duties of Guarantor
pursuant to this Guaranty shall in no way be affected or impaired by reason of
the occurrence from time to time of any of the following with respect to the
Agreement, although without notice to, or the further consent of, Guarantor:
(a) The waiver of the performance or observance by Alpine-Oasis of
any agreement, covenant, indemnity, term or condition to be performed or
observed by Alpine-Oasis;
(b) The extension of time for the payment of any sums owing or
payable pursuant to the Agreement or the time for performance of any other
obligation under, or arising out of, or on account of, the Agreement;
(c) The supplementation, modification or amendment, (whether material
or otherwise) of the Agreement or any obligation of Alpine-Oasis set forth in
the Agreement;
EXHIBIT "2"
<PAGE>
(d) The release of Alpine-Oasis by operation of law from performance
or observance of any of the agreements, covenants, terms or conditions contained
in the Agreement; or
(e) The bankruptcy or insolvency of Alpine-Oasis or any other defense
of Alpine-Oasis based on status.
3. Notice of acceptance of this Guaranty, present, demand for payment,
protest, notice of default or nonpayment, notice of dishonor, and all other
notices and demands are hereby waived by Guarantor.
4. All guaranties, covenants, and agreements contained in this Guaranty
shall bind the successor and assigns of Guarantor and Alpine-Oasis and shall
inure to the benefit of the Benefitted Party, and its successors and assigns.
5. The obligations of Guarantor hereunder shall be joint and several with
obligations of Alpine-Oasis under the Agreement.
6. This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of Nevada.
7. No delay on the part of the Benefitted Party in exercising any power
or right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder, or the failure to exercise the
same in any instance preclude other or further exercise thereof, or exercise of
any other power or right, nor shall the Benefitted Party be liable for
exercising or failing to exercise any such power or right. The rights and
remedies hereunder expressly specified are cumulative and not exclusive of any
rights or remedies the Benefitted Party may or will otherwise have.
8. Any and all notices, demands and/or communications described herein,
or which may be necessary or appropriate hereunder, shall be valid if delivered
personably, or if deposited in the U.S. Mail, postage prepaid, certified mail,
return receipt requested, to the following addresses:
If to Guarantor:
OASIS LAS VEGAS MOTOR COACH PARK, L.P.
c/o Highridge Partners, Inc.
300 North Continental Blvd.
Suite 360
El Segundo, California 90245
-2-
<PAGE>
If to Benefitted Party:
HACIENDA HOTEL, INC.
Resort Marketing International
Attn: Paul Lowden and David Lowden
Santa Fe Hotel and Casino
4949 N. Rancho Drive
Las Vegas, NV 89130
with a simultaneous copy to:
BROWN, WINFIELD & CANZONERI, INC.
300 S. Grand Ave., Ste. 1500
Los Angeles, CA 90071
Attn: Thomas F. Winfield, III, Esq.
Any notice, demand or communication deposited in the U.S. Mail as aforesaid
shall be deemed received on the earlier of three business days after deposit in
the U.S. Mail, or upon actual receipt.
9. This document contains the entire Agreement between the Benefitted
Party and Guarantor, and supersedes all prior oral and written negotiations,
agreements and understandings of every kind.
10. Should any dispute arise between the Benefitted Party and the
Guarantor pursuant to, or in connection with, this Guaranty, the prevailing
party shall be entitled to collect from the non-prevailing party reasonable
attorney's fees and costs of suit.
OASIS LAS VEGAS MOTOR COACH PARK, L.P., A CALIFORNIA LIMITED
PARTNERSHIP
BY: ALPINE-OASIS, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY,
GENERAL PARTNER
BY: ALPINE CAPITAL, L.L.C., A DE
LIMITED LIABILITY CO., ITS MEMBER
BY: HIGHRIDGE PARTNERS RV GROUP, L.L.C., A DE LIMITED
LIABILITY CO., MANAGER
BY: MJL ASSOCIATES, A CA LIMITED PARTNERSHIP, MANAGER
BY: MJL INVESTMENTS, INC., A CA CORP., GENERAL PARTNER
By: /s/ JOHN S. LONG
----------------------------------
Its:
JOHN S. LONG, PRESIDENT
----------------------------------
-3-
<PAGE>
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On July 24, 1996, before me Michele B. Karma, Notary Public, personally
appeared John Long, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the persons(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Michele Karma
-------------------------
-4-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 16,644,759
<SECURITIES> 0
<RECEIVABLES> 3,264,692
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<INVENTORY> 1,544,553
<CURRENT-ASSETS> 25,776,472
<PP&E> 203,375,835
<DEPRECIATION> 45,548,760
<TOTAL-ASSETS> 237,287,478
<CURRENT-LIABILITIES> 22,302,336
<BONDS> 167,438,813
0
18,221,589
<COMMON> 61,954
<OTHER-SE> 51,513,504
<TOTAL-LIABILITY-AND-EQUITY> 237,287,478
<SALES> 0
<TOTAL-REVENUES> 123,857,124
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<TOTAL-COSTS> 48,585,900
<OTHER-EXPENSES> 30,311,327
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<INTEREST-EXPENSE> 18,716,389
<INCOME-PRETAX> 26,243,508
<INCOME-TAX> 9,195,000
<INCOME-CONTINUING> 17,048,508
<DISCONTINUED> 0
<EXTRAORDINARY> 7,854,707
<CHANGES> 0
<NET-INCOME> 24,903,215
<EPS-PRIMARY> 3.85
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