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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): OCTOBER 23, 1998
SANTA FE GAMING CORPORATION
(Exact Name of Registrant as Specified in Charter)
NEVADA 1-9481 88-0304348
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
4949 NORTH RANCHO DRIVE 89130
LAS VEGAS, NEVADA
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (702) 658-4300
NONE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
This report is qualified in its entirety by reference to the documents
described herein and attached or incorporated herein as exhibits hereto,
which are incorporated herein by this reference.
Santa Fe Gaming Corporation ("SFGC" or the "Company") announced
October 26, 1998 (i) the extension to December 2000 of $4.8 million of
indebtedness that pursuant to its original terms matured in December 1998,
(ii) the anticipated recordation of an impairment to the carrying value of
the assets related to the Pioneer Hotel and Gambling Hall (the "Pioneer")
located in Laughlin, Nevada, and (iii) the commencement of an exchange offer
and consent solicitation by Pioneer Finance Corp. ("Pioneer Finance"), a
subsidiary of SFGC, in which Pioneer Finance is offering to exchange its 13
1/2% First Mortgage Notes due 2006 for all $60 million principal amount
outstanding of its 13 1/2% First Mortgage Bonds due December 1, 1998 (the
"Outstanding Notes") and, in the alternative, is seeking the consents of the
holders of the Outstanding Notes to, among other things, forbear against
exercising remedies in connection with a failure by Pioneer Finance to pay
principal or interest on the Outstanding Notes at the December 1, 1998
maturity date and, if Pioneer Finance seeks relief under Chapter 11 of the
United States Bankruptcy Code, to vote in favor of a plan of reorganization
in which the Outstanding Notes are treated in a manner substantially similar
to that offered in the exchange offer. Copies of the press releases of SFGC
and Pioneer Finance dated October 26, 1998 are attached as exhibits to this
Current Report on Form 8-K.
AMENDMENT AND RESTATEMENT OF INDEBTEDNESS WITH SIERRA CONSTRUCTION CORP.
Effective as of October 1, 1998, SFGC amended and restated its promissory
note in favor of Sierra Construction Corp. with a principal outstanding amount
of approximately $4.8 million. Pursuant to the amended and restated
indebtedness, the maturity date has been extended from December 1998 to
December 2000, principal will be payable in a single payment at maturity,
provided that prepayment of all or a portion of the debt will be required under
certain circumstances, and payments of interest will be payable monthly.
RECORDATION OF IMPAIRMENT OF CARRYING VALUE OF PIONEER ASSETS
The Company's wholly-owned subsidiary, Pioneer Hotel Inc. ("Pioneer
Hotel"), which owns and operates the Pioneer, will record an impairment to the
carrying value of the Pioneer assets for the quarter ended September 30, 1998.
The impairment is primarily the result of recent changes in the regulatory
environment concerning gaming operations on Indian reservations in Southern
California, which management believes will further affect the long-term
competitive environment in Laughlin. Management is currently reviewing
information to determine the amount of the impairment, but believes the
write-down will eliminate the net goodwill of $43.6 million recorded on the
balance sheet as of June 30, 1998.
PIONEER FINANCE EXCHANGE OFFER AND CONSENT SOLICITATION
On October 23, 1998, Pioneer Finance commenced an exchange offer and
consent solicitation, the expiration date of each of which is 12:00 midnight,
New York City time, on November 20, 1998 (as the same may be extended, the
"Expiration Date").
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THE EXCHANGE OFFER. Pioneer Finance is offering to exchange (the
"Exchange Offer") a principal amount of its 13 1/2% First Mortgage Notes due
2006 (together with the PIK Notes, as defined below, the "New Notes") equal
to the principal amount of all Outstanding Notes properly tendered for
exchange and not withdrawn, less the principal amount of Outstanding Notes
repurchased in the Exchange Offer, for all Outstanding Notes. Upon
consummation of the Exchange Offer, Pioneer Finance will pay accrued and
unpaid interest through December 1, 1998 on the tendered Outstanding Notes
($4.1 million) and repurchase an aggregate of $2.8 million principal amount
of Outstanding Notes. As of October 23, 1998, an aggregate principal amount
of $60 million of Outstanding Notes was outstanding.
The New Notes will bear interest at a rate equal to 13 1/2% per annum.
Interest on the New Notes is payable semiannually, commencing June 1, 1999,
on June 1 and December 1 of each year and will accrue from the date following
the Expiration Date. Pioneer Finance will have the right to pay in kind up
to 50% of the interest payable on each interest payment date through December
1, 2000 through the issuance of additional New Notes with a principal amount
equal to 50% of the interest payable on such Interest Payment Date (the "PIK
Notes"). The terms of the PIK Notes will be identical to those of the New
Notes, including without limitation that interest on the PIK Notes will be
payable 50% in cash and 50% through December 1, 2000 through the issuance of
additional PIK Notes. Pioneer Finance expects to satisfy 50% of each
interest payment obligation through December 1, 2000 through the issuance of
PIK Notes, as a result of which there would be $65.2 million principal amount
of New Notes outstanding at maturity, assuming no repurchase and retirement
of New Notes. The New Notes will mature on December 1, 2006. SFGC will
guaranty the payment of principal of, and premium, if any, and interest on,
the New Notes, and the guaranty will be secured by a pledge of the common
stock of its subsidiaries, Santa Fe Hotel Inc., a Nevada corporation
("SFHI"), and Sahara Resorts, a Nevada corporation.
The New Notes will be redeemable by Pioneer Finance at any time and from
time to time at the redemption prices and subject to the conditions set forth in
the Offering Circular and Consent Solicitation Statement dated October 23, 1998.
Upon the occurrence of certain events, Pioneer Finance will be required to
redeem all outstanding New Notes or make an offer to repurchase all or a portion
of the outstanding New Notes, in each case at 100% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the date of
purchase.
The Exchange Offer is conditioned upon, among other things, 100% of the
Outstanding Notes being properly tendered for exchange and not withdrawn.
THE SOLICITATION. Pioneer Finance is also soliciting (the
"Solicitation") the consents (the "Consents") of holders of Outstanding Notes to
the following:
- to agree to a forbearance until December 15, 2000 against the
exercise of rights and remedies in the event of the failure by Pioneer Finance
to pay principal and interest on the Outstanding Notes when due on December 1,
1998 (the "Maturity Defaults"), and any other defaults arising as a direct
result of the Maturity Defaults;
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- to agree to a forbearance until December 15, 2000 against the
exercise of rights and remedies in the event of the failure by Pioneer Hotel
to pay principal and interest on the Promissory Note dated December 1, 1988
in the original principal amount of $120 million by Pioneer Hotel in favor of
Pioneer Finance (the "Purchase Money Note") when due on December 1, 1998 (the
"Purchase Money Note Maturity Defaults"), and any other defaults arising as a
direct result of the Purchase Money Note Defaults; and
- in the event the Exchange Offer is not consummated and Pioneer
Finance files a bankruptcy case under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code"), among other things, to vote to accept a plan of
reorganization (the "Plan") that provides for treatment of the Outstanding Notes
in a manner substantially the same as proposed in the Exchange Offer.
The Consents will not become effective unless the Exchange Offer is
not consummated and Pioneer Finance receives valid Consents with respect to
at least $47 million principal amount of Outstanding Notes (the "Requisite
Consents"). Consents may be revoked by holders at any time prior to the
Expiration Date and will automatically expire if the Requisite Consents are
not obtained prior to the Expiration Date.
REPURCHASE OF OUTSTANDING NOTES IN THE EXCHANGE OR SOLICITATION. Upon
a successful consummation of the Exchange Offer, Pioneer Finance will pay in
cash all accrued and unpaid interest on tendered Outstanding Notes through
December 1, 1998 ($4.1 million) and repurchase on a pro rata basis from all
holders of the Outstanding Notes who properly tender and do not withdraw
Outstanding Notes before the Expiration Date an aggregate of $2.8 million
principal amount of Outstanding Notes. If the Exchange Offer is not
consummated but as of the Expiration Date Pioneer Finance has received and
accepted the Requisite Consents, Pioneer Finance will repurchase for cash on
a pro rata basis from the holders of Outstanding Notes with respect to which
Consents have been properly furnished an aggregate of $6.5 million principal
amount of Outstanding Notes, together with accrued and unpaid interest
thereon through the Expiration Date (approximately $400,000).
The payments to be made in connection with the Exchange Offer or
Solicitation will be funded through payments by Pioneer Hotel under the
Purchase Money Note. In the event Pioneer Finance were to file for relief
under Chapter 11 of the Bankruptcy Code within 90 days (or possibly one
year), or Pioneer Hotel were to file for relief under Chapter 11 of the
Bankruptcy Code within one year, of the payments, the payments may be
avoidable as a preference and could be subject to recovery by a trustee in
bankruptcy, an official creditors' committee, other representatives of
creditors of Pioneer Finance or Pioneer Hotel, or Pioneer Finance or Pioneer
Hotel as debtors in possession. If the payments are successfully challenged
as preferences, holders would be required to return the funds received,
together with interest thereon in a rate determined by the court, or would be
precluded from receiving any distribution on account of such holders'
Outstanding Notes.
GENERAL. If the Exchange Offer is not consummated but the Requisite
Consents are received, Pioneer Finance intends to file for relief under
Chapter 11 of the Bankruptcy Code. If the Exchange Offer is not consummated and
the Requisite Consents are not received, Pioneer
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Finance may file for relief under Chapter 11 of the Bankruptcy Code or may
continue to negotiate with the holders of the Outstanding Notes to
restructure the Outstanding Notes. If Pioneer Finance were to seek
confirmation of the Plan, no assurance can be given that the Plan would meet
the requirements of confirmation, even if the Requisite Consents are received
and the Outstanding Notes subject to the Consents are voted to accept the
Plan. Giving effect to the issuance of New Notes as of the beginning of the
period and assuming that Pioneer Finance elected to pay 50% of the interest
payment obligations through December 1, 2000 through the issuance of PIK
Notes, the ratio of earnings before interest, taxes, depreciation,
amortization, gaming equipment rent and corporate charges ("EBITDA") to cash
interest expense would have been 1.40-to-one, and EBITDA less corporate
charges (giving effect to fees payable under a management agreement to be
entered into between Pioneer Hotel and SFGC) to cash interest expense would
have been 1.11-to-one, in each case for the twelve months ended June 30,
1998. Upon commencement of the requirement that all interest be paid in cash
in 2001, the ratio of EBITDA to cash interest expense on the New Notes is
expected to be less than one-to-one (assuming no offers to repurchase New
Notes have been made). Therefore, it is expected that Pioneer Finance would
not be able to make the cash interest payment in June 2001, which would be an
event of default under the indenture under which the New Notes will be issued.
At any time after the December 1, 1998 maturity date of the Outstanding
Notes, if Pioneer Finance has not filed for bankruptcy relief and the Exchange
Offer has not been consummated, it is possible that three or more holders of
Outstanding Notes would file an involuntary petition under the Bankruptcy Code
with respect to Pioneer Finance. If Pioneer Finance were to become a debtor in
a case under the Bankruptcy Code (whether a case were commenced voluntarily or
involuntarily), it is likely that Pioneer Hotel and SFGC would file for relief
under Chapter 11 of the Bankruptcy Code. The commencement of a voluntary case
under the Bankruptcy Code by SFGC or certain circumstances related to an
involuntary case under the Bankruptcy Code with respect to SFGC will cause the
automatic acceleration of outstanding indebtedness of subsidiaries of SFGC, SFHI
and Sahara Las Vegas Corp., a Nevada corporation ("SLVC"), all of which
indebtedness is guaranteed by SFGC. If acceleration were to occur, SFGC would
expect to negotiate with the creditors of SFHI and SLVC regarding a rescission
of the acceleration. However, if the creditors holding the indebtedness were
not to rescind the acceleration, it is likely that SFHI and SLVC would file for
relief under Chapter 11 of the Bankruptcy Code.
Reference is made to Pioneer Finance's Offering Circular and Consent
Solicitation Statement dated October 23, 1998, incorporated by reference as
an exhibit to this Current Report on Form 8-K, for more detailed information
regarding the Exchange Offer and Consent Solicitation.
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ITEM 7. EXHIBITS.
The following exhibits are filed with this current report on Form 8-K:
Exhibit No. Description
----------- -----------
99.1 Press Release of Santa Fe Gaming Corporation
dated October 26, 1998
99.2 Press Release of Pioneer Finance Corp. dated
October 26, 1998
99.3 Amended and Restated Promissory Note dated as of
October 1, 1998 by Santa Fe Gaming Corporation in
favor of Sierra Construction Corp.
99.4 Offering Circular and Consent Solicitation
Statement dated October 23, 1998 of Pioneer
Finance Corp. (filed as an exhibit to the Form T-
3 Application for Qualification of Indenture
under the Trust Indenture Act of 1939 of Pioneer
Finance Corp. filed on October 23, 1998 and
incorporated by reference)
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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 hereunto duly authorized.
SANTA FE GAMING CORPORATION
Date: October 26, 1998 By: /s/ THOMAS K. LAND
--------------------------------
Thomas K. Land
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Santa Fe Gaming Corporation dated October 26, 1998
99.2 Press Release of Pioneer Finance Corp. dated October 26, 1998
99.3 Amended and Restated Promissory Note dated as of October 1, 1998 by
Santa Fe Gaming Corporation in favor of Sierra Construction Corp.
99.4 Offering Circular and Consent Solicitation Statement dated
October 23, 1998 of Pioneer Finance Corp. (filed as an exhibit to
the Form T-3 Application for Qualification of Indenture under the
Trust Indenture Act of 1939 of Pioneer Finance Corp. filed on
October 23, 1998 and incorporated by reference)
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SANTA FE GAMING CORPORATION
4949 NO. RANCHO DR.
LAS VEGAS, NV 89130
FOR IMMEDIATE RELEASE:
October 26, 1998
SANTA FE GAMING CORPORATION ANNOUNCES
AMENDMENT OF SIERRA CONSTRUCTION CORP. INDEBTEDNESS;
ACCOUNTING IMPAIRMENT OF PIONEER ASSETS;
COMMENCEMENT OF PIONEER FINANCE CORP. EXCHANGE OFFER
LAS VEGAS, NEV. - Santa Fe Gaming Corporation ("SFGC" or the "Company"), a
diversified gaming company headquartered in Las Vegas, announced today that the
Company has amended and restated its $4.8 million debt owed to Sierra
Construction Corp. The amendment extends the maturity date from December 1998
to December 2000, provides for payment of principal in one payment at maturity,
provided that prepayments are required for all or a portion of the debt under
certain circumstances, and monthly interest payments.
The Company also announced that its wholly-owned subsidiary, Pioneer Hotel Inc.,
which owns and operates the Pioneer Hotel & Gambling Hall in Laughlin, Nevada,
will record an impairment to the carrying value of Pioneer assets for the
quarter ended September 30, 1998. The impairment is primarily the result of
recent changes in the regulatory environment concerning gaming operations on
Indian reservations in Southern California, which management believes will
further affect the long-term competitive environment in the Laughlin market.
Management is currently reviewing information to determine the amount of
impairment, but believes the write-down will eliminate the net goodwill of
$43.6 million recorded on the balance sheet as of June 30, 1998.
SFGC also announced that its indirect wholly-owned subsidiary, Pioneer Finance
Corp., commenced an exchange offer and consent solicitation on October 23, 1998
with respect to $60 million principal amount of 13 1/2% First Mortgage Notes due
December 1, 1998.
Santa Fe Gaming Corporation owns and operates the Santa Fe Hotel and Casino in
northwest Las Vegas and the Pioneer Hotel & Gambling Hall in Laughlin, Nevada.
In addition, the Company holds several real estate parcels for future
development within or in the area surrounding Las Vegas, Nevada.
CONTACT: Thomas K. Land
Chief Financial Officer
Santa Fe Gaming Corporation
702-658-4340
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PIONEER FINANCE CORPORATION
4949 NO. RANCHO DR.
LAS VEGAS, NV 89130
FOR IMMEDIATE RELEASE:
October 26, 1998
PIONEER FINANCE CORPORATION ANNOUNCES
COMMENCEMENT OF EXCHANGE OFFER AND
CONSENT SOLICITATION
LAS VEGAS, NEV. - Pioneer Finance Corp. ("PFC" or the "Company"), an indirect
wholly-owned subsidiary of Santa Fe Gaming Corporation ("SFGC"), announced that
it commenced an exchange offer and consent solicitation on October 23, 1998 with
respect to its $60.0 million principal amount of 13 1/2% First Mortgage Bonds
due December 1, 1998 (the "13 1/2% Notes"). The expiration dates for both the
exchange offer and the consent solicitation are 12:00 midnight, New York City
time, on November 20, 1998. The exchange offer is conditioned upon, among other
things, 100% of the outstanding 13 1/2% Notes being tendered and not withdrawn,
and the consent solicitation is conditioned upon the receipt and acceptance by
the Company of consents with respect to at least $47 million principal amount of
outstanding 13 1/2% Notes. The consent solicitation will be effective only if
the exchange offer is not consummated.
In the exchange offer, PFC is offering, upon the terms and subject to the
conditions set forth in its Offering Circular and Consent Solicitation Statement
dated October 23, 1998, to exchange a principal amount of its 13 1/2% First
Mortgage Notes due 2006 (the "New Notes") equal to the principal amount of all
its outstanding 13 1/2% Notes properly tendered for exchange and not withdrawn,
less the principal amount of 13 1/2% Notes repurchased in the exchange
(approximately $2.8 million principal amount) for all 13 1/2% Notes. In
addition, the Company will pay accrued and unpaid interest on tendered 13 1/2%
Notes (approximately $4.1 million).
The New Notes will bear interest at a rate equal to 13 1/2% per annum. Interest
on the New Notes is payable semiannually, commencing June 1, 1999, on June 1 and
December 1 of each year and will accrue from the date following the Expiration
Date. PFC will have the right to pay in kind up to 50% of the interest payable
on each interest payment date through December 1, 2000 through the issuance of
additional New Notes with a principal amount equal to the interest being
satisfied in kind.
The Company is also soliciting the consents of holders of 13 1/2% Notes to,
among other things, forbear until December 2000 against exercising rights and
remedies as a result of a failure by PFC to pay principal or interest on the
13 1/2% Notes at the December 1, 1998 maturity and, in the event PFC files for
relief under Chapter 11 of the United States Bankruptcy Code, to vote to
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accept a plan of reorganization that provides for treatment of the 13 1/2% Notes
in a manner substantially the same as proposed in the exchange.
IBJ Schroder Bank and Trust Company is the exchange and consent solicitation
agent in connection with the exchange offer and the solicitation. D.F. King &
Co., Inc. is the information agent in connection with the exchange offer and the
solicitation.
The exchange offer and solicitation are being made by the Company only to
holders of 13 1/2% Notes in reliance upon the exemption from the registration
requirements of the Securities Act of 1933, as amended, afforded by
Section 3(a)(9) thereof. The Company will not pay any commission or other
remuneration to any broker, dealer, salesman or other person for soliciting
tenders of 13 1/2% Notes.
Santa Fe Gaming Corporation owns and operates the Santa Fe Hotel and Casino in
northwest Las Vegas and the Pioneer Hotel & Gambling Hall in Laughlin, Nevada.
In addition, the Company holds several real estate parcels for future
development within or in the area surrounding Las Vegas, Nevada.
CONTACT: Thomas K. Land
Chief Financial Officer
Santa Fe Gaming Corporation
702-658-4340
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AMENDED AND RESTATED
PROMISSORY NOTE
$4,879,875.29 Las Vegas, Nevada
As of October 1, 1998
This Amended and Restated Promissory Note (the "Note") amends and restates
in its entirety the Promissory Note dated August 20, 1993 in the original
principal amount of $6,601,909.00 (the "Original Note") by Sahara Casino
Partners, L.P. ("SCP") and Sahara Resorts in favor of Sierra Construction Corp.
("Lender").
FOR VALUE RECEIVED, Santa Fe Gaming Corporation ("Santa Fe"), successor in
interest to SCP, hereby promises to pay to Lender on December 31, 2001, the
principal sum of FOUR MILLION EIGHT HUNDRED SEVENTY-NINE THOUSAND EIGHT HUNDRED
SEVENTY-FIVE DOLLARS AND TWENTY-NINE CENTS ($4,879,875.29), or such lessor
principal amount as may then be outstanding hereunder, together with interest on
the balance remaining unpaid and accruing on and from the date hereof until paid
in full at the rate of prime plus 2% as established by the Bank of
America-Nevada. Interest shall be calculated for the actual number of days
elapsed on the basis of a 360-day year.
Santa Fe shall make monthly payments of interest, with payments being made
in arrears and due upon the first day of November 1998 and on the first day of
each month thereafter.
This Note may be prepaid in full or in part at any time without penalty.
Any payment hereunder shall be applied first to unpaid accrued interest and the
balance, if any, shall be applied to principal.
This Note shall be prepaid without penalty as provided in clauses (a)
through (e) below. Any payment hereunder shall be applied first to unpaid
accrued interest and the balance, if any, shall be applied to principal.
(a) EXECUTION OF AMENDED AND RESTATED PROMISSORY NOTE. Concurrent
with, and as a condition to, the execution and delivery of this Note and
the cancellation and satisfaction in full of the Original Note, Santa Fe
shall pay to Lender in cash principal in the amount of NINETY-TWO THOUSAND
EIGHT HUNDRED FIFTY-THREE DOLLARS AND FIFTY-SEVEN CENTS ($92,853.57),
together with accrued and unpaid interest thereon to the date of payment,
after which prepayment the outstanding principal balance of this Note will
be FOUR MILLION SEVEN HUNDRED EIGHT-SEVEN THOUSAND TWENTY-ONE DOLLARS AND
SEVENTY-TWO CENTS ($4,787,021.72).
(b) REDEMPTION OF PIONEER BONDS. If, after the date of this Amended
and Restated Note, Pioneer Finance Corp. ("PFC"), Pioneer Hotel, Inc.,
Santa Fe or any of Santa Fe's subsidiaries purchases for cash and retires
PFC's 13 1/2% First Mortgage Bonds due December 1998 (the "Pioneer Bonds"),
including any Pioneer Bonds that may
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be purchased and retired in connection with a proposed consent solicitation
by PFC, Santa Fe shall, within 120 days of any such purchase and retirement
but subject to the last sentence of this clause (b), prepay the principal
amount outstanding hereunder in an amount determined by multiplying the
principal amount then outstanding hereunder by a fraction, the numerator of
which is the principal amount of Pioneer Bonds so purchased and retired,
and the denominator of which is the principal amount of Pioneer Bonds
outstanding immediately prior to such purchase, together with accrued and
unpaid interest thereon to the date of payment. Notwithstanding the
foregoing, no prepayment shall be required to be made under this clause (b)
until the principal amount to be repaid, taking into account all purchases
and retirements of Pioneer Bonds that would require a prepayment under this
clause (b) but for this sentence, equals or exceeds $100,000.00.
(c) SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF SANTA FE HOTEL
INC. If (i) Santa Fe Hotel Inc. ("SFHI") sells all or substantially all of
its assets to an unaffiliated party (an "Asset Sale") and distributes to
Santa Fe any Net Cash Proceeds (as defined in clause (e) from the Asset
Sale, and (ii) Santa Fe uses all or a portion of any such distribution to
purchase for cash and retire Pioneer Bonds, then Santa Fe shall, within
120 days of any such purchase and retirement, prepay the principal amount
outstanding hereunder in an amount determined by multiplying the principal
amount then outstanding hereunder by a fraction, the numerator of which is
the principal amount of Pioneer Bonds purchased for cash from any such
distribution and retired, and the denominator of which is the principal
amount of Pioneer Bonds outstanding immediately prior to such purchase,
together with accrued and unpaid interest thereon to the date of payment.
(d) SALE OF WET 'N WILD PARCEL. If (i) Sahara Las Vegas Corp.
("SLVC") sells its 27 acre parcel of real property located on Las Vegas
Boulevard South to an unaffiliated party (the "Wet 'N Wild Sale") and
distributes to its stockholders any Net Cash Proceeds, (ii) any of such
stockholders distributes to Santa Fe any portion of such distribution, and
(iii) Santa Fe uses all or a portion of any such distribution to purchase
for cash and retire Pioneer Bonds, then Santa Fe shall, within 120 days of
such purchase and retirement, prepay the principal amount outstanding
hereunder in an amount determined by multiplying the principal amount then
outstanding hereunder by a fraction, the numerator of which is the
principal amount of Pioneer Bonds purchased for cash from any such
distribution and retired, and the denominator of which is the principal
amount of Pioneer Bonds outstanding immediately prior to such purchase,
together with accrued and unpaid interest thereon to the date of payment.
(e) NET CASH PROCEEDS. For purposes of clauses (c) and (d) of this
paragraph, "Net Cash Proceeds" shall mean the aggregate cash proceeds
received by SFHI or SLVC, as the case may be, in respect of an Asset Sale
or the Wet 'N Wild Sale, net of the direct costs relating to such Asset
Sale or Wet 'N Wild Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation
expenses incurred as a result thereof, taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements), amounts required to be applied to the
repayment of indebtedness secured by a lien on the asset or assets that
were the subject of such Asset Sale or Wet 'N Wild Sale and any
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reserve established by SFHI or SLVC, as the case may be, in accordance with
generally accepted accounting principles against any liabilities associated
with such Asset Sale or Wet 'N Wild Sale and retained by SFHI or SLVC, as
the case may be, or any of such corporations' affiliates after such Asset
Sale or Wet 'N Wild Sale.
All payments on account of principal and interest shall be made in lawful
money of the United States of America at such place as the holder hereof may
from time to time designate in writing to the Santa Fe.
This Note shall be governed and construed in accordance with the laws of
the State of Nevada and the courts of the State of Nevada shall have exclusive
jurisdiction.
Should payment of any principal or interest not be made when due, Santa Fe
shall be in default under this Note. If such default is not cured within
fifteen (15) days from the date thereof, the whole sum of principal and interest
shall become immediately due and payable at the option of the holder, and the
holder may thereafter exercise any and all rights and remedies it may possess at
law or in equity for the collection of this obligation.
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In addition to and not in limitation of the foregoing, Santa Fe further
agrees to pay costs and reasonable attorney's fees incurred by the holder of
this Note in endeavoring to collect any amounts payable hereunder which are not
paid when due.
SANTA FE GAMING CORPORATION, a
Nevada corporation,
By:
------------------------------------
Its:
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