<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---------- EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---------- EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 1-12962
GRAND CASINOS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1689535
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
130 Cheshire Lane
Minnetonka, Minnesota 55305
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(Address of principal executive offices) (Zip Code)
(612) 449-9092
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of November 7, 1997, there were 41,956,587 shares of Common Stock, $0.01 par
value per share, outstanding.
Page 1 of 35
<PAGE> 2
GRAND CASINOS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page of
Form 10-Q
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of 3
September 28, 1997 and December 29, 1996
Consolidated Statements of Earnings 4
for the three months ended September 28, 1997
and September 29, 1996
Consolidated Statements of Earnings for the 5
nine months ended September 28, 1997 and
September 29, 1996
Consolidated Statements of Cash Flows 6
for the nine months ended September 28, 1997
and September 29, 1996
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND 13
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
----------------
ITEM 1. Legal Proceedings 22
ITEM 6. Exhibits and Reports On Form 8-K 31
</TABLE>
- 2 -
<PAGE> 3
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION> (UNAUDITED)
SEPTEMBER 28, DECEMBER 29,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $140,333 $147,254
Current installments of notes receivable 7,171 7,792
Accounts receivable 17,407 13,463
Deferred income taxes 12,835 9,910
Other current assets 14,823 15,335
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Total Current Assets 192,569 193,754
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Property and Equipment-Net 934,205 821,827
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Other Assets:
Cash and cash equivalents-restricted 6,078 10,276
Securities available for sale 18,180 23,603
Notes receivable-less current installments 27,945 30,772
Investments in and notes from unconsolidated affiliates 8,467 8,823
Debt issuance and deferred licensing costs-net 20,596 22,851
Other long-term assets 19,620 10,910
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Total Other Assets 100,886 107,235
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TOTAL ASSETS $1,227,660 $1,122,816
===================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $13,249 $20,002
Current installments of long-term debt 1,355 4,101
Current installments of capital lease obligations 16,871 15,358
Accrued interest 15,664 5,486
Accrued payroll and related expenses 22,914 23,418
Other accrued expenses 46,935 31,542
- -----------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 116,988 99,907
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Long-term Liabilities:
Long-term debt-less current installments 454,498 455,002
Capital lease obligations-less current installments 87,447 56,740
Deferred income taxes 74,208 71,494
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Total Long-Term Liabilities 616,153 583,236
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TOTAL LIABILITIES 733,141 683,143
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COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares;
common stock issued and outstanding 41,930 and 41,796
at September 28, 1997 and December 29, 1996, respectively 420 418
Additional paid-in-capital 413,530 412,576
Net unrealized gains (losses) on securities available for sale 187 1,358
Retained earnings 80,382 25,321
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Total Shareholders' Equity 494,519 439,673
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,227,660 $1,122,816
===================================================================================================================================
</TABLE>
* FROM AUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE> 4
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
----------------------------------------
SEPT. 28, 1997 SEPT. 29. 1996
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<S> <C> <C>
REVENUES:
Casino $125,764 $109,391
Hotel 10,074 6,516
Food and beverage 17,546 14,941
Management fee income 23,133 22,447
Retail and other income 3,715 3,071
- ---------------------------------------------------------------------------------------------------------------------------------
Gross Revenues 180,232 156,366
Less: Promotional allowances (12,651) (9,641)
- ---------------------------------------------------------------------------------------------------------------------------------
NET REVENUES 167,581 146,725
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COSTS AND EXPENSES:
Casino 42,972 39,509
Hotel 2,462 1,512
Food and beverage 8,753 8,980
Other operating expenses 3,205 3,111
Depreciation and amortization 12,206 14,930
Lease expense 4,993 4,992
Selling, general and administrative 48,371 40,638
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Total Costs and Expenses 122,962 113,672
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EARNINGS FROM OPERATIONS 44,619 33,053
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OTHER INCOME (EXPENSE):
Interest income 2,846 4,063
Interest expense (10,954) (11,167)
Other (64) (245)
Equity in loss of unconsolidated affiliates (465) (10,910)
- ---------------------------------------------------------------------------------------------------------------------------------
Total other expense, net (8,637) (18,259)
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 35,982 14,794
Provision for income taxes 13,817 11,291
- ---------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $22,165 $3,503
=================================================================================================================================
EARNINGS PER COMMON SHARE $0.51 $0.08
=================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND COMMON
STOCK EQUIVALENTS OUTSTANDING 43,606 42,827
=================================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-4-
<PAGE> 5
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
-------------------------------------------------
SEPT. 28, 1997 SEPT. 29, 1996
-------------- --------------
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<S> <C> <C>
REVENUES:
Casino $348,072 $263,991
Hotel 26,650 18,555
Food and beverage 48,498 34,009
Management fee income 62,001 61,539
Retail and other income 10,139 8,406
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Revenues 495,360 386,500
Less: Promotional allowances (34,774) (22,961)
- ----------------------------------------------------------------------------------------------------------------------------------
NET REVENUES 460,586 363,539
- ----------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Casino 121,040 90,195
Hotel 6,572 4,561
Food and beverage 25,272 18,500
Other operating expenses 9,655 8,686
Depreciation and amortization 36,167 28,269
Lease expense 14,173 13,164
Selling, general and administrative 133,271 102,487
- ----------------------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 346,150 265,862
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EARNINGS FROM OPERATIONS 114,436 97,677
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OTHER INCOME (EXPENSE):
Interest income 9,540 13,501
Interest expense (33,572) (21,733)
Other (176) (245)
Equity in loss of unconsolidated affiliates (665) (14,749)
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Total expense, net (24,873) (23,226)
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Earnings before income taxes 89,563 74,451
Provision for income taxes 34,503 33,892
- ----------------------------------------------------------------------------------------------------------------------------------
Net Earnings $55,060 $40,559
==================================================================================================================================
EARNINGS PER COMMON SHARE $1.27 $0.94
==================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES AND COMMON
STOCK EQUIVALENTS OUTSTANDING 43,320 42,985
==================================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-5-
<PAGE> 6
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 28, 1997 SEPTEMBER 29, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $55,060 $40,559
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 36,167 28,269
Equity in loss of unconsolidated affiliates 665 14,749
Deferred income taxes - 616
Write-off of project note receivables - (340)
Changes in operating assets and liabilities:
Other current assets (4,815) (15,460)
Accounts payable (6,753) 7,314
Accrued expenses 25,067 34,849
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 105,391 110,556
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (1,328) (453)
Proceeds from repayment of notes receivable 5,868 10,349
Investment in and notes receivable from unconsolidated affiliates (338) (53,664)
Payments for property and equipment (144,100) (261,508)
Sales (Purchases) of securities available for sale 4,045 (19,750)
Decrease in cash and cash equivalents-restricted and other 4,198 649
Increase in other long-term assets (10,309) (13,455)
- -------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (141,964) (337,832)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock-net 956 15,047
Debt issuance costs and deferred financing costs (276) (5,018)
Proceeds from issuance of long-term debt 45,088 18,429
Payments on long-term debt and capital lease obligations (16,116) (9,664)
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 29,652 18,794
- -------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (6,921) (208,482)
Cash and cash equivalents - beginning of period 147,254 334,772
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $140,333 $126,290
====================================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of capitalized interest $29,731 $9,883
Income taxes $19,642 $15,719
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-6-
<PAGE> 7
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1997
(UNAUDITED)
NOTE 1 UNAUDITED FINANCIAL STATEMENTS
Grand Casinos, Inc. and Subsidiaries, collectively the Company,
develop, construct, and manage land-based and dockside casinos and
related hotel and entertainment facilities. The Company owns and
operates two dockside casinos on the Mississippi Gulf Coast and one
dockside casino in Tunica County, Mississippi, and manages two
Indian-owned casinos in Minnesota and two Indian-owned casinos in
Louisiana. Related hotel facilities at Company-owned Grand Casino
Biloxi, located in Biloxi, Mississippi, are currently under
construction. In addition, related hotel facilities at Indian-owned
Grand Casino Hinckley, located in Hinckley, Minnesota, are currently
under construction and are scheduled to open during the fourth quarter.
The Company also owns approximately 42% of Stratosphere Corporation
(Stratosphere), which owns and operates Stratosphere Tower, Casino &
Hotel in Las Vegas, Nevada. Stratosphere filed for reorganization
under Chapter 11 of the Bankruptcy Code on January 27, 1997. See Note
7 for further discussion regarding Stratosphere's bankruptcy
proceeding.
The consolidated financial statements include the accounts of Grand
Casinos, Inc. and its wholly-owned and majority-owned subsidiaries.
Investments in unconsolidated subsidiaries representing between 20% and
50% of voting stock are accounted for on the equity method. All
material intercompany balances and transactions have been eliminated in
the consolidation.
The accompanying unaudited consolidated financial statements have
been prepared by the Company in accordance with generally accepted
accounting principles for interim financial information, in accordance
with the rules and regulations of the Securities and Exchange
Commission. Pursuant to such rules and regulations, certain financial
information and footnote disclosures normally included in the
consolidated financial statements have been condensed or omitted. In
the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for fair presentation have
been included.
Operating results for the nine months ended September 28, 1997, are not
necessarily indicative of the results that may be expected for the
fiscal year ending December 28, 1997.
-7-
<PAGE> 8
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1 UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
The consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included
in the Company's annual report on Form 10-K for the fiscal year ended
December 29, 1996.
NOTE 2 NEW ACCOUNTING PRONOUNCEMENT
During March 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 128, Earnings Per Share
(SFAS 128), which requires the disclosure of basic earnings per share
and diluted earnings per share. The Company will adopt Statement 128
in fiscal 1997.
NOTE 3 PREOPENING EXPENSES
Expenses incurred prior to opening of Company-owned facilities are
capitalized and amortized to expense using the straight-line method
over the six months following the opening of the respective facilities.
These costs include direct payroll and other operating costs incurred
prior to commencement of operations. Depreciation and amortization for
the nine months ended September 28, 1997 and September 29, 1996
includes approximately $1.3 million and $5.6 million of preopening
amortization expense, respectively. For the three months ended
September 28, 1997 and September 29, 1996, approximately $.4 million
and $5.2 million, respectively, of preopening amortization was
expensed.
NOTE 4 INTEREST COSTS
The Company's policy is to capitalize interest incurred on debt during
the course of qualifying construction projects at Company-owned
facilities. Such costs are amortized over the related assets'
estimated useful lives. For the nine months ended September 28, 1997
and September 29, 1996, approximately $6.3 million and $14.1 million,
respectively, of interest cost was capitalized. For the three months
ended September 28, 1997 and September 29, 1996, approximately $2.6
million and $1.0 million, respectively, of interest cost was
capitalized.
-8-
<PAGE> 9
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 NOTES RECEIVABLE
Notes receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
Sept. 28, 1997 Dec. 29, 1996
-------------- -------------
<S> <C> <C>
Notes from the Coushatta Tribe with
interest at a defined reference rate plus
1% (not to exceed 16%), receivable in
84 monthly installments through
January 2002 23,182 23,800
Notes from the Tunica-Biloxi Tribe with
interest at a defined reference rate plus
1% (not to exceed 16%), receivable in
84 monthly installments through June
2001 10,963 12,558
Other, less allowance for doubtful accounts
of $3,050 and $3,050, respectively 971 2,206
------- -------
$35,116 $38,564
Less current installments of notes
receivable (7,171) (7,792)
------- -------
Notes receivable-less current installments $27,945 $30,772
======= =======
</TABLE>
NOTE 6 LONG-TERM DEBT
On November 30, 1995, the Company completed its public offering of
$450.0 million of eight year 10.125% First Mortgage Notes due December
1, 2003. The First Mortgage Notes are secured by substantially all the
assets of Grand Casino Biloxi and Grand Casino Gulfport, Grand Casino
Tunica assets included in Phase 1 development, capital stock owned by
the Company in Stratosphere, and certain existing notes receivable due
the Company from Tribes. The notes require semi-annual payments of
interest only on June 1 and December 1 of each year which commenced
June 1, 1996, until December 1, 2003, at which time the entire
principal plus accrued interest is due and payable. The notes may be
redeemed at the Company's option, in whole or in part, anytime after
December 1, 1999, at a premium, declining ratably thereafter to par
value on December 1, 2002, to maturity.
-9-
<PAGE> 10
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6 LONG-TERM DEBT (CONTINUED)
On May 10, 1996, the Company completed a $120 million Senior Secured
Term Loan through BankAmerica Leasing and Capital Group. The five-year
Senior Secured Term Loan Facility, with varying interest rates ranging
from 1.75% to 2.50% over the LIBO Rate, is being used for the continued
development of the Company's Grand Casino Tunica project, located in
northern Mississippi, just outside of Memphis, Tennessee.
Approximately $90 million of the loan was used for furniture, fixtures
and equipment for the 340,000 square foot casino complex. The balance
of approximately $30 million was used to construct a 600-room hotel at
Grand Casino Tunica. As of September 28, 1997, $104.3 million was the
balance owing under the Senior Secured Term Loan Facility (see Note 8).
NOTE 7 COMMITMENTS AND CONTINGENCIES
STRATOSPHERE CORPORATION
The Company owns approximately 42% of the equity in Stratosphere
Corporation. Stratosphere did not make its scheduled First Mortgage
Notes interest payment due on November 15, 1996. On January 6, 1997,
Stratosphere, the Company and an ad hoc committee representing the
holders of more than 57% of Stratosphere's First Mortgage Notes reached
an agreement-in-principle for restructuring the debt and equity of
Stratosphere.
On January 27, 1997, Stratosphere filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Pursuant to the
agreement-in-principle, Stratosphere and the Company filed a joint
proposed plan of reorganization for Stratosphere and a related
investment agreement, which stated the terms and conditions pursuant to
which the Company agreed to participate in the reorganization of
Stratosphere.
The proposed plan of reorganization and the related investment
agreement provided that the Company's obligations to participate in the
proposed reorganization were conditioned on Stratosphere obtaining
average monthly consolidated cash flow (as defined in the investment
agreement) of at least $2,267,000 for the months between October 1,
1996 and June 30, 1997. In June 1997, Stratosphere announced that its
average monthly-consolidated cash flow for the eight-month period ended
May 25, 1997 was $1,470,996. As a result of Stratosphere's inability to
satisfy the consolidated cash flow condition, the Company terminated
the original investment agreement.
- 10 -
<PAGE> 11
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
STRATOSPHERE CORPORATION (CONTINUED)
On June 20, 1997, Stratosphere and the Company entered into an
amended investment agreement and filed an amended plan of
reorganization, establishing modified terms and conditions of the
Company's proposed participation in the reorganization of
Stratosphere.
On July 25, 1997, Stratosphere advised the Company that an
independent committee of Stratosphere's Board of Directors had
reached a preliminary determination that a restructuring proposal
presented to Stratosphere by High River Limited Partnership and
American Real Estate Partners, L.P. (collectively "High River") was
more favorable than the restructuring proposal contained in the
amended investment agreement and plan of reorganization. The
restructuring proposal presented by High River did not provide the
Company with any opportunity to invest in or otherwise participate
in the ownership of reorganized Stratosphere.
On July 31, 1997, the Company announced that the members of the
Company's Board of Directors who had also been members of
Stratosphere's Board of Directors had resigned from their positions
as Stratosphere board members. Accordingly, no director or officer
of the Company is a director or officer of Stratosphere.
On October 9, 1997, the Company announced that it had been unable to
reach an agreement with the holders of a significant portion of
Stratosphere's first mortgage for a consensual reorganization of
Stratosphere involving the Company's participation. The Company also
announced that it had informed Stratosphere that the Company had no
intention of participating in any Stratosphere plan of
reorganization. The Company has terminated the amended investment
agreement with Stratosphere entered into on June 20, 1997.
In connection with the issuance of Stratosphere's First Mortgage
Notes, the Company delivered a Standby Equity Commitment pursuant to
which the Company agreed, under the terms and conditions described
in the Standby Equity Commitment, to purchase up to $20 million of
additional equity in Stratosphere during each of the first three
years Stratosphere is operating (as defined in the Standby Equity
Commitment) to the extent Stratosphere's consolidated cash flow (as
defined in the Standby Equity Commitment) during each of such years
does not reach $50 million. As a result of Stratosphere's bankruptcy
filing and the application of federal bankruptcy laws, the Company
has contended that the enforceability of the Standby Equity
Commitment is in question.
- 11 -
<PAGE> 12
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
STRATOSPHERE CORPORATION (CONTINUED)
This issue is currently the subject of litigation in Stratosphere's
Chapter 11 bankruptcy proceedings and in U.S. District Court in
Nevada. See Part II - Item 1. Legal Proceedings of this Form 10-Q.
LOAN GUARANTY AGREEMENTS
The Company has guaranteed two loan and security agreements entered
into by the Tunica-Biloxi Tribe of Louisiana for $14.1 million for
the purpose of financing casino equipment and for $16.5 million for
the purpose of purchasing a hotel and additional casino equipment.
The agreements extend through 1998 and 2000, respectively, and as of
September 28, 1997, the amounts outstanding were $4.0 million and
$14.0 million, respectively.
The Company has also guaranteed loan and security agreements entered
into by the Coushatta Tribe of Louisiana for $22.3 million for the
purpose of financing casino equipment. The agreements are for three
years and have various maturity dates through 1998, and as of
September 28, 1997, the amounts outstanding were $5.8 million. In
addition, on May 1, 1997, the Company entered into a guaranty
agreement related to a loan agreement entered into by the Coushatta
Tribe of Louisiana in the amount of $25.0 million, for the purpose
of constructing a hotel and acquiring additional casino equipment.
The guaranty will remain in effect until the loan is paid. The loan
term is approximately five years.
The Company has entered into a master hotel development agreement
with Casino Resource Corporation for the Grand Casino Hinckley Inn
adjacent to Grand Casino Hinckley. The Company has guaranteed the
mortgage for the hotel which had an unpaid principal balance of $2.5
million as of September 28, 1997.
The Company has provided a limited guaranty for the purpose of
financing Stratosphere Corporation hotel and casino equipment
subject to a maximum limitation amount of $8.7 million.
OTHER
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation will
not have a material adverse effect on the results of operations or
the financial position of the Company. See Part II - Item 1. Legal
Proceedings of this Form 10-Q.
- 12 -
<PAGE> 13
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
NOTE 8 SUBSEQUENT EVENTS
On September 30, 1997 the Company closed on $100 million in bank
financing. The 5-year Revolving Senior Secured Capital Lease Term
Loan Facility will be used for the continued development of Grand
Casino Tunica, located in northern Mississippi, and Grand Casino
Gulfport, located in Gulfport, Mississippi, as well as other general
corporate purposes. As of November 7, 1997, no advances relating to
this financing had been made.
On October 14, 1997, the Company closed on a $115.0 million, 9.0%,
seven year, Senior Unsecured Note offering. The proceeds from the
offering will be used to refinance an existing bank capital lease in
approximately the same amount (see Note 6). The Senior Notes will
rank pari passu in right of payment with all senior indebtedness and
senior in right of payment to all subordinated indebtedness.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company develops, constructs and manages land-based and dockside
casinos. The Company's revenues are derived from the Company-owned
casinos of Grand Casino Biloxi, Grand Casino Gulfport, and Grand Casino
Tunica, and from management fee income from Grand Casino Mille Lacs,
Grand Casino Hinckley, Grand Casino Avoyelles, and Grand Casino
Coushatta.
Pursuant to the Mille Lacs, Hinckley, Avoyelles, and Coushatta
management contracts, the Company receives a fee based on the net
distributable profits (as defined in the contracts) generated by Grand
Casino Mille Lacs, Grand Casino Hinckley, Grand Casino Avoyelles, and
Grand Casino Coushatta. The management agreement for Grand Casino
Mille Lacs will expire in April 1998, and will not be renewed. No
decision has been made with respect to renewal of the management
agreement for Grand Casino Hinckley, which expires in June 1999.
The Company commenced operations in August 1990, and opened its
Company-owned casinos, Grand Casino Gulfport, Grand Casino Biloxi
and Grand Casino Tunica in May 1993, January 1994 and June 1996,
respectively.
- 13 -
<PAGE> 14
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
OVERVIEW (CONTINUED)
Therefore, the Company's limited operating history may not be
indicative of the Company's future performance. In addition, a
comparison of results from year to year may not be meaningful due to
the opening of new facilities during such years. The Company's
growth strategy contemplates expanding existing operations and
establishing additional gaming operations.
The successful implementation of this growth strategy is contingent
upon the satisfaction of various conditions and the occurrence of
certain events, including obtaining governmental approvals and
increased competition, many of which are beyond the control of the
Company. The Company expects that Grand Casino Biloxi and Grand
Casino Gulfport may be affected by the addition of new competition
on the Mississippi Gulf Coast. The following discussion and
analysis should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 29, 1996.
Revenues from owned and operated casinos are calculated in
accordance with generally accepted accounting principles and are
presented in a manner consistent with industry practice. Net
distributable profits from Grand Casino Mille Lacs, Grand Casino
Hinckley, Grand Casino Avoyelles, and Grand Casino Coushatta are
computed using a modified cash basis of accounting in accordance
with the management contracts. The effect of the use of the
modified cash basis of accounting is to accelerate the write-off of
capital equipment and leased assets, which thereby impacts the
timing of net distributable profits.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 28, 1997 COMPARED TO THE NINE MONTHS
ENDED SEPTEMBER 29, 1996
Earnings Per Common Share and Net Earnings
Earnings per common share for the nine months ended September 28,
1997 were $1.27 versus $.94 for the prior year's comparable period
based upon weighted average common shares outstanding of 43.3
million and 43.0 million for the nine month periods ended September
28, 1997 and September 29, 1996, respectively.
- 14 -
<PAGE> 15
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Earnings Per Common Share and Net Earnings (Continued)
Net earnings for the nine months ended September 28, 1997 increased
$14.5 million to $55.1 million. Net earnings for the comparable
period in the prior fiscal year included a $14.7 million loss
related to unconsolidated affiliates, whereas net earnings for the
nine months ended September 28, 1997 includes only a $.7 million
loss related to unconsolidated affiliates. An increase of $11.8
million in interest expense is offset by less preopening expense and
improved operating results at Grand Casino Tunica.
Gross Revenues
Grand Casino Biloxi, Grand Casino Gulfport, and Grand Casino Tunica
generated $348.1 million in gross casino revenue and $85.3 million
in gross hotel, food, beverage, retail and entertainment revenue
during the nine months ended September 28, 1997. During the nine
months ended September 29, 1996, Grand Casino Tunica, Grand Casino
Biloxi and Grand Casino Gulfport generated $264.0 million in gross
casino revenue and $61.0 million in gross food, beverage, and retail
revenue. The increase in gross revenues is primarily related to
Grand Casino Tunica which contributed $141.3 million of gross
revenues for the nine months ended September 28, 1997 compared to
$38.0 million for the same period in 1996. Grand Casino Tunica was
open all of 1997 compared to being open approximately one quarter in
1996. Combined gross revenues for Grand Casino Biloxi and Grand
Casino Gulfport increased $5.1 million for the nine months ended
September 28, 1997 compared to the same period in the prior year.
For the nine months ended September 28, 1997, management fees were
approximately even with management fees for the same period in the
prior year.
Net Revenues
Net revenues for the Company increased $97.0 million for the nine
months ended September 28, 1997 compared to the same period in the
prior year. The increase in net revenues is primarily due to Grand
Casino Tunica, which contributed net revenues of $128.3 million
during the nine months ended September 28, 1997 compared to $35.1
million during the nine months ended September 29, 1996. Grand
Casino Tunica was open all of 1997 compared to being open
approximately one quarter in 1996. In addition, combined net
revenues of Grand Casino Biloxi and Grand Casino Gulfport increased
$3.5 million for the nine months ended September 28, 1997 compared
to the same period in the prior year.
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<PAGE> 16
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Net Revenues (Continued)
The Company implemented a new marketing campaign in 1997 for Grand
Casino Biloxi and Grand Casino Gulfport. This campaign has
increased the level of play, however, it has made only a slight
impact on win due to lower win percentages in table games and slots.
The increase in net revenues for Grand Casino Biloxi and Grand
Casino Gulfport has principally been due to non-gaming revenues.
Costs and Expenses
Total costs and expenses increased $80.3 million from $265.9 million
for the nine months ended September 29, 1996 to $346.2 million for
the nine months ended September 28, 1997.
Casino expenses were $121.0 million for the nine months ended
September 28, 1997 compared to $90.2 million for the comparable
period last year. The increase of $30.8 million was comprised of
additional casino expenses for Grand Casino Tunica in the amount of
$26.4 million. Grand Casino Tunica was open all of 1997, compared
to being open approximately one quarter in 1996. The casino expenses
for Grand Casino Biloxi and Grand Casino Gulfport increased $4.4
million for the nine months ended September 28, 1997 compared to the
same period in the prior year. The increase was principally a
result of additional complimentaries and labor to service and
attract guests. Food and beverage expenses increased $6.8 million
to $25.3 million during the nine-month period ended September 28,
1997, $4.7 million of which related to Grand Casino Tunica being
open all of 1997 compared to approximately one quarter in 1996.
Selling, general, and administrative expenses increased $30.8
million from $102.5 million for the nine months ended September 29,
1996 to $133.3 million for the nine months ended September 28, 1997.
Grand Casino Tunica's selling, general, and administrative expenses
increased $32.6 million from the nine months ended September 29,
1996 to the nine months ended September 28, 1997. In addition,
combined selling, general, and administrative expenses for Grand
Casino Biloxi and Grand Casino Gulfport increased slightly from 1996
to 1997 ($.5 million). Corporate expense decreased $2.8 million
from the nine months ended September 29, 1996 to the nine months
ended September 28, 1997 as a result of corporate reorganization
plans implemented in late 1996.
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<PAGE> 17
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Other
Interest income decreased by $4.0 million to $9.5 million for the
nine months ended September 28, 1997 from the comparable period last
year. This decrease is primarily attributable to lower cash
balances due to construction at Grand Casino Biloxi and Grand Casino
Tunica. Interest expense increased by $11.8 million to $33.6
million for the nine months ended September 28, 1997 compared to
$21.7 million for the nine months ended September 29, 1996. The
increase is the result of a reduction in capitalized interest
relating to the construction at Grand Casino Tunica and interest
expense incurred under the $120 million Senior Secured Term Loan.
Capitalized interest was $6.3 million and $14.1 million for the nine
months ended September 28, 1997 and September 29, 1996,
respectively.
THREE MONTHS ENDED SEPTEMBER 28, 1997 COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 29, 1996
Earnings Per Common Share and Net Earnings
Earnings per common share for the three months ended September 28,
1997 were $.51 versus $.08 for the prior year's comparable period
based upon weighted average common shares outstanding of 43.6
million and 42.8 million for the three month periods ended September
28, 1997 and September 29, 1996, respectively. Net earnings
increased $18.7 million to $22.2 million for the three months ended
September 28, 1997 compared to the same period in the prior year.
The increase in net earnings is attributable to no loss from
Stratosphere for the three months ended September 29, 1997, and
preopening expenses at Grand Casino Tunica in 1997. During the
three months ended September 29, 1996, equity in loss of
unconsolidated affiliates was $10.9 million, whereas, for the three
months ended September 29, 1997 it was $.5 million. Grand Casino
Tunica expensed $5.2 million in preopening costs for the three
months ended September 29, 1996 compared to $.3 million for the same
period in 1997.
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<PAGE> 18
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Gross Revenues
Grand Casino Biloxi, Grand Casino Gulfport, and Grand Casino Tunica
generated $125.8 million in gross casino revenue and $31.3 million in
gross hotel, food, beverage, retail, and entertainment revenue during
the three months ended September 28, 1997. During the three months
ended September 29, 1996, Grand Casino Tunica, Grand Casino Biloxi and
Grand Casino Gulfport generated $109.4 million in gross casino revenue
and $24.5 million in gross hotel, food, beverage and retail revenue.
The increase in gross revenues is primarily attributable to the opening
of Grand Casino Tunica which contributed $54.7 million of gross revenues
for the three months ended September 28, 1997 compared to $33.0 million
for the same period in 1996. Combined gross revenues for Grand Casino
Biloxi and Grand Casino Gulfport increased $1.5 million for the three
months ended September 28, 1997 compared to the same period in the prior
year. Management fees were approximately even for the three months
ended September 28, 1997 compared to the same period in the prior year.
Net Revenues
Net revenues for the Company increased $20.9 million for the three
months ended September 28, 1997 compared to the same period in the
prior year. The increase in net revenues is primarily due to Grand
Casino Tunica, which contributed net revenues of $49.7 million during
the three months ended September 28, 1997, compared to $30.3 million
during the three months ended September 29, 1996. In addition, combined
net revenues of Grand Casino Biloxi and Grand Casino Gulfport increased
$.8 million for the three months ended September 28, 1997 compared to
the same period in the prior year.
Costs and Expenses
Total costs and expenses increased $9.3 million from $113.7 million
for the three months ended September 29, 1996 to $123.0 million for the
three month period ended September 28, 1997. Casino expenses were $43.0
million for the three month period ended September 28, 1997 compared to
$39.5 million for the comparable period in 1996.
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<PAGE> 19
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Costs and Expenses (Continued)
The increase of $3.5 million was comprised of additional casino
expenses for Grand Casino Tunica in the amount of $2.6 million and a
combined increase for Grand Casino Biloxi and Grand Casino Gulfport
of $.9 million for the three months ended September 28, 1997
compared to the same period in the prior year. Food and beverage
expenses decreased $.2 million to $8.8 million for the three month
period ended September 28, 1997. Selling, general, and
administrative expenses increased $7.7 million from $40.6 million
for the three months ended September 29, 1996 to $48.4 million for
the three months ended September 28, 1997.
Grand Casino Tunica's selling, general, and administrative expenses
increased $5.3 million from the three months ended September 29,
1996 to the three months ended September 28, 1997. In addition,
combined selling, general, and administrative expenses for Grand
Casino Biloxi and Grand Casino Gulfport increased $2.5 million from
the three months ended September 29, 1996 to the three months ended
September 28, 1997. Corporate expenses for the three months ended
September 28, 1997 decreased slightly from the same period in 1996.
Other
Interest income decreased by $1.2 million to $2.8 million for the
three months ended September 28, 1997. This decrease is primarily
attributable to lower cash balances due to construction at Grand
Casino Biloxi and Grand Casino Tunica. Interest expense decreased
by $.2 million to $11.0 million for the three months ended September
28, 1997 compared to $11.2 million for the three months ended
September 29, 1996. The decrease is the result of an increase in
capitalized interest relating to the construction at Grand Casino
Tunica and Grand Casino Biloxi, which is offset by interest expense
on additional advances under the $120 million Senior Secured Term
Loan. Capitalized interest was $2.6 million and $1.0 million for
the three months ended September 28, 1997 and September 29, 1996,
respectively.
- 19 -
<PAGE> 20
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
CAPITAL RESOURCES AND LIQUIDITY
As of September 28, 1997, the Company had cash and cash equivalents
of $140.3 million. For the nine months ended September 28, 1997,
capital expenditures were $144.1 million compared to $261.5 million
for the comparable period in the prior year. The majority of
expenditures for the nine months ended September 28, 1997, related
to additional construction at Grand Casino Biloxi and Grand Casino
Tunica. Based on the projected cash generated from operations,
current cash and cash equivalents, and available credit facilities,
the Company believes it will have sufficient resources to fund
operations and proposed capital expenditures during the next twelve
months.
Pursuant to the Company's covenants related to the $450.0 million
First Mortgage Notes and the $115.0 million Senior Notes, the
Company is restricted from paying cash dividends and must maintain
certain financial ratios. Because of such restrictions and to
provide funds for the growth of the Company, no cash dividends are
expected to be paid on common shares in the foreseeable future.
FORWARD-LOOKING STATEMENTS
Certain information included in this Form 10-Q and other materials
filed or to be filed by the Company with the Securities and Exchange
Commission (as well as information included in oral statements or
other written statements made or to be made by the Company) contains
statements that are "forward-looking" under the Federal Private
Securities Litigation Reform Act of 1995.
Forward-looking statements are those which include statements
regarding projections, plans and objectives, and future economic
performance, together with statements regarding any assumptions
pertaining to such projections, plans and objectives, and future
economic performance. While these forward-looking statements
reflect the best judgment of the Company, based on information
available on the date of this Form 10-Q, such statements are all
subject to risks and uncertainties that could cause actual results
to vary from the forward-looking statements made in this Form 10-Q.
Those variances could be significant.
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<PAGE> 21
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
FORWARD-LOOKING STATEMENTS (CONTINUED)
Such forward-looking statements involve risks and uncertainties that
could significantly affect future results, and accordingly, such results
may differ from those expressed in any forward-looking statements made
by or on behalf of the Company. These risks and uncertainties
include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and
debt service (including sensitivity to fluctuations in interest rates),
changes in competitive conditions, domestic or global economic
conditions, changes in federal or state tax laws or the administration
of such laws and changes in gaming laws or regulations (including the
legalization of gaming in certain jurisdictions). In addition to any
specific risks and uncertainties mentioned or discussed in this Form
10-Q, the risks and uncertainties discussed in detail in the Company's
1996 Form 10-K, provide information which should be considered in
evaluating any of the Company's forward-looking statements. In
addition, you should be aware that the facts and circumstances which
exist when any forward-looking statements are made and on which those
forward-looking statements are based, may significantly change in the
future, thereby rendering obsolete the forward-looking statements on
which such facts and circumstances were based.
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<PAGE> 22
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following descriptions are summaries of the status of each of the
following legal proceedings as of November 1, 1997. More complete
information may be obtained by reviewing the court files pertaining to
such actions.
COHEN - FEDERAL ACTION
In April 1994, Harvey Cohen brought an action in the United States
District Court for the District of Nevada -- Harvey Cohen, et. al. v.
Stratosphere Corporation, et. al. - Case No. CV-S-94-00334 DWH (LRL)
-- against various defendants, including Grand Casinos Resorts, Inc.
("Resorts"), a wholly owned subsidiary of the Company. Cohen alleges
federal securities law violations and various state law claims in
connection with the initial public offering (the "IPO") for
Stratosphere Corporation ("Stratosphere"). Cohen brought the action as
a class action, and alleges that the defendants deprived the
plaintiffs of the opportunity to purchase Stratosphere common stock
in the IPO.
In April 1995, the federal district court dismissed the action. In
May 1995, the plaintiffs filed a notice of appeal of the dismissal
with the United States Court of Appeals for the Ninth Circuit. The
appeal -- Case No. CA 95-16098 -- was subsequently briefed and argued,
and in June 1997, the Appeals Court issued its decision affirming the
district court's dismissal of the action. Because the plaintiffs did
not request reconsideration or review of the Appeals Court's decision
by the applicable deadline, the district court's dismissal of the
action is final.
COHEN - STATE ACTION
In August 1995, Harvey Cohen brought an action in the District Court
for Clark County, Nevada -- Harvey J. Cohen, et. al. v. Stratosphere
Corporation, et. al. - Case No. A349985 -- against various defendants,
including Grand Casinos Resorts, Inc., a wholly owned subsidiary of
the Company. Cohen brought the action as a class action, and makes
substantially the same claims as made in the federal action brought by
Cohen and described above.
The state action has, by agreement of the parties, been stayed pending
a decision in the federal court action. The Company intends to
request that the state action be dismissed.
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<PAGE> 23
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
CALIFORNIA VIDEO POKER LITIGATION
In April 1996, three plaintiffs brought an action in the Superior
Court of California, County of San Diego -- Tom Payne, et. al. v.
Aztar Corporation, et. al. - Case No. 698592 -- against several
defendants, including the Company. The plaintiffs alleged that the
defendants participated in fraudulent and misleading conduct
intended to induce plaintiffs to play video poker machines based on
false beliefs regarding how such machines operate, and that the
defendants' alleged conduct violates various provisions of
California law. The plaintiffs sought to have the action certified
a class action, compensatory and punitive damages and other relief.
The defendants submitted various motions to dismiss the action,
including a motion by the Company based on the claim that the
California court does not have jurisdiction over the Company.
In March 1997, the court required the plaintiffs to file a
complaint stating more clearly the basis on which the plaintiffs
claim the defendants violated California law. In April 1997, the
plaintiffs filed an amended complaint. The amended complaint
included allegations that the defendants directed advertisements to
California residents that included false statements regarding video
poker machines.
The Company continued to assert that the California courts do not
have jurisdiction over the Company, and, therefore submitted a
motion to dismiss the action with respect to the Company.
Certain of the defendants in the action - - not including the
Company - - submitted a motion to dismiss based on a claim that the
U.S. Constitution precludes California courts from considering the
plaintiffs' claims against those defendants. Before the court ruled
on the Company's jurisdictional motion, the court granted the other
defendants' constitutional motion. The Company has been advised that
the plaintiffs intend to appeal the dismissal order.
- 23 -
<PAGE> 24
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
CALIFORNIA VIDEO POKER LITIGATION (CONTINUED)
In October 1997, the plaintiffs and the defendants who submitted
jurisdictional motions to dismiss (including the Company) entered
into an agreement pursuant to which the plaintiffs' claims against
those defendants will be dismissed. If the plaintiffs' appeal is
unsuccessful, the constitutional dismissal will apply to all
defendants in the action - - including the Company. If the
plaintiff's appeal is successful, the plaintiffs will have the
right to reinstate their claims against all of the defendants. If
the plaintiffs reinstate their claims against the Company, the
Company will be free to reinstate its jurisdictional motion to
dismiss.
SLOT MACHINE LITIGATION - NEVADA
In April 1994, William H. Poulos brought an action in the United
States District Court for the Middle District of Florida, Orlando
Division -- William H. Poulos, et. al. vs. Caesars World, Inc. et.
al. - Case No. 39-478-CIV-ORL-22 -- in which various parties
(including the Company) alleged to operate casinos or be slot
machine manufacturers were named as defendants. The plaintiff
sought to have the action certified as a class action.
A subsequently filed action -- William Ahearn, et. al. vs. Caesars
World, Inc., et. al. - Case No. 94-532-CIV-ORL-22 -- made similar
allegations and was consolidated with the Poulos action.
Both actions included claims under the federal
Racketeering-Influenced and Corrupt Organizations Act and under
state law, and sought compensatory and punitive damages. The
plaintiffs claimed that the defendants are involved in a scheme to
induce people to play electronic video poker and slot machines
based on false beliefs regarding how such machines operate and the
extent to which a player is likely to win on any given play.
In December 1994, the consolidated actions were transferred to the
United States District Court for the District of Nevada.
In September 1995, Larry Schreier brought an action in the United
States District Court for the District of Nevada -- Larry Schreier,
et. al. vs. Caesars World, Inc., et. al. - Case No.
CV-S-95-00923-DWH (RJJ).
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<PAGE> 25
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
SLOT MACHINE LITIGATION - NEVADA (CONTINUED)
The plaintiffs' allegations in the Schreier action were similar to
those made by the plaintiffs in the Poulos and Ahearn actions,
except that Schreier claimed to represent a more precisely defined
class of plaintiffs than Poulos or Ahearn.
In December 1996, the court ordered the Poulos, Ahearn and Schreier
actions consolidated under the title William H. Poulos, et. al. vs.
Caesars World, Inc., et. al. - Case No. CV-S-94-1126 - DAE (RJJ) -
(Base File), and required the plaintiffs to file a consolidated and
amended complaint. In February 1997, the plaintiffs filed a
consolidated and amended complaint.
In March 1997, various defendants (including the Company) filed (i)
motions to dismiss the amended complaint, and (ii) motions to stay
the consolidated action pending consideration of the plaintiff's
allegations by various gaming regulatory authorities. As of
November 1, 1997, the Company has not received notice of a decision
regarding any of such motions.
STRATOSPHERE SECURITIES LITIGATION - FEDERAL
In August 1996, a complaint was filed in the United States District
Court for the District of Nevada -- Michael Caesar, et. al. v.
Stratosphere Corporation, et. al. -- against Stratosphere
Corporation and others, including the Company. The complaint was
filed as a class action, and sought relief on behalf of
Stratosphere shareholders who purchased their stock between
December 19, 1995 and July 22, 1996. The complaint included
allegations of misrepresentations, federal securities law
violations and various state law claims.
In August through October 1996, several other nearly identical
complaints were filed by various plaintiffs in the United States
District Court for the District of Nevada. Those complaints
include the following:
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<PAGE> 26
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE SECURITIES LITIGATION - FEDERAL (CONTINUED)
o Regina Peltz, et. al. v. Stratosphere Corporation, et. al.
o Robert Stengel, et. al. v. Stratosphere Corporation, et. al.
o Robert Johnson, et. al. v. Stratosphere Corporation, et. al.
o David Vallee, et. al. v. Stratosphere Corporation, et. al.
o Anthony L. Poli, et. al. v. Stratosphere Corporation, et. al.
o Darrell Russell and Gail Russell, et. al. v. Stratosphere Corporation,
et. al.
o Mitchell Gordon, et. al. v. Stratosphere Corporation, et. al.
o James J. Enright, Jr. v. Stratosphere Corporation, et. al.
The defendants in the above actions submitted motions requesting that all of
the actions be consolidated. Those motions were granted on January 15, 1997,
and the consolidated action is entitled In Re: Stratosphere Corporation
Securities Litigation - Master File No. CV-S-96-00708 PMP (RLH).
In February 1997, the plaintiffs filed a consolidated and amended complaint
naming various defendants, including the Company and certain officers and
directors of the Company. The amended complaint includes claims under federal
securities laws and Nevada laws based on acts alleged to have occurred between
December 19, 1995 and July 26, 1996.
In February 1997, various defendants, including the Company and the
Company's officers and directors named as defendants, submitted motions to
dismiss the amended complaint on various grounds, including the Company's claim
that the amended complaint failed to state a valid cause of action against the
Company and the Company's officers and directors.
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<PAGE> 27
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE SECURITIES LITIGATION - FEDERAL (CONTINUED)
In May 1997, the court issued an order dismissing the action. The
original dismissal order did not allow the plaintiffs to amend
their complaint in an attempt to state a valid cause of action.
In June 1997, the plaintiffs asked the court to reconsider its
dismissal order. In July 1997, the court amended its dismissal
order to provide that the amended complaint was dismissed, but that
the plaintiffs could submit a second amended complaint by August
22, 1997.
In August 1997, the plaintiffs filed a second amended complaint.
In September 1997, certain of the defendants, including the Company
and the Company's officers and directors named as defendants,
submitted motions to dismiss the second amended complaint on
various grounds, including the Company's claim that the second
amended complaint fails to state a valid cause of action against
the Company and those officers and directors.
STRATOSPHERE SECURITIES LITIGATION - STATE
In August 1996, a complaint was filed in the District Court for
Clark County, Nevada -- Victor M. Opitz, et. al. v. Robert E.
Stupak, et. al. - Case No. A363019 -- against various defendants,
including the Company. The complaint seeks relief on behalf of
Stratosphere Corporation shareholders who purchased stock between
December 19, 1995 and July 22, 1996. The complaint alleges
misrepresentations, state securities law violations and other state
claims.
The Company and certain defendants submitted motions to (i)
dismiss, or (ii) stay the state court proceedings pending
resolution of the federal court actions described above. The court
has stayed further proceedings pending the proceedings in federal
district court In Re: Stratosphere Securities Litigation.
GRAND SECURITIES LITIGATION - FEDERAL
In September and October 1996, two actions (Joel Blake, et. al. v.
Grand Casinos, Inc., et. al. and Robert D. Marcus, et. al. v. Grand
Casinos, Inc., et. al.) were filed by Company Shareholders in the
United States District Court for the District of Minnesota against
the Company and certain of the Company's directors and officers.
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<PAGE> 28
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
GRAND SECURITIES LITIGATION - FEDERAL (CONTINUED)
The complaints allege misrepresentations, federal securities law
violations and other claims in connection with the Stratosphere
project.
The actions have been consolidated In Re: Grand Casinos, Inc.
Securities Litigation - Master File No. 4-96-890 -- and the
plaintiffs filed a consolidated complaint. The defendants have
submitted a motion to dismiss the consolidated complaint. The
court heard arguments regarding the motion in May 1997, but as of
November 1, 1997, the Company has not received notice of a decision
regarding the motion to dismiss.
MICHAELS COMPANY OF NEVADA
In December 1996, a complaint was filed in the United States
District Court for the District of Nevada -- Michaels Company of
Nevada v. Grand Casinos, Inc., et. al. - Case No. CV-S-96-01006-PMP
(RLH) -- against the Company and others, including certain
directors and officers of the Company. The complaint alleges that
the Company improperly withdrew from an agreement to finance and
develop a potential Indian-owned gaming project in California.
The complaint seeks lost profits that which the plaintiff claims it
would have received had the Company not withdrawn. The Company
believes that it had legitimate business reasons to withdraw from
the proposed project.
The Company and the other defendants have submitted answers denying
the allegations of the complaint. The parties to the action then
began discovery.
In October 1997, plaintiff and the defendants signed a settlement
agreement pursuant to which the complaint will be dismissed.
DERIVATIVE ACTION
In February 1997, certain shareholders of the Company brought an
action in the Hennepin County, Minnesota District Court -- Lloyd
Drilling, et. al. v. Lyle Berman, et. al. - Court File No.
MC97-002807 -- against certain officers and directors of the
Company. The plaintiffs allege that those officers and directors
breached certain fiduciary duties to the shareholders of the
Company as a result of certain transactions involving the
Stratosphere project.
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<PAGE> 29
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
DERIVATIVE ACTION (CONTINUED)
The Company's Board of Directors appointed an independent special
litigation committee to evaluate whether the Company should pursue
the claims against the officers and directors.
The Company's officers and directors named as defendants in the
action have filed an answer to the complaint. The special
litigation committee asked the court stay discovery in the action
pending completion of the special litigation committee's evaluation.
Discovery has been stayed pending the special litigation committee's
evaluation. As of November 1, 1997, the special litigation
committee is conducting its evaluation.
STRATOSPHERE VACATION CLUB LITIGATION
In late April, 1997, the Company and Grand Casinos Resorts, Inc.
("Resorts"), a wholly-owned subsidiary of the Company, were served
with a summons and a second amended complaint in an action in
District Court in Clark County, Nevada -- Richard Duncan, et. al.
vs. Bob and Jane Doe Stupak, et. al. - Case No. A370127. The
plaintiffs allege that the defendants, including the Company and
Resorts, engaged in acts that which constitute "consumer fraud"
under Nevada law in connection with vacation packages which the
defendants claim to have purchased from Bob Stupak. The plaintiffs
also allege "unjust enrichment", breach of contract and other
claims under Nevada law. The plaintiffs seek to pursue their claims
as a class action, and ask for various remedies including
compensatory damages and punitive damages.
The Company has submitted a motion to dismiss the complaint as it
pertains to Company and Resorts. The court denied the motion to
dismiss. Discovery has been commenced.
STRATOSPHERE NOTEHOLDER COMMITTEE BANKRUPTCY COURT ACTION
In June 1997, the Official Committee of Noteholders (the
"Committee") in the Chapter 11 bankruptcy proceeding for
Stratosphere Corporation ("Stratosphere") pending in the United
States Bankruptcy Court for the District of Nevada (the "Bankruptcy
Court") filed a motion by which the Committee sought Bankruptcy
Court approval for assumption (on behalf of Stratosphere's
bankruptcy estate) of the March 1995 Standby Equity Commitment (the
"Standby Equity Commitment") between Stratosphere and the Company.
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<PAGE> 30
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE NOTEHOLDER COMMITTEE BANKRUPTCY COURT ACTION
(CONTINUED)
In the motion, the Committee seeks Bankruptcy Court authorization to
compel the Company to fund up to $60 million in "capital
contributions" to Stratosphere over three years, based on the
Committee's claim that such "contributions" are required by the
Standby Equity Commitment.
Both the Company and Stratosphere opposed the Committee's motion.
The Bankruptcy Court held a preliminary hearing on the Committee's
motion in June 1997, and set evidentiary hearings in December 1997
on the issues raised by the Committee's motion and the Company's
opposition to that motion.
The Company has asserted, in its opposition to the Committee's
motion, that the Standby Equity Commitment is not enforceable in the
Stratosphere bankruptcy proceeding as a matter of law.
Discovery is ongoing with respect to some of the factual issues
raised by the Committee's motion and the Company's opposition to
that motion. Accordingly, the Bankruptcy Court has not issued a
definitive ruling regarding the Committee's motion.
STANDBY EQUITY COMMITMENT LITIGATION
In September 1997, the successor trustee (the "Stratosphere
Trustee") under the indenture pursuant to which Stratosphere
Corporation issued Stratosphere Corporation's first mortgage notes
filed a complaint in the United States District Court for the
District of Nevada - - IBJ Schroeder Bank & Trust Company, Inc. vs.
Grand Casinos, Inc. - File No. CV-S- 97-01252-DWH (RJJ) - - naming
the Company as defendant.
The complaint alleges that the Company failed to perform under a
Standby Equity Commitment entered into between Stratosphere
Corporation and the Company in connection with Stratosphere
Corporation's issuance of such first mortgage notes in March 1995.
The complaint seeks an order compelling specific performance of what
the Committee claims are Grand's obligations under the Standby
Equity Commitment. The Stratosphere Trustee filed the complaint in
its alleged capacity as a third party beneficiary under the Standby
Equity Commitment.
- 30 -
<PAGE> 31
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STANDBY EQUITY COMMITMENT LITIGATION (CONTINUED)
The complaint was served on the Company on October 6, 1997. The
Company has yet not responded to the complaint.
The Company has, however, asserted in previous filings with the United
States Securities and Exchange Commission (and continues to assert)
that as a result of Stratosphere's bankruptcy filing and the
application of bankruptcy laws, the enforceability of the Standby
Equity Commitment is in question.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No.
4.1 Second Amendment to Indenture, dated as of September 16,
1997, by and among Grand Casinos, Inc., Grand Casinos
Resorts, Inc., Grand Casinos of Mississippi, Inc. -
Gulfport, Grand Casinos of Mississippi, Inc. - Biloxi,
Grand Casinos Biloxi Theater, Inc., Mille Lacs Gaming
Corporation, Grand Casinos of Louisiana, Inc. -
Tunica-Biloxi, Grand Casinos of Louisiana, Inc. -
Coushatta, GCA Acquisition Subsidiary, Inc., BL
Development Corp., BL Resorts I, Inc., GCG Resorts I,
Inc., Grand Casinos Nevada I, Inc., and Firstar Bank of
Minnesota, N.A.
4.2 Third Amendment to Indenture, dated as of September 25,
1997, by and among Grand Casinos, Inc., Grand Casinos
Resorts, Inc., Grand Casinos of Mississippi, Inc. -
Gulfport, Grand Casinos of Mississippi, Inc. - Biloxi,
Grand Casinos Biloxi Theater, Inc., Mille Lacs Gaming
Corporation, Grand Casinos of Louisiana, Inc. -
Tunica-Biloxi, Grand Casinos of Louisiana, Inc. -
Coushatta, GCA Acquisition Subsidiary, Inc., BL
Development Corp., BL Resorts I, Inc., GCG Resorts I,
Inc., Grand Casinos Nevada I, Inc., BL Resorts I, LLC,
GCG Resorts I, LLC and Firstar Bank of Minnesota, N.A.
- 31 -
<PAGE> 32
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
(a) Exhibit No. (Continued)
4.3 Indenture, dated as of October 16, 1997, between Grand
Casinos, Inc., the Guarantors and Firstar Bank of
Minnesota, N.A. (Incorporated herein by reference to
Exhibit 4.1 to the Company's Registration Statement on
Form S-4, as amended, File No. 333-39009.)
4.4 Registration Rights Agreement, dated as of October 16,
1997, between Grand Casinos, Inc., the Guarantors and
Donaldson, Lufkin & Jenrette Securities Corporation.
(Incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4, as amended,
File No. 333-39009.)
10.1 Participation Agreement, dated as of September 29, 1997,
by and among BL Resorts I, LLC, GCG Resorts I, LLC,
Grand Casinos, Inc. and its Subsidiaries Listed on
Schedule I, as Guarantors, Hancock Bank, the Persons
Listed on Schedule II, as Lenders, Societe Generale, The
Sumitomo Bank, Limited, and Wells Fargo Bank, National
Association, as Co-Agents, the Mitsubishi Trust and
Banking Corporation, as Lead Manager, and BA Leasing &
Capital Corporation, as Arranger and Administrative
Agent, including Appendix.
10.2 Master Lease Agreement and Deed of Trust, dated as of
September 29, 1997, between Hancock Bank and BL Resorts
I, LLC and GCG Resorts I, LLC.
10.3 Reducing Revolving Loan Agreement, dated as of September
29, 1997, among Hancock Bank, BA Leasing & Capital
Corporation, Societe Generale, The Sumitomo Bank,
Limited, and Wells Fargo Bank, National Association, The
Mitsubishi Trust and Banking Corporation, and the Persons
named on Schedule I, as Lenders.
10.4 Trust Agreement, dated as of September 29, 1997, between
BL Resorts I, LLC and GCG Resorts I, LLC, and Hancock
Bank.
- 32 -
<PAGE> 33
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
(a) Exhibit No. (Continued)
10.5 Guaranty, dated as of September 29, 1997 of Grand
Casinos, Inc., and its Subsidiaries named therein in
favor of the Beneficiaries named therein.
10.6 Purchase Agreement, dated as of October 9, 1997, by and
among Grand Casinos, Inc., the Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation. (Incorporated
herein by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-4, as amended, File No.
333-39009.)
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarterly period
ended September 28, 1997.
- 33 -
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 12, 1997 GRAND CASINOS, INC.
----------------------------
Registrant
By/ S /THOMAS J. BROSIG
----------------------------
Thomas J. Brosig, President
/ S / TIMOTHY J. COPE
----------------------------
Timothy J. Cope
Executive Vice President and
Chief Financial Officer
- 34 -
<PAGE> 1
EXHIBIT 4.1
SECOND AMENDMENT TO INDENTURE
THIS SECOND AMENDMENT TO INDENTURE (the "Second Amendment") is dated as of
September 16, 1997, by and among GRAND CASINOS, INC., a Minnesota corporation
(the "Issuer"), GRAND CASINOS RESORTS, INC., GRAND CASINOS OF MISSISSIPPI, INC.
- - GULFPORT, GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI, GRAND CASINOS BILOXI
THEATER, INC., MILLE LACS GAMING CORPORATION, GRAND CASINOS OF LOUISIANA, INC.
- -- TUNICA - BILOXI, GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA, GCA
ACQUISITION SUBSIDIARY, INC. and BL DEVELOPMENT CORP. (collectively, the
"Guarantors"), BL RESORTS I, INC., GCG RESORTS I, INC., and GRAND CASINOS
NEVADA I, INC. (collectively the "New Guarantors") and FIRSTAR BANK OF
MINNESOTA, N.A., a national association, as trustee (the "Trustee").
RECITALS:
WHEREAS, the Issuer, the Guarantors and the Trustee previously entered
into that certain Indenture dated as of November 30, 1995, as amended by First
Amendment to Indenture, dated as of May 10, 1996 (the "Indenture"), providing
for the issuance of the Issuer's 10 1/8% First Mortgage Notes due December 1,
2003 (the "Notes"); and
WHEREAS, pursuant to Section 9.01(a)(v) of the Indenture, the Issuer, the
Guarantors and the Trustee may amend the Indenture without the consent of the
Holders of the Notes to make any change that would provide any additional
rights or benefits to the Holders of the Notes (including providing for
additional Note Guarantees pursuant to the Indenture); and
WHEREAS, pursuant to Article XI of the Indenture, the Issuer has formed
certain additional Subsidiaries respectively identified as follows: BL Resorts
I, Inc., a Minnesota corporation, GCG Resorts I, Inc., a Minnesota corporation
and Grand Casinos Nevada I, Inc., a Minnesota corporation (collectively, the
"New Guarantors"); and
WHEREAS, pursuant to Article XI of the Indenture, the Issuer and each
Guarantor separately, independently and respectively desire to cause each of
the New Guarantors to become "Guarantors" and to amend the Indenture to provide
for the same; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party hereto agrees as
follows for the benefit of the others and for the equal and ratable benefit of
the Holders:
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed in the Indenture.
-1-
<PAGE> 2
Section 2. Additional Note Guarantees. Pursuant to Section 11.02 of the
Indenture, the New Guarantors each hereby, on a senior basis, jointly and
severally unconditionally guarantee the Company's obligations under the Note,
the Indenture, and the Note Collateral Documents to the full extent specified
in Article XI of the Indenture as if such New Guarantor was a Guarantor at the
time of execution of the Indenture on November 30, 1995.
Section 3. Representations and Warranties. The Issuer, the Guarantors and
the New Guarantors represent and warrant to the Trustee that this Second
Amendment constitutes the respective legal, valid and binding obligations of
each of said parties, enforceable in accordance with its terms (subject as to
enforcement of remedies to any applicable bankruptcy, reorganization,
moratorium or similar laws or principles of equity affecting the enforcement of
creditor's rights generally).
Section 4. Entire Agreement; Ratification. This Second Amendment
represents the entire agreement between the parties and supersedes any prior
agreements or understandings with respect to the subject matter hereof. Except
as modified or supplemented in connection herewith, the Indenture shall
continue in full force and effect in accordance with its original terms.
Section 5. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of New York and the United
States of America.
Section 6. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument. In making proof hereof, it shall not be necessary to
produce or account for any counterpart other than the one signed by the party
against which enforcement is sought.
[THE REMAINDER OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK]
-2-
<PAGE> 3
IN WITNESS WHEREOF, this Second Amendment To Indenture is executed as of
the date first above written.
ISSUER:
GRAND CASINOS, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GUARANTORS
GRAND CASINOS RESORTS, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS BILOXI THEATER, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
<PAGE> 4
MILLE LACS GAMING CORPORATION
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS OF LOUISIANA, INC. -- TUNICA - BILOXI
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GCA ACQUISITION SUBSIDIARY, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
BL DEVELOPMENT CORP.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
NEW GUARANTORS
BL RESORTS I, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
<PAGE> 5
GCG RESORTS I, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
GRAND CASINOS NEVADA I, INC.
BY:
-----------------------------
Name: Timothy J. Cope
-----------------------------
Title: CFO
-----------------------------
TRUSTEE
FIRSTAR BANK OF MINNESOTA, N.A.
BY:
-----------------------------
Name: Frank P. Leslie, III
-----------------------------
Title: Vice President
-----------------------------
BY:
-----------------------------------
Name: Angela M. Weidell - LaBathe
---------------------------
Title: Assistant Vice President
---------------------------
<PAGE> 1
EXHIBIT 4.2
THIRD AMENDMENT TO INDENTURE
THIS THIRD AMENDMENT TO INDENTURE (the "Third Amendment") is dated as of
September 25, 1997, by and among GRAND CASINOS, INC., a Minnesota corporation
(the "Issuer"), GRAND CASINOS RESORTS, INC., GRAND CASINOS OF MISSISSIPPI, INC.
- - GULFPORT, GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI, GRAND CASINOS BILOXI
THEATER, INC., MILLE LACS GAMING CORPORATION, GRAND CASINOS OF LOUISIANA, INC.
- -- TUNICA - BILOXI, GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA, GCA
ACQUISITION SUBSIDIARY, INC., BL DEVELOPMENT CORP., BL RESORTS I, INC., GCG
RESORTS I, INC., and GRAND CASINOS NEVADA I, INC. (collectively, the
"Guarantors"), BL RESORTS I, LLC and GCG RESORTS I, LLC (collectively the "New
Guarantors") and FIRSTAR BANK OF MINNESOTA, N.A., a national association, as
trustee (the "Trustee").
RECITALS:
WHEREAS, the Issuer, the Guarantors and the Trustee previously entered
into that certain Indenture dated as of November 30, 1995, as amended by First
Amendment to Indenture, dated as of May 10, 1996, and as amended by Second
Amendment to Indenture, dated as of September 16, 1997 (collectively, the
"Indenture"), providing for the issuance of the Issuer's 10 1/8% First Mortgage
Notes due December 1, 2003 (the "Notes"); and
WHEREAS, pursuant to Section 9.01(a)(v) of the Indenture, the Issuer, the
Guarantors and the Trustee may amend the Indenture without the consent of the
Holders of the Notes to make any change that would provide any additional
rights or benefits to the Holders of the Notes (including providing for
additional Note Guarantees pursuant to the Indenture); and
WHEREAS, pursuant to Article XI of the Indenture, the Issuer has formed
certain additional Subsidiaries respectively identified as follows: BL Resorts
I, LLC, a Minnesota limited liability company and GCG Resorts I, LLC, a
Minnesota limited liability company (collectively, the "New Guarantors"); and
WHEREAS, pursuant to Article XI of the Indenture, the Issuer and each
Guarantor separately, independently and respectively desire to cause each of
the New Guarantors to become "Guarantors" and to amend the Indenture to provide
for the same; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party hereto agrees as
follows for the benefit of the others and for the equal and ratable benefit of
the Holders:
-1-
<PAGE> 2
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed in the Indenture.
Section 2. Additional Note Guarantees. Pursuant to Section 11.02 of the
Indenture, the New Guarantors each hereby, on a senior basis, jointly and
severally unconditionally guarantee the Company's obligations under the Note,
the Indenture, and the Note Collateral Documents to the full extent specified
in Article XI of the Indenture as if such New Guarantor was a Guarantor at the
time of execution of the Indenture on November 30, 1995.
Section 3. Representations and Warranties. The Issuer, the Guarantors and
the New Guarantors represent and warrant to the Trustee that this Third
Amendment constitutes the respective legal, valid and binding obligations of
each of said parties, enforceable in accordance with its terms (subject as to
enforcement of remedies to any applicable bankruptcy, reorganization,
moratorium or similar laws or principles of equity affecting the enforcement of
creditor's rights generally).
Section 4. Entire Agreement; Ratification. This Third Amendment
represents the entire agreement between the parties and supersedes any prior
agreements or understandings with respect to the subject matter hereof. Except
as modified or supplemented in connection herewith, the Indenture shall
continue in full force and effect in accordance with its original terms.
Section 5. Governing Law. This Third Amendment shall be governed by and
construed in accordance with the laws of the State of New York and the United
States of America.
Section 6. Counterparts. This Third Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument. In making proof hereof, it shall not be necessary to
produce or account for any counterpart other than the one signed by the party
against which enforcement is sought.
[THE REMAINDER OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK]
-2-
<PAGE> 3
IN WITNESS WHEREOF, this Third Amendment To Indenture is executed as of
the date first above written.
ISSUER:
GRAND CASINOS, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GUARANTORS
GRAND CASINOS RESORTS, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS BILOXI THEATER, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
<PAGE> 4
MILLE LACS GAMING CORPORATION
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS OF LOUISIANA, INC. -- TUNICA - BILOXI
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GCA ACQUISITION SUBSIDIARY, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
BL DEVELOPMENT CORP.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
BL RESORTS I, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
<PAGE> 5
GCG RESORTS I, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GRAND CASINOS NEVADA I, INC.
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
NEW GUARANTORS
BL RESORTS I, LLC
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
GCG RESORTS I, LLC
BY:
------------------------------
Name: Timothy J. Cope
------------------------------
Title: CFO
------------------------------
TRUSTEE
FIRSTAR BANK OF MINNESOTA, N.A.
BY:
------------------------------
Name: Frank P. Leslie, III
------------------------------
Title: Vice President
------------------------------
<PAGE> 1
EXHIBIT 10.1
[EXECUTION COPY]
PARTICIPATION AGREEMENT
dated as of September 29, 1997
among
BL RESORTS I, LLC and GCG RESORTS I, LLC,
as Initial Lessees and Construction Agents,
GRAND CASINOS, INC.
AND ITS SUBSIDIARIES LISTED ON SCHEDULE I,
as Guarantors,
HANCOCK BANK,
not in its individual capacity except as
expressly stated herein, but solely
as Lessor, Borrower and Trustee
THE PERSONS LISTED ON SCHEDULE II,
as Lenders,
SOCIETE GENERALE,
THE SUMITOMO BANK, LIMITED, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Agents
THE MITSUBISHI TRUST AND BANKING CORPORATION,
as Lead Manager
and
BA LEASING & CAPITAL CORPORATION,
as Arranger and Administrative Agent
--------------------------------------------------
Acquisition, Construction and Equipment Financing
For a Hotel, Convention Center and Restaurant Associated with
Grand Casino Tunica in Tunica County, Mississippi
and a Hotel Associated with
Grand Casino Gulfport in Harrison County, Mississippi
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
ARTICLE I DEFINITIONS; EXHIBITS AND SCHEDULES
ARTICLE II EFFECTIVENESS; FUNDING OF ADVANCES; GENERAL PROVISIONS
<S> <C>
2.1. Effectiveness of Agreement............................................................... 2
2.2. Advances -- General Provisions........................................................... 4
2.3. Notes.................................................................................... 7
2.4. Procedures for Advances; Use of Proceeds................................................. 7
2.5. Postponement of Advance.................................................................. 9
2.6. The Account.............................................................................. 10
2.7. Reduction in Commitments and Prepayments................................................. 10
2.8. Obligations Several...................................................................... 11
2.9. Timing of Advances to Trustee and Payments to the Lenders................................ 11
2.10. Lenders' Instructions to the Administrative Agent........................................ 12
2.11. Computations............................................................................. 13
2.12. Commitment Fee........................................................................... 13
2.13. Fees..................................................................................... 13
2.14. Legal and Tax Representation............................................................. 14
2.15. Replacement or Purchase of Leased Property............................................... 14
ARTICLE III CONDITIONS TO ADVANCES AND COMPLETION
3.1. Conditions Precedent to All Advances..................................................... 14
3.2. Conditions to Initial Construction Advance Date With Respect to Each Facility............ 16
3.3. Conditions to the Initial Construction Advance for Facility Costs With
Respect to Each Facility................................................................. 20
3.4. Conditions to all Construction Advances for Building Costs............................... 23
3.5. Conditions to Construction Advances for Facility F,F&E Costs............................. 25
3.6. Deliveries with Respect to Construction Advances for Facility Costs After a Default...... 26
3.7. Conditions to Completion Date of Any Facility............................................ 28
3.8. Additional Conditions Precedent To Revolving Advances.................................... 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Lessees, Construction Agents and Guarantors............ 30
4.2. Representations and Warranties of Each Lender............................................ 40
4.3. Representations and Warranties of Trustee................................................ 41
4.4. Representations and Warranties of the Administrative Agent............................... 43
ARTICLE V COVENANTS OF LESSEES, CONSTRUCTION AGENTS AND PARENT
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
5.1. Further Assurances....................................................................... 44
5.2. Consolidation, Merger, Sale, etc......................................................... 44
5.3. Corporate Existence...................................................................... 47
5.4. Ownership of Lessee...................................................................... 48
5.5. Liens.................................................................................... 48
5.6. Financial Covenant Compliance Certificates............................................... 48
5.7. Investigation by Governmental Authorities................................................ 49
5.8. Books and Records........................................................................ 49
5.9. Payment of Taxes, Etc.................................................................... 49
5.10. Inspection............................................................................... 50
5.11. Maintenance of Property, etc............................................................. 50
5.12. Maintenance of Insurance................................................................. 50
5.13. Change of Name or Principal Place of Business............................................ 51
5.14. Financial and Other Information.......................................................... 51
5.15. Securities............................................................................... 53
5.16. Financial Covenants...................................................................... 54
5.17. Searches and Estoppel Certificates...................................................... 55
5.18. Amendment of Levee Board Lease........................................................... 55
5.19. Changes to Contracts for a System........................................................ 55
5.20. Additional Construction Covenants........................................................ 56
5.21. Compliance with Laws..................................................................... 56
5.22. Fiscal Year.............................................................................. 56
5.23. May 10, 1996 Lease Documents............................................................. 56
5.24. Year 2000................................................................................ 57
ARTICLE VI COVENANTS OF TRUSTEE, AGENTS AND LENDERS
6.1. Covenants of Trustee, Agents and the Lenders............................................. 57
6.2. Restrictions On and Effect of Transfe.................................................... 59
6.3. Participations........................................................................... 62
6.4. Required Transfers....................................................................... 63
6.5. Reciprocal Easement Arrangements......................................................... 63
ARTICLE VII GENERAL INDEMNITY
7.1. General Indemnification.................................................................. 63
7.2. Environmental Indemnity.................................................................. 66
ARTICLE VIII GENERAL TAX INDEMNITY
8.1. General Tax Indemnity.................................................................... 68
8.2. Exclusions from General Tax Indemnity.................................................... 68
8.3. Contests................................................................................. 69
8.4. Payments................................................................................. 71
8.5. Reports.................................................................................. 71
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
8.6. Withholding Tax Exemption.............................................................. 71
ARTICLE IX MISCELLANEOUS
9.1. Survival of Agreements................................................................. 72
9.2. No Broker, etc......................................................................... 72
9.3. Notices................................................................................ 72
9.4. Counterparts........................................................................... 73
9.5. Amendments............................................................................. 73
9.6. Headings, etc.......................................................................... 74
9.7. Governing Law.......................................................................... 74
9.8. Transaction Costs...................................................................... 74
9.9. Severability........................................................................... 74
9.10. Successors and Assigns................................................................. 74
9.11. Final Agreement........................................................................ 75
9.12. No Third-Party Beneficiaries........................................................... 75
9.13. Release of Lien; Termination of Ground Lease........................................... 75
9.14. Reproduction of Documents.............................................................. 77
9.15. Submission to Jurisdiction............................................................. 77
9.16. Jury Trial............................................................................. 77
9.17. Payments Set Aside..................................................................... 78
9.18. Trust Agreement........................................................................ 78
9.19. Consent to Conflict of Interest........................................................ 78
9.20. No Marshaling/Other Loans and Set-Off.................................................. 78
9.21. Joint and Several...................................................................... 79
9.22. Further Additional Lessees............................................................. 79
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
Schedule I -- List of Initial Subsidiary Guarantors
Schedule II -- Lender Commitments
Schedule III -- Notice Information, Funding Offices and Wire Instructions
Schedule IV -- General Description of Facilities; Estimated Completion Dates
Schedule V -- Required Licenses
Schedule VI -- Disclosure Schedule
Appendix 1 -- Definitions
Exhibit A -- Form of Master Lease
Exhibit B -- Form of Loan Agreement
Exhibit C -- Form of Trust Agreement
Exhibit D -- Form of Security Agreement
Exhibit E -- Form of Construction Agency Agreement
Exhibit F -- Form of Guaranty
Exhibit G-1 -- Form of Deed of Trust
Exhibit G-2 -- Form of Ground Lease
Exhibit H -- Form of Advance Request
Exhibit I -- Form of Bill of Sale
Exhibit J -- Form of Certificate of Acceptance
Exhibit K -- Form of Investor's Letter
Exhibit L -- Form of Purchase Order Assignment
Exhibit M-1 -- Form of Opinion of Counsel to Lessees, Construction Agents and Guarantors
Exhibit M-2 -- Form of Opinion of Mississippi Counsel to Lessee
Exhibit M-3 -- Form of Opinion of Counsel to Trustee
Exhibit M-4 -- Form of Opinion of Special Counsel to Administrative Agent
Exhibit N -- Form of Architect's Certificate
Exhibit O -- Form of Prime Contractor's Certificate
Exhibit P -- Form of Financial Covenant Compliance Certificate
Exhibit Q -- Form of Pricing Ratio Certificate
Exhibit R -- Form of Improvements Deed
Exhibit S -- Form of Officer's Certificate of Parent
Exhibit T-1 -- Form of Construction Certificate
Exhibit T-2 -- Form of Post-Default Construction Certificate
Exhibit U -- Form of Officer's Certificate of Lessee
Exhibit V -- Form of Joinder Agreement
</TABLE>
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<PAGE> 6
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement"), dated as of September
29, 1997, is entered into by and among BL RESORTS I, LLC, a Minnesota limited
liability company ("BL Resorts"), GCG RESORTS I, LLC, a Minnesota limited
liability company ("GCG Resorts" and, together with BL Resorts, the "Initial
Lessees"), each other party that becomes a Lessee with respect to the Operative
Documents in the manner specified in Section 9.22 hereof (collectively, with the
Initial Lessees, "Lessees"), as Lessees and Construction Agents; GRAND CASINOS,
INC., a Minnesota corporation, and each of its Subsidiaries listed on Schedule I
hereto, as Guarantors; HANCOCK BANK, not in its individual capacity, except as
expressly stated herein, but solely as Lessor, Borrower and Trustee; the Persons
listed on Schedule II hereto, as Lenders; SOCIETE GENERALE, THE SUMITOMO BANK,
LIMITED, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Agents; THE
MITSUBISHI TRUST AND BANKING CORPORATION, as Lead Manager; and BA LEASING &
CAPITAL CORPORATION, a California corporation, as the Arranger and
Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Master Lease and Lease
Supplements, Lessor will lease to Lessees, and Lessees will respectively lease
from Lessor, the Leased Property as designated in each Lease Supplement to be
leased by a designated Lessee; and
WHEREAS, pursuant to the Operative Documents, Lessees will apply
Construction Advances from Lessor to finance the construction of the Facilities
and the acquisition of the Facility F,F&E subject to the terms of the Master
Lease and Lease Supplements; and
WHEREAS, the Lenders are willing, on the terms and conditions
hereinafter set forth (including Article III), to provide financing to Lessor in
an aggregate principal amount not to exceed the Commitment Amount to fund
payment of Building Costs and Facility F,F&E Costs;
WHEREAS, upon completion of any one or more of the Facilities and
provided availability then exists under the aggregate Commitments, subject to
the terms and conditions set forth in the Operative Documents, Lessor shall
provide Revolving Advances to Lessees from time to time for purposes permitted
by the Operative Documents and the Lenders shall provide financing to Lessor in
amounts necessary to enable Lessor to make such Revolving Advances to Lessees;
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Participation Agreement
WHEREAS, to secure such financing by the Lenders, the Administrative
Agent, on behalf of the Lenders, will have the benefit of a Lien from Lessor on
all of Lessor's right, title and interest in and to the Leased Property and
other Collateral and an assignment of Lessor's rights in the Operative
Documents; and
WHEREAS, each Lessee's respective obligations under the Operative
Documents will be guaranteed pursuant to the terms of the Guaranty;
NOW, THEREFORE, in consideration of the mutual terms and conditions
herein contained, the parties hereto agree as follows:
ARTICLE
DEFINITIONS; EXHIBITS AND SCHEDULES
Unless the context shall otherwise require, capitalized terms used but
not defined herein (including those used in the foregoing recitals) shall have
the meanings specified in Appendix 1 hereto for all purposes hereof; and the
rules of interpretation set forth in Appendix 1 hereto shall apply to this
Agreement. All Exhibits and Schedules to this Agreement, either as originally
existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference. A matter disclosed on any
Schedule shall be deemed disclosed on all Schedules.
ARTICLE
EFFECTIVENESS; FUNDING OF ADVANCES; GENERAL PROVISIONS
SECTION III.1. Effectiveness of Agreement. This Agreement shall
become effective upon the occurrence of each of the following conditions (the
"Closing Date"):
(a) Authorization, Execution and Delivery of Certain
Operative Documents. This Agreement and each of the Master Lease, Loan
Agreement, Notes, Trust Agreement, and Guaranty shall have been duly
authorized, executed and delivered by each of the respective parties
thereto, and shall be in full force and effect. No Default or Event of
Default shall exist under any of the foregoing described Operative
Documents to which either Initial Lessee is a party (either before or
after giving effect to the transactions contemplated by the Operative
Documents).
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<PAGE> 8
Participation Agreement
(b) Formation and Authorization Documents and Certificates
of Good Standing. The Administrative Agent shall have received from
each Initial Lessee and each Guarantor:
(i) certificates of existence and good standing issued by the
Secretary of State of the State of Minnesota with respect to each
Initial Lessee and the Secretary of State of the state of its
formation with respect to each Guarantor, respectively, each dated
within thirty Business Days of the Closing Date;
(ii) copies of the respective articles of organization,
operating agreement, articles of incorporation and by-laws, as the
case may be, certified to be true and correct by a Responsible
Officer of each Initial Lessee and each Guarantor, respectively;
and
(iii) certificates of a Responsible Officer of each
Initial Lessee and each Guarantor certifying as to (A) the
resolutions of the Board of Governors of each Initial Lessee and
the Board of Directors of each Guarantor, respectively, duly
authorizing the execution, delivery and performance of each
Operative Document to which they are or will be a party, (B) the
incumbency and signature of Persons authorized to execute and
deliver such documents and agreements on behalf of each Initial
Lessee and each Guarantor, respectively, and (C) the accuracy of
all representations and warranties and absence of Defaults.
(c) No Material Adverse Effect. Since December 29, 1996,
there shall not have occurred any Material Adverse Effect.
(d) Opinions of Counsel. Agents, Trustee and each Lender
shall have received the legal opinions set forth below, each dated as
of Closing Date and addressed to Agents, Trustee and each Lender:
(i) from Maslon Edelman Borman & Brand, LLP, counsel to
Lessees, Construction Agents and Guarantors, as to the matters set
forth in the form of Exhibit M-1;
(ii) from Watkins Ludlam & Stennis, P.A., Mississippi counsel
to Lessees, as to the matters set forth in the form of Exhibit
M-2;
(iii) from William Abbott, internal counsel to Trustee, as to
the matters set forth in the form of Exhibit M-3;
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<PAGE> 9
Participation Agreement
(iv) from Sheppard, Mullin, Richter & Hampton LLP, special
counsel to the Lenders, as to the matters set forth in the form of
Exhibit M-4.
(e) Financial Statements. The Administrative Agent shall
have received (with copies for Trustee and each Lender) copies of the
audited consolidated financial statements of Parent and its
consolidated Subsidiaries for the Fiscal Year ended December 29, 1996,
together with a statement or certificate from the controller, treasurer
or chief financial officer of Parent to the effect that (i) such
financial statements are true, complete and correct, (ii) the financial
condition of Parent and the Obligor Subsidiaries has not materially
adversely changed since the date of such financial statements and (iii)
no other event affecting Parent and the Obligor Subsidiaries shall have
occurred since the date of such financial statements which could
reasonably be expected to have a Material Adverse Effect.
(f) Indenture. The Administrative Agent shall have
received (with copies for Trustee and each Lender) a true and correct
copy of (i) the Indenture and (ii) the Standby Equity Commitment,
together with all exhibits and schedules and all amendments and
modifications to each of the foregoing documents.
(g) Payment of Fees. Trustee and each Lender shall have
received payment of all fees which are due and payable on the Closing
Date pursuant to this Agreement (including without limitation the
up-front fee referenced in Section 2.13), the Arranger Fee Letter, the
Administrative Agent Fee Letter, the Co-Agents Fee Letter and the
Trustee Fee Letter. Arranger shall have received payment of the
Arrangement Fee. Arranger shall have received, for the account of (i)
each Co-Agent, payment of the Co-Agents Fee and (ii) Trustee, payment
of a one-time acceptance fee as set forth in the Trustee Fee Letter.
The Administrative Agent shall have received payment of the
Administrative Agency Fee. Lessees shall pay all Transaction Costs for
which payment has been requested as evidenced by an invoice or other
acceptable documentation.
SECTION III.2. Advances -- General Provisions.
(a) Advances Generally. Subject to the terms and
conditions hereinafter set forth, and in reliance on the
representations and warranties contained herein or made pursuant
hereto, upon receipt of an Advance Request, on the Advance Date
specified therein, each Lender shall finance a portion of the
applicable Advance by making a Loan to Trustee (in accordance with
Trustee's payment instructions set forth on Schedule III) in
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<PAGE> 10
Participation Agreement
an amount in immediately available funds equal to such Lender's
Commitment Percentage of the aggregate amount of the Advance being
funded on such Advance Date. Notwithstanding any other provision
hereof, no Lender shall be permitted or required to fund any Loan to
the extent that, after giving effect thereto, the aggregate amount
advanced would exceed such Lender's Commitment, or the aggregate
original principal amount of all Loans then outstanding would exceed
the Commitment Amount.
(b) Maximum Construction Advances. With respect to each of
the Facilities, the aggregate amount of Construction Advances disbursed
with respect to Facility Costs relating to any such Facility (or, if
applicable, the Construction Advance disbursed with respect to a
Completed Facility) shall not exceed the lesser of (i) the Fair Market
Sales Value of such Facility (including the value attributable to the
related Facility F,F&E) as determined by the applicable Appraisal
delivered pursuant to Section 3.3(i) and (ii) the amount specified
below opposite such Facility:
Facility Maximum Amount
-------- --------------
Tunica Hotel $ 47,000,000
Tunica Convention Center $ 11,000,000
Tunica Restaurant $ 4,000,000
Gulfport Hotel $ 40,000,000;
provided, however, that in no event will the aggregate amount of outstanding
Advances disbursed with respect to all Facilities exceed $100,000,000 at any
time.
(c) Revolving Advances - Generally. From and after the
Completion Date for any Facility (or, if applicable, from and after the
date upon which a Completed Facility becomes subject to the Master
Lease), so long as such Facility remains subject to the Master Lease,
amounts prepaid with respect to the Lease Supplement Balance relating
to such Facility (other than (i) Collateral Shortfall Payments, if any,
and (ii) payments made pursuant to Section 2.7(d), which payments may
not be readvanced) may be readvanced in accordance with the terms and
conditions hereof (including the satisfaction or waiver of all
applicable conditions set forth in Sections 3.1 and 3.8) and, in the
case of any such amount advanced by any Lender, in accordance with the
terms and conditions of the Loan Agreement.
(d) Failure of Lender to Fund. If the Administrative Agent
determines that any Lender (a "Defaulting Lender") will not make
available the amount (the "Defaulted Amount") which would constitute
its portion of the Advance specified in an Advance
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<PAGE> 11
Participation Agreement
Request, the Administrative Agent shall promptly notify each other Lender
(each, a "Non-Defaulting Lender") and specify the additional amounts required
to be funded by each Non-Defaulting Lender. Each Non-Defaulting Lender, as
soon as practicable after receipt of notice but not before the Advance Date,
shall transfer to the Bank for deposit into the Account, in immediately
available funds, its pro rata share of the Defaulted Amount, determined in the
same proportion that such Non-Defaulting Lender's Commitment bears to the
aggregate Commitments of all Non-Defaulting Lenders; provided that such amount,
together with all amounts previously funded by each Non-Defaulting Lender,
shall not exceed the Non-Defaulting Lender's Commitment and provided further
that if and to the extent that the Defaulted Amount is not funded by the
Non-Defaulting Lenders, the Administrative Agent shall reduce the amount of the
Advance Request so that the total Advance specified in the Advance Request
equals the aggregate revised fundings for the Advance Date.
If the Defaulted Amount cannot be fully funded by the Non-Defaulting
Lenders, the Administrative Agent shall so notify the Non-Defaulting Lenders and
give to all Non-Defaulting Lenders the opportunity to increase their respective
Commitments by notice in writing to the Administrative Agent; provided that
should the aggregate proposed increased Commitments by one or more
Non-Defaulting Lenders exceed the Defaulted Amount, the Administrative Agent
shall increase the Commitments of the participating Non-Defaulting Lenders on a
pro-rata basis in accordance with the respective amounts by which such
Non-Defaulting Lenders have offered to participate, it being understood that in
no event shall the aggregate amount funded by any Lender exceed the amount of
such Lender's Commitment, after giving effect to any increase in such Commitment
pursuant to this sentence.
In the event of any funding of all or a portion of the Defaulted Amount
by the Non-Defaulting Lenders, the following rules shall apply notwithstanding
any other provision in any Operative Document:
(i) The Commitment of the Defaulting Lender shall be decreased
in an amount equal to the total aggregate increase, if any, in the
Commitments of the Non-Defaulting Lenders pursuant to this Section
2.2(d) and the Commitment Percentages of the Lenders shall be
revised accordingly;
(ii) A Defaulting Lender shall be obligated to fund any
Advances occurring after its default based upon its revised
Commitment Percentage, if the Commitment Percentages are revised
in accordance with the immediately preceding clause (i); and to
the extent that the Commitment Percentage of any
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<PAGE> 12
Participation Agreement
Defaulting Lender shall not be so revised, the Administrative
Agent may thereafter call upon such Defaulting Lender to fund a
share of one or more future Advances in an amount greater than
such Defaulting Lender's Commitment Percentage so that the
aggregate amount disbursed by such Defaulting Lender shall equal
(after giving effect to such Advance or Advances) its Commitment
Percentage of the aggregate amount of all Advances then and
theretofore made by all Lenders;
(iii) A Defaulting Lender shall not have the right to fund its
Defaulted Amount without the written consent of the Agents and
Lessees and then only to the extent such Defaulted Amount has not
been funded by the Non-Defaulting Lenders in a manner that
resulted in a decrease in the Defaulting Lender's Commitment
Percentage; and
(iv) The Defaulting Lender shall not be responsible for any
incidental or consequential damages suffered by any Lessee or any
Affiliate of any Lessee as a result of its failure to so fund.
(e) Continuation Notice. Upon a timely request of any
Lender, Trustee shall deliver to the Lender making such request, not
more than five and not less than three Business Days prior to the
commencement of each Interest Period an irrevocable written notice
confirming that all Loans outstanding at such time (subject to
prepayment or partial prepayment as provided in the Operative
Documents) shall be continued as LIBO Rate Loans (subject to such rate
changing to the Alternate Base Rate as provided in the Operative
Documents) at the Interest Rate to be determined by the Administrative
Agent two Business Days prior to the commencement of the Interest
Period.
SECTION III.3. Notes. Each amount made available by a Lender
pursuant to Section 2.2 shall be evidenced by one or more Notes issued by
Trustee payable to the order of such Lender in a maximum principal amount
equal to such Lender's Commitment (including any changes thereto due to one
or more Defaulting Lenders) and shall be repayable in accordance with the
terms of the Loan Agreement.
SECTION III.4. Procedures for Advances; Use of Proceeds.
(a) Request. With respect to each funding of an Advance,
the Lessee(s) requesting such Advance shall deliver to Trustee, the
Administrative Agent and the Lenders, not later than 12:00 noon,
Gulfport, Mississippi time, three Business Days prior to the proposed
Advance Date, an irrevocable written notice substantially in the form
of
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<PAGE> 13
Participation Agreement
Exhibit H (an "Advance Request"), specifying (i) the proposed Advance
Date, (ii) whether such Advance is to be a Construction Advance or a
Revolving Advance, (iii) the amount of the Advance requested, which
shall be made in an amount not less than (A), in the case of a
Construction Advance, the least of (1) the amount necessary to fund
the Final Construction Advance for any applicable Facility (or, if
applicable, the sole Construction Advance for a Completed Facility),
(2) the then unused amount of the applicable Commitments or (3)
$5,000,000 or, if such Construction Advance applies solely to the
Tunica Restaurant, $2,000,000, or (B), in the case of a Revolving
Advance, the lesser of (1) the then unused amount of the applicable
Commitments or (2) $5,000,000, (iv) in the case of a Construction
Advance, (x) the Lease Supplement(s) and the Facility(ies) or Facility
F,F&E to which such Construction Advance pertains and, if applicable,
that such Facility (or Facilities, as the case may be) constitutes a
Completed Facility, (y) the portion of such Construction Advance to be
applied to pay to Persons unaffiliated with such Lessee(s) for
Facility Costs, including any payments applied toward the purchase
price or invoice cost of Facility F,F&E described on Schedule III to
the applicable Lease Supplement(s), and otherwise in sufficient detail
to identify the types of Building Costs and items of Facility F,F&E
that are being funded with the proceeds of such Construction Advance,
as the case may be, and (z) the portion of such Construction Advance
to be applied to reimburse such Lessee(s) or any Affiliate of any such
Lessee for Facility Costs, including progress payments made by such
Person on account of Facility F,F&E described on Schedule III to the
applicable Lease Supplement(s), and otherwise in sufficient detail to
identify the types of Building Costs previously paid or the items of
Facility F,F&E for which payments have been made and (v) in the case
of a Revolving Advance, the Lease Supplement or Lease Supplements in
respect of which such Revolving Advance pertains.
(b) Funding. All amounts to be advanced by the Lenders
pursuant to Section 2.2 shall be transferred to the Bank for deposit
into the Account. Upon satisfaction or waiver of each of the applicable
conditions set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and/or
3.8, as applicable, the Bank shall make such funds available to
Trustee. On the scheduled Advance Date, upon (i) receipt by Trustee of
all amounts to be paid by the Lenders pursuant to Section 2.2 and (ii)
satisfaction or waiver of each of the applicable conditions set forth
in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and/or 3.8, as applicable,
(A) in the case of a Construction Advance, Lessor shall purchase, and
the applicable Lessee, Construction Agent or vendor shall deliver a
bill of sale or deed, as applicable, conveying to Lessor, as collateral
security, all of such Person's right, title and interest in the Leased
Property described in the Advance Request, and (B) in consideration for
making such conveyance, Trustee shall deposit, from funds made
available by the Lenders pursuant to Section 2.2 and the Loan
Agreement, the amount specified in the Advance Request in
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<PAGE> 14
Participation Agreement
immediately available funds remitted by wire transfer to the
Account. Deposits in the Account representing proceeds from Advances
shall be disbursed in accordance with Section 2.6.
(c) Number and Dates of Advances.
(i) Construction Advances. There may not be more than one
Construction Advance in any calendar month. No Construction
Advances shall be made after September 30, 2001.
(ii) Revolving Advances. There may not be more than one
Revolving Advance in any calendar month. No Revolving Advances
shall be made after March 29, 2002.
(iii) In the event Lessees intend to request a Construction
Advance and a Revolving Advance during any calendar month, such
Advances, if otherwise satisfying the terms hereof, shall be made
on the same date.
(d) Termination of Commitments. Notwithstanding anything
in this Agreement or any other Operative Document to the contrary, no
party hereto shall be obligated to make any Advances after 12:00 noon,
Gulfport, Mississippi time, on the Commitment Termination Date, or such
earlier date as the Commitments are terminated, and no Advance Date may
occur following such dates or when the Commitments are suspended.
(e) Use of Proceeds. All Construction Advances shall be
used solely for the purpose of funding Facility Costs. All Revolving
Advances shall be used solely for general corporate purposes of the
requesting Lessee or any Guarantor not otherwise prohibited by the
terms of the Operative Documents.
(f) Interest Rate. Each determination of an Interest Rate
pursuant to any provision of the Loan Agreement shall be conclusive and
binding on Trustee, Lessees and the Lenders in the absence of manifest
error.
SECTION III.5. Postponement of Advance. If the Lenders make a
Loan requested pursuant to an Advance Request and the conditions precedent
to such Advance have not been satisfied on the date specified in the Advance
Request, Lessees shall pay to the Bank, for the benefit of each Lender,
interest on the amount funded by each Lender at a rate equal to the Assumed
Rate for the period from the date of each such Advance to the date such
Advance is
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<PAGE> 15
Participation Agreement
returned to such Lender or such Advance Date shall have occurred, less
any interest earned by the Bank on behalf of the Lenders by investing such
funded amounts. The Bank (or its assignee) shall not be required to invest
such funds in interest-bearing investments, but the Bank (or its assignee)
shall upon direction of Lessees (or, if an Event of Default exists, the
Required Lenders) invest such funds in Cash Equivalents to the extent it is
practicably able to do so. Such interest shall be due and payable by
Lessees upon the occurrence of such Advance Date or upon return of such
funds to the Lenders. Such payment of interest shall be an additional
condition precedent to such Advance Date. If any Advance Date shall not have
occurred by the third Business Day following the proposed Advance Date in
respect thereof, then all such interest shall be due and payable on such
date, and the Bank shall refund to each Lender all amounts funded by such
Lender and all accrued interest allocable to such Lender to the extent the
Bank has received such interest. No additional Advance Request shall be
required if an Advance Date is postponed and thereafter consummated.
SECTION III.6. The Account. Trustee shall establish and maintain
(or cause to be established and maintained) with Trustee a deposit account
(the "Account") in its name in favor of the Administrative Agent into which
(i) proceeds of Loans on each Advance Date shall be remitted upon
satisfaction of the applicable provisions of Section 3.1, 3.2, 3.3, 3.4,
3.5, 3.6 and/or 3.8 and (ii) amounts expressly required to be deposited by
any Operative Document shall be remitted. Each Lessee is hereby granted a
power of attorney to make withdrawals from the Account, so long as on any
date of withdrawal no Default or Event of Default exists. The applicable
Lessee shall apply any monies withdrawn from the Account in accordance with
any Advance Request previously delivered (in the case of monies deposited
pursuant to clause (i) above) by such Lessee and in all events in accordance
with the Operative Documents. The power of attorney granted in the
preceding sentence shall be automatically revoked at any time when a Default
or Event of Default exists and shall be automatically reinstated when any
such Default or Event of Default is cured or waived, in writing, by the
Required Lenders. Trustee shall not allow any Lessee to make withdrawals
from the Account at any time after Trustee is notified in writing a Default
or Event of Default exists, either by any Lessee or any Lender, unless and
until any such Default or Event of Default is cured or waived pursuant to
Section 6.2 of the Loan Agreement and Section 10.2 of the Master Lease.
SECTION III.7. Reduction in Commitments and Prepayments.
(a) Voluntary Reduction of Commitments. Lessees may from
time to time permanently reduce the Commitment Amount in whole or in
part (in each such case in a minimum aggregate amount of $5,000,000
and integral multiples of $1,000,000 in excess thereof) upon three
Business Days' prior written notice to the Administrative Agent,
Trustee and the Lenders; provided, however, that no such reduction
shall be effective if the sum of (x) the aggregate amount of
outstanding Loans plus (y) the then
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<PAGE> 16
Participation Agreement
applicable aggregate Reserve Amounts exceeds the remaining
Commitment Amount. Any voluntary reduction of the Commitment Amount
under this Section 2.7(a) shall be applied to reduce the Reduction
Amount for the then final scheduled Reduction Date (to the extent of
such reduction) and thereafter to preceding Reduction Dates in the
inverse order of their occurrence.
(b) Automatic Reduction of Commitment. Subject to the last
sentence of Section 2.7(a), on each Reduction Date, the Commitment
Amount shall automatically be reduced by the applicable Reduction
Amount.
(c) Voluntary Prepayments. From and after the Completion
Date for any Facility, the applicable Lessee shall have the right to
prepay all or any portion of the then outstanding Advances attributable
to such Facility, without penalty or premium, provided, however, that
any such prepayment that does not constitute a full prepayment of all
outstanding Advances attributable to all Facilities then subject to the
Master Lease may only be made on a Scheduled Payment Date and provided
further that such Lessee shall pay all accrued and unpaid Periodic Rent
and Supplemental Rent allocable to the Loans to which such prepaid
Advances pertain. The application of each such prepayment shall be
applied to the Lease Supplement Balance applicable to such Facility.
Any amounts prepaid in connection with (i) a Collateral Shortfall
Payment or (ii) a payment under clause (d), shall not constitute a
payment pursuant to this clause (c). Upon receipt of any such
prepayment, Trustee shall pay to the Lenders all or any portion of the
Loans to which such prepaid Advances and Periodic and Supplemental Rent
pertain.
(d) Mandatory Prepayment.
(i) If at any time the sum of the aggregate amount of
outstanding Loans shall exceed the Commitment Amount, Lessees
shall immediately make payment on the Loans in an amount
sufficient to eliminate such excess. Payments required to be made
hereunder shall be applied to Alternate Base Rate Loans until
fully repaid and then to LIBO Rate Loans in direct order of their
Interest Period maturities.
(ii) All amounts payable by any Lessee pursuant to Article V,
VII or IX of the Master Lease shall be used to prepay the Loans
and shall be applied to the Loans in the manner set forth in
Section 2.4(c) of the Loan Agreement.
(e) Notice. Lessees will provide notice to the
Administrative Agent, Trustee and the Lenders of any prepayment by
12:00 noon, Gulfport, Mississippi time, at least
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<PAGE> 17
Participation Agreement
three Business Days prior to the date of prepayment.
(f) Supplemental Rent. Concurrently with any prepayment
made by any Lessee pursuant to this Section 2.7, such Lessee shall pay
to Lessor all Supplemental Rent then due and owing as of the date of,
and after giving effect to, such prepayment.
SECTION III.8. Obligations Several. The obligations of the
Lenders hereto or elsewhere in the Operative Documents shall be several and
not joint; and, except with respect to Lessees and Guarantors in connection
with the Guaranty and the other Operative Documents, no party shall be
liable or responsible for the acts or defaults of any other party hereunder
or under any other Operative Document.
SECTION III.9. Timing of Advances to Trustee and Payments to the
Lenders.
(a) Timing of Advances to Trustee. Any Advance Request
delivered by any Lessee to Trustee, the Administrative Agent and the
Lenders later than 12:00 noon, Gulfport, Mississippi time, on any day
shall be deemed to have been delivered on the next Business Day.
Subject to timely delivery of an Advance Request pursuant to Section
2.4(a) and the other terms and conditions of the Operative Documents,
each Lender shall make its Commitment Percentage of the requested
Advance available to the Bank by 1:00 p.m., Gulfport, Mississippi time,
on the requested Advance Date, and the Bank will deposit any such
amounts so received into the Account as soon after receipt as
practicable, but not later than 3:00 p.m., Gulfport, Mississippi time,
on such Advance Date.
(b) Payments to Lenders. So long as there are obligations
outstanding under the Operative Documents, Trustee has assigned all
payments of Rent to the Administrative Agent pursuant to Section 2.1 of
the Security Agreements, and the Administrative Agent has appointed the
Bank as its agent to receive such payments of Rent under Section 7.12
of the Loan Agreement, any payments received by the Administrative
Agent (or the Bank as agent to the Administrative Agent) from or on
behalf of any Lessee or Trustee not later than 11:00 a.m., Gulfport,
Mississippi time, shall be paid by the Administrative Agent (or the
Bank) to the Lenders in immediately available funds no later than 2:00
p.m., Gulfport, Mississippi time, on the same day, and any payments
received by the Administrative Agent (or the Bank) from or on behalf of
any Lessee or Trustee or Construction Agent after 11:00 a.m., Gulfport,
Mississippi time, shall be paid by the Administrative Agent or the Bank
to the Lenders as soon after receipt as practicable, but not later than
11:00 a.m., Gulfport, Mississippi time, on the next succeeding Business
Day. Rent and all other payments due to Trustee, the
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<PAGE> 18
Participation Agreement
Administrative Agent or any Lender under the Operative Documents
shall be paid in immediately available funds, at its respective office
specified in Schedule III or at such other office as it may from time
to time specify to Trustee, the Administrative Agent and Lessees in a
notice pursuant hereto. All such payments shall be received by Trustee
(in its individual or trust capacity), the Administrative Agent or such
Lender, as applicable, not later than 11:00 a.m., Gulfport, Mississippi
time, on the date due. Funds received after such time shall for all
purposes of the Operative Documents be deemed to have been received on
the next succeeding Business Day.
(c) Agency. So long as the Notes remain outstanding, Rent
shall be paid by Lessees to the Bank as agent for the Administrative
Agent and as Trustee's assignee under the Operative Documents.
SECTION III.10. Lenders' Instructions to the Administrative Agent.
By making its Advance pursuant to Section 2.2, each Lender agrees that such
act shall constitute, without further act, (i) evidence that the applicable
conditions precedent set forth in Article III have been satisfied or waived;
provided that any Lender's failure to raise the issue of noncompliance with
respect to any such condition as to any third party shall not be deemed to
be a waiver of such condition unless such Lender shall have acknowledged
such waiver in writing, (ii) authorization and direction by such Lender to
the Administrative Agent to make a Loan pursuant to Section 2.3 of the Loan
Agreement, (iii) authorization and direction by such Lender to the Bank (as
agent for the Administrative Agent) to deposit the amount so loaned into the
Account in reliance upon Lessee's certificate delivered pursuant to Section
3.1(j) confirming that all conditions precedent to the relevant Advance have
been satisfied and (iv) authorization and direction to Trustee to permit
Lessees to withdraw funds from the Account, subject to Sections 2.4 and 2.6.
The Bank and each Lender agree that any monies advanced to the Bank prior to
deposit into the Account shall be returned to a Lender if such Lender so
requests.
SECTION III.11. Computations.
(a) Determination of the Interest Rate. All computations
of accrued amounts pursuant to the Operative Documents shall be made on
the basis of actual number of days elapsed in a 360-day year or, in the
case of the Alternate Base Rate or Commitment Fee, on the basis of
actual number of days elapsed in a 365-day or 366-day year.
(b) Dollars. All payments required to be made by Lessees,
Trustee, or the Administrative Agent, including any Advance or payment
of Rent, shall be made only in Dollars in immediately available funds.
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SECTION III.12. Commitment Fee. Lessees shall pay to the
Administrative Agent, for the account of each Lender, for the period
(including any portion thereof when any of its Commitments are suspended by
reason of any Lessee's inability to satisfy any condition of Article III)
commencing on the Closing Date and continuing through the Commitment
Termination Date, a nonrefundable, fully-earned commitment fee (the
"Commitment Fee") at the Applicable Commitment Fee Rate on the average daily
unused portion of each such Lender's Commitment during such period, payable
quarterly in arrears on the last Business Day of each calendar quarter and
on the Commitment Termination Date.
SECTION III.13. Fees. Lessees shall pay to the Administrative
Agent, for the account of each Lender, a nonrefundable up-front fee in an
amount equal to the fee set forth opposite such Lender's name on Schedule
II, payable upon the Closing Date. Lessees shall pay to the Administrative
Agent, for the account of each Co-Agent, the Co-Agents Fee on or before the
Closing Date. Lessees shall pay to Administrative Agent, from time to time
as set forth in the Administrative Agent Fee Letter, the Administrative
Agency Fees. Lessees shall pay to Administrative Agent on or before the
Closing Date, for the account of Trustee, the one-time acceptance fee
referenced in the Trustee Fee Letter; thereafter, Lessees shall pay to
Trustee directly the annual fees referenced in the Trustee Fee Letter.
SECTION III.14. Legal and Tax Representation. Each Lessee
acknowledges and agrees that none of the Administrative Agent, Arranger,
Co-Agents, Lead Manager, Trustee, Bank or any Lender has made any
representation or warranty concerning the tax, accounting or legal
characteristics of the Master Lease or any of the other Operative Documents,
and that such Lessee has obtained and relied on such tax, accounting and
legal advice regarding the Master Lease and the other Operative Documents as
it deems appropriate. Each of Trustee and each Lender acknowledges and
agrees that it has obtained and relied on the Operative Documents and the
various items delivered in connection therewith, and on such tax, accounting
and legal advice regarding the Master Lease and the other Operative
Documents as it deems appropriate.
SECTION III.15. Replacement or Purchase of Leased Property.
Trustee and the Administrative Agent shall release from the lien of the
Security Documents, the Master Lease and applicable Lease Supplements, such
items of Leased Property which any applicable Lessee has elected to (a)
replace under Sections 7.3 or 9.1 of the Master Lease or (b) purchase under
Section 5.1, or 5.2, 7.3 or 9.1(b), of the Master Lease, upon satisfaction
by such Lessee of the conditions contained in Section 5.1, 5.2, 7.3 or
9.1(b), as the case may be, of the Master Lease.
ARTICLE IV
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CONDITIONS TO
ADVANCES AND COMPLETION
SECTION IV.1. Conditions Precedent to All Advances. In addition
to the applicable conditions precedent set forth elsewhere in this
Agreement, the obligation of each Lender hereunder on any Advance Date shall
be subject to the fulfillment to the satisfaction of, or the waiver in
writing by, each Lender (or by the Agents) of the conditions precedent
(including, with respect to writings, such writings being in form and
substance reasonably satisfactory to the Agents) set forth in this Section
3.1 on or prior to such Advance Date (except that the obligation of any
party hereto shall not be subject to such party's own performance or
compliance):
(a) Advance Request. With respect to any Advance, the
Administrative Agent, Trustee and each Lender shall have received, at
least three Business Days before each Advance Date, a fully executed
Advance Request duly executed by the Lessee requesting such Advance in
accordance with Section 2.4(a). Each of the delivery of an Advance
Request and the acceptance by the applicable Lessee of the proceeds of
such Advance shall constitute a representation and warranty by all
Lessees that on the date of such Advance (both immediately before and
after giving effect to such Advance and the application of the proceeds
thereof) the statements made in Section 3.1(b) and in such Advance
Request, are true and correct and that no violation regarding maximum
permitted Construction Advances shall exist or occur.
(b) Accuracy of Representations and Warranties, No Default,
etc. On the applicable Advance Date, the following statements shall be
true and correct:
(i) All of the representations and warranties of Lessees, each
Guarantor, and to the best knowledge of Lessees, Trustee,
contained herein and in each of the other Operative Documents are
true and correct in all material respects on and as of such
Advance Date as though made on and as of that date, except to the
extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and
as of such earlier date;
(ii) No Default or Event of Default exists; and
(iii) Except as set forth in the Disclosure Schedule or as
theretofore disclosed by Lessees to the Administrative Agent and
Trustee in writing, no labor controversy, litigation, arbitration
or governmental investigation or proceeding shall be pending or,
to the knowledge of Lessees and/or Parent, threatened against
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Participation Agreement
any Lessee and/or Parent or any other Guarantor which might have
a Material Adverse Effect.
(c) Officer's Certificate of Parent. The Administrative
Agent shall have received (with copies for Trustee and each Lender) a
certificate of a Responsible Officer of Parent with respect to Parent
and each Obligor Subsidiary, substantially in the form of Exhibit S,
stating that all of the representations and warranties of such Person
contained herein and in each of the other Operative Documents are true
and correct on and as of such Advance Date in all material respects as
though made on and as of that date, except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date.
(d) Gaming Permits. Parent and each of the Obligor
Subsidiaries shall have respectively obtained all Gaming Permits as
required for or in connection with the conduct of its gaming business
and the conduct of its games of chance, as applicable, each as
conducted as of the date of such Advance, at each of the Casinos and
such Gaming Permits shall not then be suspended, enjoined or prohibited
(for any length of time) by any Gaming Authority or any other
Governmental Authority.
(e) Liquor Permits. Parent and each of the Obligor
Subsidiaries, to the extent applicable, shall have respectively
obtained all Liquor Permits as required for or in connection with the
operation and use of each of the Casinos and each Facility, as operated
and used as of the date of such Advance, and the Liquor Permits shall
not then be suspended, enjoined or prohibited (for any length of time)
by any Governmental Authority having or asserting jurisdiction over
either Casino and/or any such Facility.
(f) Taxes. All Taxes other than Charges due and payable by
Lessees on or prior to such Advance Date in connection with the
execution, delivery, recording and filing of any of the Operative
Documents, in connection with the filing of any of the financing
statements or in connection with the consummation of any of the
transactions contemplated hereby or by the Operative Documents shall
have been paid in full.
(g) Further Assurances, etc. Agents shall have received
such other and further instruments, duly executed, acknowledged (if
appropriate) and delivered, as Agents reasonably shall have requested
in connection with each Advance and this Agreement.
(h) Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of Lessees and Parent shall
be satisfactory in form and substance to
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Participation Agreement
the Agents and their counsel; the Agents and their counsel shall
have received all information, approvals, opinions, documents or
instruments as the Administrative Agent or its counsel may reasonably
request.
(i) Litigation. No law or regulation shall prohibit, and
no order, judgement or decree of any Governmental Authority shall, and
no action or proceeding shall be pending or threatened which in the
reasonable judgement of the Required Lenders would or might, enjoin,
prohibit, limit or restrain the making of such Advance.
(j) Officer's Certificate of Lessee. The Agents, Trustee
and each Lender shall have received a certificate of a Responsible
Officer of the applicable Lessee, substantially in the form of Exhibit
U, confirming the satisfaction of, or the waiver in writing by, each
Lender (or by the Agents) of the applicable conditions precedent to the
relevant Advance on or prior to such Advance Date.
(k) Opinion of Counsel. Agents, Trustee and each Lender
shall have received from Mayer Brown & Platt, special New York counsel
to the Lenders, a legal opinion satisfactory to the Agents, Trustee and
the Required Lenders as to the transactions contemplated by this
Agreement, dated on or about the date of such initial Advance and
addressed to Agents, Trustee and each Lender (and the parties to this
Agreement agree that the delivery of such an opinion shall also be a
condition precedent to the acquisition of any Leased Property by
Trustee).
SECTION IV.2. Conditions to Initial Construction Advance Date With
Respect to Each Facility. In addition to the conditions precedent set forth
in Section 3.1, the obligation of Trustee and each Lender to perform their
respective obligations on the Initial Construction Advance Date for any
Facility shall be subject to the fulfillment to the satisfaction of, or the
waiver in writing by, each Lender of the conditions precedent set forth in
this Section 3.2 on or before such Initial Construction Advance Date with
respect to such Facility (except that the obligation of any party hereto
shall not be subject to such party's own performance or compliance).
(a) Delivery of Certain Operative Documents. The
Administrative Agent shall have received (with copies for Trustee and
each Lender), with respect to such Facility: (i) a Lease Supplement,
(ii) a Deed of Trust, (iii) a Ground Lease, (iv) an Improvements Deed,
(v) a Security Agreement, (vi) a Construction Agency Agreement and
Construction Documents Assignment (except that no Construction Agency
Agreement or Construction Documents Assignment shall be required if
such Facility is a Completed Facility), and (vii) UCC-1 Financing
Statements as required by the
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Participation Agreement
Administrative Agent, in each case duly authorized, executed and
delivered by each of the respective parties thereto, and each of the
foregoing shall be in full force and effect.
(b) Filings and Recordings. All filings, registrations and
recordings set forth on Schedule I to the applicable Lease Supplement
(to be delivered and approved by the Administrative Agent and the
Lenders on or before the applicable Initial Construction Advance Date)
in respect of such Facility shall have been made in the appropriate
places or offices and all fees and taxes with respect to any
recordings, filings or registrations made pursuant to this Section
3.2(a) shall have been paid in full, and satisfactory evidence thereof
shall have been delivered to Trustee and the Administrative Agent, or
arrangements for such payment shall have been made to the satisfaction
of Trustee and the Agents.
(c) Searches. The Administrative Agent shall have received
a report, as of a current date, prepared by a search company reasonably
satisfactory to the Agents, of judgment liens, tax liens, Uniform
Commercial Code filings and other encumbrances of record with respect
to the applicable Lessee, Facility Site and Leased Property, with the
applicable filing offices in the States of Minnesota and Mississippi,
and such report shall show no Liens other than Permitted Liens or Liens
with respect to which a release has been filed subsequent to the date
of such report or for which title insurance acceptable to the Required
Lenders has been provided assuring the senior priority of the Liens in
favor of Trustee and the Administrative Agent on behalf of the Lenders
with respect to such Facility Site and Leased Property.
(d) Insurance. The Administrative Agent shall have
received (with copies for Trustee and each Lender) evidence of each of
the insurance policies required to be maintained pursuant to the Master
Lease, setting forth the respective coverages, limits of liability,
carrier, policy number and period of coverage, accompanied by
affidavits, certificates, paid bills or other documents evidencing that
all premium payments relating to such policies are current.
(e) Governmental Approvals, Permits, Consents, etc. The
Administrative Agent shall have received copies of all material
permits, approvals or consents by all Governmental Authorities required
for the construction, use and operation of such Facility and the
transactions provided for in this Agreement which are required by
Applicable Law to be obtained as of such Initial Construction Advance
Date, together with all supporting documents and materials reasonably
requested by the Administrative Agent, Trustee or any Lender, including
(i) a copy of each order or license issued by (A) a Gaming Authority as
to the Casino associated with such Facility and (B) a Liquor
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Participation Agreement
Authority as to the Facility, in each case as then available or
required by Applicable Law, evidencing approval of (1) the applicable
Lessee as the licensed operator of such Facility and (2) an Obligor
Subsidiary as the licensed operator of the Casino associated therewith
and (ii) a copy of the letter or other evidence that Parent has been
registered as the publicly traded holding company of Lessee.
(f) Recordation. The Administrative Agent shall have
received evidence satisfactory to the Lenders that the Deed of Trust on
Trustee's leasehold estate in the applicable Facility Site, the related
Ground Lease or a memorandum thereof, the applicable Improvements Deed,
the applicable Lease Supplement and the applicable Security Agreement
shall have been or are being recorded with the appropriate Governmental
Authorities, and the UCC Financing Statements with respect to the
applicable Collateral shall have been or are being filed with the
appropriate Governmental Authorities.
(g) Recognition of Assignment. The Administrative Agent
shall have received executed written instruments satisfactory to the
Administrative Agent, Trustee and the Lenders pursuant to which each of
the Architect and the Prime Contractor for such Facility shall have
agreed to perform its respective obligations under the applicable
Construction Documents to which it is a party for the benefit of
Trustee and the Lenders, when and if Trustee and the Lenders shall
exercise their rights under the applicable Construction Documents
Assignment.
(h) Partial Release of Indenture Lien. If applicable, the
Administrative Agent shall have received a fully-executed release of
lien in recordable form relating to any and all deeds of trust or other
instruments executed with respect to the Indenture affecting such
Facility, the related Facility Site and the items of Facility F,F&E
relating to such Facility, together with executed copies of Uniform
Commercial Code partial release statements (Form UCC-3) sufficient to
release such Facility Site, and the related items of Facility F,F&E,
and evidence of the filing of such releases.
(i) Construction Services Group. Lessees shall have
engaged CSG, at the expense of Lessee, to monitor the construction of
such Facility.
(j) Environmental Report and Reliance Letter.
(i) The Administrative Agent shall have received (with copies
for CSG, Trustee and each Lender), and Trustee and the Lenders
shall have approved, (A) the existing studies, reports, surveys
and analyses in the possession of the
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Participation Agreement
applicable Lessee or any of its applicable Affiliates with
respect to environmental matters relating to the applicable
Facility Site (and, if such Facility Site is part of the Tunica
Resort Property, relating to the Tunica Resort Property) and (B)
except as otherwise described on the Disclosure Schedule, the
existing Environmental Assessment pertaining to such Facility
Site, prepared and certified by the applicable Environmental
Engineer, in form and substance satisfactory to the Lenders and
Trustee, evidencing that no toxic or hazardous substance, waste,
pollutant or contaminant (as those terms are described in federal
or Mississippi state laws), as of the date of such Environmental
Assessment (or any update thereof previously delivered to the
Administrative Agent) were stored or contained on, in or under any
portion of such Facility Site in violation of Environmental Laws.
In addition to the foregoing, the Required Lenders, in the
exercise of their reasonable, good faith discretion, may request
an update to the environmental studies, reports, surveys and
analyses regarding the Tunica Resort Property in connection with
any such Advance to be made with respect to a Facility located on
the Tunica Resort Property.
(ii) The Administrative Agent shall have received a letter
from the applicable Environmental Engineer indicating that the
Administrative Agent, CSG, Trustee and the Lenders may rely on the
Environmental Assessment referenced in subsection (i) above or
such other environmental assessment as may have been provided by
such Environmental Engineer to the Administrative Agent.
(k) Purchase Order Assignment. The Administrative Agent
shall have received (with copies for Trustee and each Lender) a
Purchase Order Assignment with respect to such Facility, fully executed
by the applicable Lessee and by Lessor.
(l) Water, Sewer and Chiller Plant Easements. With respect
to any Facility associated with the Tunica Resort, BL Development and
BL Utility, to the extent of their interests therein, shall have
delivered to the Administrative Agent and Trustee a duly executed
document in recordable form and in substance reasonably acceptable to
the Administrative Agent and Trustee, granting to Trustee a limited,
non-exclusive easement across the Tunica Resort Property running in
favor of the Facility Site relating to such Facility to assure that
sewer, water and chiller plant services can be made available to such
Facility Site (in the event that Trustee occupies or assumes control
over such Facility Site), which easement shall terminate upon the
earlier of (i) the date on which the indebtedness secured by the
applicable Deed of Trust is satisfied or (ii) the date, if any, that BL
Development and/or BL Utility, transfer ownership of or grant a
long-term lease
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Participation Agreement
to the related sewer, water and chiller plant facilities to an
unrelated third party and such third party delivers to the
Administrative Agent and Trustee a certificate in form and
substance acceptable to the Administrative Agent and Trustee
stating that it is currently providing and shall continue to
provide sewer, water and chiller plant utilities to the Facility
Site in an amount sufficient to meet the then required and
reasonably foreseeable future demand for such Facility Site and
related Facility. The foregoing easement shall be a present and
current grant of right in and to the Tunica Resort Property.
Notwithstanding the foregoing, the Administrative Agent and
Trustee agree not to exercise any such right unless and until (A)
the Administrative Agent or Trustee, as the case may be, acquires
possession or control of such Facility pursuant to the terms of
the Operative Documents and (B) BL Utility shall fail to enter
into a service contract acceptable to the Administrative Agent and
Trustee which provides standard and customary terms and provisions
for the delivery and service of sewer, water and chiller plant
utilities to such Facility Site and related Facility.
SECTION IV.3. Conditions to the Initial Construction Advance for
Facility Costs With Respect to Each Facility. In addition to the conditions
precedent set forth in Section 3.1, Section 3.2 and Section 3.4 of this
Agreement, the obligation of each Lender hereunder to make the initial
Construction Advance for the payment of Facility Costs with respect to any
Facility shall be subject to the fulfillment to the satisfaction of, or the
waiver in writing by, each Lender (or by the Agents) of the conditions
precedent (including, with respect to writings, such writings being in form
and substance reasonably satisfactory to the Agents) set forth in this
Section 3.3 on or prior to such Advance Date (except that the obligation of
any party hereto shall not be subject to such party's own performance or
compliance):
(a) Contracts. The Administrative Agent shall have
received true copies of the Prime Construction Contract and the
Architect's Agreement relating to the construction of such Facility,
which agreements (i), if such Facility is not a Completed Facility,
shall be (A) in form and substance acceptable to the Agents, and (B) in
full force and effect, and (ii), in any event, shall be free from
material default by the parties thereto and the applicable Lessee shall
so certify to the Agents.
(b) Survey. The Administrative Agent shall have received a
current boundary and location survey of the Facility Site upon which
such Facility is to be constructed, certified to the Administrative
Agent and Trustee, dated not earlier than thirty (30) days prior to the
date of the initial Construction Advance for such Facility, prepared in
accordance with the current Minimum Standard Detail Requirements for
Land Title Surveys, as adopted by the American Land Title Association
and American Congress on
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Participation Agreement
Surveying and Mapping in 1992, which shall (i) be certified to
the Agents, Trustee, applicable Lessee, and the Title Insurance Company
by a surveyor or engineer licensed by the State of Mississippi, (ii) be
satisfactory in all respects to the Agents and their counsel and to the
Title Insurance Company, (iii) show such Facility Site to be free of
encroachments, overlaps, and other survey defects unless otherwise
approved by the Agents in writing, (iv) show the courses and distances
of the lot lines for such Facility Site, (v) show that all existing
improvements are located within said lot and building lines, and (vi)
show the location of all above and below ground easements, proposed
improvements of which the surveyor has been advised, in writing,
appurtenances, rights-of-way, water rights and ingress and egress, by
reference to book and page numbers and/or filed map reference, as
applicable. Such survey shall include a certification by the surveyor
that such Facility Site is not located in an area designated by the
Secretary of Housing and Urban Development as a special flood area.
(c) Title Insurance Policy. The Administrative Agent shall
have received (with copies for the Agents, Trustee and each Lender) a
mortgagee's construction loan title insurance policy in favor of the
Administrative Agent as the agent for the Lenders and Trustee, in an
amount equal to the amount specified for such Facility in Section
2.2(b), which policy shall contain customary pending disbursement
provisions and which shall otherwise be in form and substance and
issued by the Title Insurance Company satisfactory to Agents, with
respect to such Facility Site, insuring that title to such Facility
Site is marketable and that the interests created by the Deed of Trust
relating to such Facility Site and the Master Lease and related Lease
Supplement(s) constitute valid first Liens on such Facility Site and
the leasehold interest free and clear of all defects and encumbrances
other than Permitted Liens of the type described in clause (i), (ii)
and (iii) of the definition of "Permitted Liens" or unless otherwise
approved by the Agents and their counsel in writing. Such policy shall
also include a comprehensive endorsement, variable rate endorsement,
revolving advance endorsement, access and utilities endorsements, a
mechanic's lien endorsement, an environmental and zoning endorsement
(which shall insure that the contemplated use of the applicable
Facility by such Lessee will comply in all material respects with all
applicable zoning and land use laws), an endorsement protecting against
forfeiture or reversion due to covenants, restrictions or
encroachments, last-dollar endorsement, pro tanto endorsement and such
other endorsements as the Agents shall reasonably request. All
premiums, title examination, survey, departmental violations, judgment
and Uniform Commercial Code search charges and other charges and fees
shall have been paid in full and the Administrative Agent shall have
received satisfactory evidence of such payment. For purposes of
reinsurance, the share of liability assumed by each such company shall
be satisfactory to the Agents.
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(d) Leases. The Administrative Agent shall have received
with respect to such Facility, certified true and complete copies, and
approved the form and substance, of each of the leases, licenses,
occupancy and use agreements, concessions and other arrangements, oral
or written, entered into as of the date of such Construction Advance
whereby any Person agrees to pay money or any other consideration for
the use, possession or occupancy of such Facility or any portion
thereof, and, in addition, shall have received such standard and
customary subordination agreements, subordination, non-disturbance and
attornment agreements, estoppel certificates, and other instruments as
the Administrative Agent may reasonably request.
(e) Architect's Statement of Professional Opinion. The
Administrative Agent shall have received (with copies for the Agents,
Trustee, and each Lender) a statement of professional opinion from the
Architect for such Facility, substantially in the form of Exhibit N,
stating that upon completion of such Facility in accordance with its
applicable Plans and Specifications, such Facility will comply in all
material respects with the design and building codes of each applicable
State or local jurisdiction; provided, however, if such Facility
constitutes a Completed Facility, such Architect shall state that such
Facility has been completed in accordance with its applicable Plans and
Specifications and complies in all material respects with the design
and building codes of each applicable State or local jurisdiction.
(f) Plans and Specifications, Facility Schedule and
Facility Cost Analysis. The Administrative Agent shall have received
(i) detailed Plans and Specifications for such Facility that have been
signed by the applicable Construction Agent and applicable Architect,
which shall show the design of such Facility with, to the extent
applicable, sufficient parking therefor pursuant to applicable zoning
regulations, and (ii), unless such Facility constitutes a Completed
Facility (in which case this clause (ii) shall not apply), a detailed
construction schedule for such Facility (the "Facility Schedule"),
together with a detailed breakdown of the estimated costs of
constructing such Facility (the "Facility Cost Analysis").
(g) Evidence of Availability of Utilities. The
Administrative Agent shall have received evidence in form and substance
satisfactory to the Agents of the availability of water, sewer,
electric, gas, telephone and, if applicable, chiller plant service to
such Facility adequate for the use and occupancy of the related
Facility Site for its intended purpose.
(h) Building Permits. Unless such Facility is a Completed
Facility (in which
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Participation Agreement
case this condition shall not apply), all building permits
required by any Governmental Authority in connection with the then
current phase of construction for which the applicable Construction
Advance is being made shall have been obtained.
(i) Appraisal. The Administrative Agent shall have
received (with copies for Trustee and each Lender) and the Lenders
shall have approved an appraisal report with respect to such Facility
and its related Facility F,F&E on an as-built, in-place and in-use
basis in accordance with the applicable Plans and Specifications,
prepared by a qualified appraiser satisfactory to the Lenders in
compliance with the requirements of FIRREA establishing the aggregate
Fair Market Sales Value of such Facility (including the value of any
such related Facility F,F&E) as of the Estimated Completion Date for
such Facility (or as of the date of such Advance if such Facility is a
Completed Facility) and as of the Final Maturity Date. Such appraisal
shall be prepared at the cost and expense of Lessee.
(j) Environmental Reports. If requested by the
Administrative Agent, the Administrative Agent shall have received
(with copies for Trustee and each Lender), and the Lenders shall have
approved, an update of the applicable Environmental Assessment (if any)
as it relates to such Facility and the related Facility Site, addressed
to the Administrative Agent, Trustee and the Lenders.
SECTION IV.4. Conditions to all Construction Advances for Building
Costs. In addition to the conditions precedent set forth in Section 3.1,
Section 3.2 and Section 3.3 of this Agreement, the obligation of each Lender
hereunder to make any Construction Advance for the payment of Building Costs
relating to any Facility (but excluding any Construction Advance made with
respect to a Completed Facility) shall be subject to the fulfillment to the
satisfaction of, or the waiver in writing by, each Lender (or by the Agents)
of the conditions precedent (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to the
Administrative Agent) set forth in this Section 3.4 on or prior to such
Advance Date (except that the obligation of any party hereto shall not be
subject to such party's own performance or compliance):
(a) Construction Certificate. The Administrative Agent
shall have received, at least five (5) Business Days prior to the
applicable Advance Date, a certificate, dated the date of such
Construction Advance, substantially in the form of Exhibit T-1, from
the applicable Construction Agent (i) to the effect that such Facility
has, as of the date of such certificate, been constructed in accordance
with its Plans and Specifications (as amended in conformity with
Section 2.4(c) of the applicable Construction Agency Agreement), and
that the contemplated use thereof by the applicable Lessee will comply
with all Requirements of Law, (ii) to the effect that an amount not
less than the requested
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amount of such Construction Advance is then due in respect of
Building Costs, which amount has not been included in any previous
certificate delivered hereunder, (iii) specifies in reasonable detail
the Building Costs to which such Construction Advance relates, and (iv)
as to such other matters as the Agents may reasonably request.
(b) CSG Document Review; CSG Certificate. CSG shall have
advised the Administrative Agent that it has received and reviewed (i)
the Advance Request, (ii) AIA Document Form G702 and G703, together
with a partial lien waiver for the work described in any preceding draw
request, each from the Prime Contractor, (iii) the Construction
Certificate, (iv) a current projected completion date, and (v) an
updated "Project Budget" status report, and, based on such
documentation review which review shall be completed within five (5)
Business Days after receipt thereof, CSG, to the best of its knowledge,
believes that the Lessee requesting such Advance is in compliance with
all construction disbursement requirements set forth in the Operative
Documents. In addition, the Administrative Agent shall have received,
within the ninety (90) day period preceding the applicable Advance
Date, written certification from CSG that, after conducting an on-site
inspection of such Facility and other construction monitoring
activities (including without limitation further analysis and review of
the documentation initially delivered in connection with previous
Advances as described above), to the best of CSG's knowledge, after
giving effect to all Advances made as of the date of such
certification, the Lenders have not advanced more than the maximum
amount allowed to be advanced as of such date by the terms of the
Operative Documents, including without limitation the terms of Section
2.2(b).
(c) Title Insurance Policy Endorsement. The Administrative
Agent shall have received on the applicable Advance Date, a date-down
endorsement, dated the date of such Construction Advance, to the
applicable title insurance policy delivered by the Title Insurance
Company pursuant to Section 3.3(c) (or such other evidence of the lack
of recorded and unrecorded mechanics' liens affecting (or inchoate
rights thereto which could affect) the applicable Facility Site as the
Agents shall request). Upon each Construction Advance, such title
policy shall contain a pending disbursement endorsement protecting the
Lenders through the date of such Construction Advance against
mechanics' lien Claims for all Construction Advances made with respect
to such Facility up to and including the date of such Construction
Advance.
(d) Cost of Completion. The Administrative Agent shall
have received and approved a certificate from the applicable Prime
Contractor, substantially in the form of Exhibit O, certifying the
estimated cost of completing such Facility pursuant to its Plans and
Specifications and evidencing that such estimated cost does not then
exceed the
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Available Commitments allocable to such Facility under Section
2.2(b).
(e) Certificate of Acceptance. The applicable Lessee shall
have delivered to the Administrative Agent a fully-executed Certificate
of Acceptance substantially in the form of Exhibit J with respect to
each portion of such Facility identified in an Advance Request.
SECTION IV.5. Conditions to Construction Advances for Facility
F,F&E Costs. The obligation of each Lender to perform its obligations on
any Advance Date for the payment of costs associated with any item of
Facility F,F&E shall be subject to the fulfillment to the satisfaction of
each Lender (including, with respect to writings, such writings being in
form and substance reasonably satisfactory to, or the waiver in writing by,
the Agents) of the conditions precedent set forth in this Section 3.5 (in
addition to the conditions precedent set forth in Section 3.1 and Section
3.2) on or prior to such Advance Date (except that the obligation of any
party hereto shall not be subject to such party's own performance or
compliance):
(a) Bill of Sale. The applicable Lessee shall have
delivered to the Administrative Agent a fully-executed Bill of Sale
substantially in the form of Exhibit I with respect to the items of
Facility F,F&E identified in an Advance Request.
(b) Certificates of Acceptance. The applicable Lessee
shall have delivered to the Administrative Agent a fully-executed
Certificate of Acceptance substantially in the form of Exhibit J with
respect to each item of Facility F,F&E identified in such Advance
Request (it being understood that no Certificate of Acceptance shall be
required for any System prior to the earlier of the System being placed
in service or payment in full of the purchase price therefor).
(c) Third Party Approvals. To the extent not previously
delivered all third party approvals necessary in the reasonable opinion
of the Agents for the operation and use of such Facility F,F&E and for
the applicable Lessee to perform its obligations with respect to the
applicable Lease Supplement shall have been obtained.
(d) Financing Statements. To the extent not previously
filed, the Administrative Agent shall have received acknowledgment
copies of properly filed UCC Financing Statements (Form UCC-1), dated a
date reasonably near to the Advance Date, or such other evidence of
filing as may be acceptable to the Administrative Agent, naming the
applicable Lessee as the debtor and Trustee as the secured party, and
assigning to the Administrative Agent, for the benefit of the Lenders,
all of Trustee's interest in the Collateral, and any other similar
instruments or documents, filed under the
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Uniform Commercial Code of all jurisdictions as may be necessary
or, in the opinion of the Administrative Agent, desirable to perfect
the security interest of the Administrative Agent pursuant to the
Security Documents.
(e) Additional Items. The Agents and each Lender shall
have received such other documents as they may reasonably request and
which are consistent with the terms hereof including any third party
approvals.
(f) Facility F,F&E Costs for any System. In respect of any
funding of any System, the Administrative Agent shall have received an
Application and Certificate for payment AIA Document G702 with attached
continuation sheet AIA Document G703 executed by a Responsible Officer
of the applicable Lessee and the applicable Prime Contractor.
(g) CSG Document Review; CSG Certificate. CSG shall advise
the Administrative Agent that it has received and reviewed (i) the
Advance Request, (ii) the Construction Certificate and (iii), if such
Advance relates to any System, AIA Document Forms G702 and G703,
together with (A) a partial lien waiver for the work described in any
preceding draw request, each from the Prime Contractor, (B) a current
projected completion date for such System, and (C) a total project
detail report for such System, and based on such documentation review,
CSG, to the best of its knowledge, believes that the Lessee requesting
such Advance is in compliance with all Facility F,F&E Costs
disbursement requirements set forth in the Operative Documents.
SECTION IV.6. Deliveries with Respect to Construction Advances for
Facility Costs After a Default. If the Agents, at the direction of the
Lenders, elect to make any Construction Advance for the payment of Facility
Costs for any Facility during the existence of a Default or an Event of
Default, the applicable Lessee, in addition to the conditions precedent set
forth in Section 3.1, Section 3.2, Section 3.4 and, if such Construction
Advance pertains in whole or in part to Facility F, F & E, Section 3.5, of
this Agreement, shall deliver the following items with respect to each such
Construction Advance:
(a) Construction Certificate. In addition to the
certificate delivered by Construction Agent pursuant to Section 3.4(a),
the Administrative Agent shall have received, at least five (5)
Business Days prior to the applicable Advance Date, a certificate,
dated the date of such Construction Advance, substantially in the form
of Exhibit T-2, from the applicable Construction Agent (i) to the
effect that the Available Commitments allocable to such Facility
pursuant to Section 2.2(b) are adequate to pay for all Facility Costs
yet to be paid for to complete such Facility, and (ii) the progress of
the construction is such that completion of such Facility can occur on
or prior to the
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Construction Termination Date (and specifying the stage and
percentage of completion which has been achieved by each of the various
trades engaged in the construction of such Facility), and the amount of
such Construction Advance is not greater than the actual value of the
materials incorporated into such Facility and the work and labor
performed in connection therewith.
(b) In Balance; Deposit of Additional Funds. If the
Lenders and/or Inspecting Engineer shall determine in their sole
discretion at the time that the costs to complete such Facility are
greater than the amount of the Available Commitments allocable to such
Facility, the applicable Lessee shall deposit all funds with Trustee
necessary to remove any such deficiency within ten (10) days of receipt
of written notice of the requirement of such deposit from the
Administrative Agent. Any such funds so deposited not used by the
applicable Lessee to pay the costs of completing construction of such
Facility shall be held by Trustee in the Account until no Event of
Default or Default exists.
(c) Inspecting Engineer Approvals and Report. The
independent firm of professional engineers or consulting architects
approved by the Agents (the "Inspecting Engineer") shall have received
and approved in its sole discretion (i) all detailed Plans and
Specifications (together with all Change Orders) for such Facility,
(ii) confirmation that the applicable Facility Schedule is accurate and
complete, (iii) a detailed breakdown of the estimated costs of
completing such Facility, and (iv) a true and correct copy of each
subcontract (involving an expenditure of $1,000,000 or more) relating
to work to be performed and materials to be supplied in connection with
such Facility. The Agents shall have received a report satisfactory to
the Agents in their sole discretion prepared by Inspecting Engineer
with respect to the applicable Facility Site and such Facility and all
relevant aspects thereof and other satisfactory evidence, in the
Agents' reasonable discretion, that (x) such Facility can be completed
in accordance with the costs set forth in the applicable Facility Cost
Analysis pursuant to the applicable Facility Schedule, (y) such
Facility, when completed in accordance with the applicable Plans and
Specifications, will comply in all respects with all applicable
Requirements of Law and insurance requirements and (z) that all
structural elements and other systems and components of such Facility
will be in good working order and condition, free from any latent or
patent defects and conditions requiring extraordinary maintenance or
remedial action.
(d) Contracts. The Administrative Agent shall have
received a complete list and summary (including the parties, term,
general subject matter, compensation and cancellation terms), together
with certified true copies, of all Primary Construction Contracts
necessary or appropriate as of such date for the construction of the
work in
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Participation Agreement
respect of such Facility, which Primary Construction Contracts
shall be (i) in form and substance acceptable to the Agents, (ii) in
full force and effect, and (iii) free from material default by the
parties thereto (or if not, a specification of the material defaults
thereunder) and the applicable Lessee shall so certify to Agents.
(e) Architect's Statement of Professional Opinion. The
Administrative Agent shall have received (with copies for the Agents,
Trustee, and each Lender) a statement of professional opinion from the
applicable Architect, in form and scope satisfactory to the Agents,
stating that (i) the contemplated use of such Facility by the
applicable Lessee will comply in all material respects with the
applicable design and building codes of the applicable state and local
jurisdictions, and (ii) such Facility is being constructed in a good
and workmanlike manner and in accordance with its Plans and
Specifications and applicable design and building codes of the
applicable state and local jurisdictions.
(f) Cost of Completion. The Administrative Agent shall
have received a certificate from the applicable Prime Contractor
approved by Inspecting Engineer, in form and scope satisfactory to the
Agents, certifying (i) that after giving effect to the applicable
Construction Advance and, if required, the deposits made by the
applicable Lessee pursuant to Section 3.6(b), both (x) the estimated
unpaid cost of completing such Facility pursuant to its Plans and
Specifications and (y) such estimated cost shall not exceed the
Available Commitments allocable to such Facility under Section 2.2(b),
and (ii) the estimated completion date for construction of such
Facility and that such estimated completion date is in accordance with
the applicable Facility Schedule.
(g) Change Orders. Inspecting Engineer shall have received
all Change Orders to the applicable Plans and Specifications issued
from the date of the last Construction Advance and the Agents shall
have approved and consented to each such Change Order (or any number of
related Change Orders) the result of which is to increase or decrease
the cost of such Facility by $500,000 or more or otherwise have a
material adverse effect on the scope or quality of such Facility.
(h) Contractor Receipts. On or prior to the date of such
Construction Advance, the Administrative Agent shall have received (i)
receipts or other evidence satisfactory to the Agents from the
applicable Prime Contractor and all subcontractors engaged in the
construction of such Facility with respect to any invoice which is the
subject of such Construction Advance and which is in excess of $50,000
evidencing that all sums previously advanced for Facility Costs have
been expended for such Facility Costs and that no further amounts are
owing with respect to such previously invoiced Facility Costs, and (ii)
copies of all documents required to be submitted by such Prime
Contractor or the applicable Lessee as of such date pursuant to the
terms of the
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Construction Contracts.
(i) CSG Certificate. The Administrative Agent shall have
received, on or prior to the date of such Construction Advance, a
written certificate from CSG with respect to such of the foregoing
matters in this Section 3.6 as may be requested by the
Administrative Agent.
SECTION IV.7. Conditions to Completion Date of Any Facility. The
date upon which any Facility shall be deemed to have been constructed and
completed pursuant to the applicable Construction Agency Agreement (the
"Completion Date") shall be deemed to have occurred upon the date that each
of the following conditions has been satisfied:
(a) The applicable Construction Agent shall have delivered
to the Administrative Agent an AIA Certificate of Completion, signed by
the applicable Architect and Prime Contractor and by such Construction
Agent, evidencing that the construction of such Facility shall have
been substantially completed (subject only to industry-custom punchlist
items) in accordance with the applicable Prime Construction Contract,
Plans and Specifications and Change Orders and applicable design and
building codes of the applicable state and local jurisdictions.
(b) The applicable Construction Agent shall have delivered
to the Administrative Agent a Certificate of Acceptance with respect to
such Facility and all Facility F,F&E related thereto, or if
construction of such Facility is not completed under the applicable
Prime Construction Contract, then other comparable certificates
reasonably satisfactory to Trustee, the Agents and the Lenders.
(c) The applicable Construction Agent shall have furnished
to Trustee and the Administrative Agent a certificate from a
Responsible Officer of such Construction Agent which will indicate that
it is made in favor of and for the benefit of Trustee, the
Administrative Agent and each of the Lenders certifying, representing
and warranting that:
(i) such Facility has been constructed and installed on the
applicable Facility Site in accordance with the applicable Plans
and Specifications (as amended in accordance with Section 2.4(c)
of the applicable Construction Agency Agreement) and the
applicable Primary Construction Contract;
(ii) such Facility and all Facility F,F&E related thereto is in
compliance with all Applicable Laws, except for such violations
which,
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individually or in the aggregate, would not have a Material
Adverse Effect;
(iii) the representations and warranties with respect
to such Facility and all Facility F,F&E related thereto set forth
at Sections 4.1(x), 4.1(y), 4.1(z) and 4.1(aa) through (kk) are
true and correct as of the date of such certificate;
(iv) all amounts then due or owing to third parties
for the construction of such Facility and purchase of all
Facility F,F&E related thereto have been paid in full or the
applicable Construction Agent has made adequate reserves for any
punchlist or contingent obligations remaining with respect to the
construction of such Facility and purchase of all Facility F,F&E
related thereto); and
(v) Trustee has good and marketable title to such
Facility and related Facility F,F&E free and clear of all Liens,
other than Permitted Liens.
(d) The Administrative Agent shall have received with
respect to such Facility (a) a final "as built" survey showing the
completed Facility which shall be reasonably satisfactory to the
Lenders and (b) final Plans and Specifications and as-built mechanical
drawings of underground site work and of interior utility and other
building systems.
SECTION IV.8. Additional Conditions Precedent To Revolving
Advances. In addition to the conditions precedent set forth in Section 3.1,
the obligation of each Lender to make any Revolving Advance hereunder on any
Advance Date shall be further subject to the condition precedent that after
giving effect to the requested Revolving Advance, (a) the aggregate
principal amount of the Loans outstanding under the Notes as of such date
shall not exceed the then applicable Commitment Amount and (b) the aggregate
amount of Revolving Advances made in respect of any Facility shall not
exceed the aggregate amount of voluntary principal prepayments theretofore
made by the applicable Lessee pursuant to Section 2.7(c) to reduce the Loans
attributable to such Facility.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION V.1. Representations and Warranties of Lessees,
Construction Agents and Guarantors. Except as otherwise set forth on the
Disclosure Schedule, each of the Lessees, Construction Agents and Guarantors
jointly and severally represents and warrants to each of the
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other parties hereto as follows:
(a) Due Organization, etc. Each of the Lessees,
Construction Agents and the Guarantors is a corporation or limited
liability company duly organized, validly existing and in good standing
under the laws of the State of Minnesota and is duly qualified or
licensed and in good standing as a foreign corporation or limited
liability company, as applicable, authorized to do business in all
jurisdictions where failure to so qualify could reasonably be expected
to have a Material Adverse Effect, and each has the requisite power and
authority to execute, deliver and perform its respective obligations
under each of the Operative Documents to which it is a party and each
other agreement, instrument and document executed and delivered by it
on each Advance Date in connection with or as contemplated by each such
Operative Document. The "principal place of business" and "chief
executive office" (as such terms are used in Section 9-103(3) of the
UCC) of each of the Lessees, Construction Agents, and Guarantors is
located at 130 Cheshire Lane, Minnetonka, Minnesota 55305.
(b) Authorization; No Conflict; No Approvals, Etc. The
execution and delivery by each of the Lessees, Construction Agents and
Guarantors of each of the Operative Documents to which it is a party,
and the performance by each such Person of its respective obligations
under such Operative Documents, have been duly authorized by all
necessary corporate or limited liability action, as applicable
(including any necessary stockholder or member action) on its part, and
do not and will not: (i) contravene any Applicable Laws currently in
effect applicable to or binding on it or any of the Leased Property;
(ii) violate any provision of its respective charter, bylaws or other
organizational documents; (iii) result in a breach of or constitute a
default under (with or without the giving of notice or lapse of time or
both) any indenture, mortgage, deed of trust, lease, loan or credit
agreement, or any other agreement or instrument to which any of the
Lessees, Construction Agents or Guarantors is a party or by which any
of the Lessees, Construction Agents or Guarantors or their respective
properties may be bound or affected, except for such breaches or
defaults which, individually or in the aggregate, would not have a
Material Adverse Effect; or (iv) require any Governmental Approval by
any Governmental Authority, except for (x) the filings and recordings
listed on Schedule I to any applicable Lease Supplement to perfect the
rights of Trustee, the Lenders and the Administrative Agent intended to
be created by the Operative Documents and (y) the required licenses,
approvals and/or notices listed on Schedule V hereto or on Schedule II
to any applicable Lease Supplement; and none of the Lessees,
Construction Agents or Guarantors is in default under or in violation
of its respective charters or bylaws.
(c) Enforceability. Each Operative Document to which any
of the Lessees,
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Construction Agents or Guarantors is a party constitutes the
legal, valid and binding obligation of such Person, enforceable against
such Person in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) Litigation. There is no action, suit or proceeding, or
any governmental investigation or any arbitration, in each case pending
or, to the knowledge of Lessees, Construction Agents and Guarantors,
threatened against any such Person or any of the Leased Property or
before any Governmental Authority (i) which challenges the validity of
the Operative Documents to which any such Person is a party or any
action taken or to be taken pursuant to the Operative Documents to
which any such Person is a party, or (ii) which if adversely determined
would have, individually or in the aggregate, a Material Adverse
Effect.
(e) Ownership. Parent has sole beneficial and record
ownership, directly or indirectly, of 100% of the issued and
outstanding capital stock or membership interests, as applicable, of
each of the Lessees, Construction Agents and Guarantors (excluding
Parent). There are no outstanding subscriptions, options, warrants,
calls, rights (including preemptive rights) or other arrangements or
commitments of any nature relating to any capital stock or membership
interests, as applicable, of any of the Lessees, Construction Agents or
Guarantors (excluding Parent).
(f) Financial Statements. The audited consolidated
financial statements of Parent and its consolidated Subsidiaries for
the Fiscal Year ended December 29, 1996 fairly present the financial
condition of Parent and its consolidated Subsidiaries on such date, and
the results of consolidated operations for the period then ended, and
there has been no Material Adverse Effect with respect to Parent and
its consolidated Subsidiaries since such date.
(g) No Other Agreements. None of the Lessees, Construction
Agents or Guarantors is a party to any agreement to sell any interest
in any of the Leased Property or either of the Resorts or any portion
of any of the foregoing, whether under construction pursuant to any
Construction Agency Agreement or subject to the Master Lease (except as
otherwise contemplated in the Operative Documents).
(h) Compliance With Law. With respect to the Leased
Property and the operation of each of the Facilities, each of the
Lessees, Construction Agents and
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Guarantors have at all times complied and are in compliance with
all Applicable Laws, except for any violations which, individually or
in the aggregate, would not have a Material Adverse Effect.
(i) Investment Company Act. None of the Lessees,
Construction Agents or Guarantors is an "investment company" or a
company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
(j) Public Utility Holding Company. None of the Lessees,
Construction Agents or Guarantors is subject to regulation as a
"holding company," an "affiliate" of a "holding company", or a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(k) Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA
and the Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section
412 of the Code in respect of any Plan, (ii) failed to make any
contribution or payment due any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. No Plan Termination Event has occurred with respect to
any Plan or Multiemployer Plan. No member of the ERISA Group has any
knowledge of any event that could result in a liability of any such
member to the PBGC, whether under a Plan, a Multiemployer Plan or
otherwise. There have not been any nor are there now existing any
events or conditions that would permit any Plan to be terminated under
circumstances that would cause the lien provided under Section 4068 of
ERISA to attach to the material assets of any Lessee or its ERISA
Affiliates. The value of the Plans' benefits guaranteed under Title IV
of ERISA on the date hereof does not exceed the value of such Plans'
assets allocable to such benefits as of the date of this Agreement. No
"Prohibited Transaction" within the meaning of Section 406 of ERISA
exists or will exist upon the execution and delivery of this Agreement
or any Operative Document with respect to any Plan or Benefit
Arrangement.
(l) Environmental Matters. Except as may be disclosed in
any environmental report provided to the Administrative Agent pursuant
to Sections 3.2(j) and 3.3(j), (i) there are no conditions existing
currently which would be likely to subject Trustee, the
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Administrative Agent, the Lenders or any of the Lessees,
Construction Agents or Guarantors to damages, penalties, injunctive
relief or cleanup costs in an amount in excess of $100,000 under any
Environmental Laws or assertions thereof, or which, pursuant to
applicable Environmental Laws, require or are likely to require
cleanup, removal, remedial action or other response at or with respect
to (A) any Leased Property or (B) any other portion of the Resort
Properties if the failure to cleanup, remove, remediate or otherwise
respond to any such condition would reasonably be expected to cause a
Material Adverse Effect; (ii) none of the Lessees, Construction Agents
or Guarantors is a party to any litigation or administrative proceeding
for which it has received service of process or other similar
notification, and to the knowledge of Lessees, Construction Agents and
Guarantors, any litigation or administrative proceeding threatened
against any of them, which asserts or alleges that any of the Lessees,
Construction Agents or Guarantors, any Leased Property or any of the
Projects has violated or is violating Environmental Laws with respect
to any Leased Property or any of the Projects or that any of the
Lessees, Construction Agents or Guarantors is required to clean up,
remove or take any remedial or other responsive action due to the
disposal, depositing, discharge, leaking or other release of any
Hazardous Materials at or from any Leased Property, or any of the
Projects; (iii) none of the Lessees, Construction Agents or Guarantors
is subject to any judgment, decree, order or citation arising out of
Environmental Laws which relates to (A) any Leased Property or (B) any
other portion of the Resort Properties (or any interest therein) if the
failure to comply with any such judgment, decree, order or citation
would reasonably be expected to cause a Material Adverse Effect; and
(iv) none of the Lessees, Construction Agents or Guarantors has been
named or listed as a potentially responsible party by any governmental
body in a manner arising under any Environmental Laws with respect to
or which affects any Leased Property, any of the Facilities or any of
the Projects.
(m) Subjection to Government Regulation. Except in the
case of the ownership of, or the holding of an interest in, any Leased
Property following the exercise of remedies under the Master Lease, no
Agent or Lender will become subject to ongoing regulation of its
operations by a Governmental Authority (excluding foreign Governmental
Authorities) solely by reason of entering into the Operative Documents
or the consummation of the transactions contemplated thereby; provided,
however, that the Mississippi Gaming Commission may at any time require
Trustee, any Agent or any Lender to file an application, at Lessees'
expense, for a finding of suitability to be affiliated with Lessees.
The exercise of remedies by Trustee, any Agent or any Lender under any
of the Operative Documents with respect to the Collateral will not
require the approval of or filing with any Gaming Authority except as
otherwise disclosed on Schedule V hereto or Schedule I to any
applicable Lease Supplement.
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(n) Securities Act. No Lessee nor anyone authorized to act
on any Lessee's behalf (excluding Trustee, the Arranger, the Agents and
the Lenders) has, directly or indirectly, offered or sold any interest
in the Notes, any Leased Property, the Master Lease or any of the
Operative Documents in violation of Section 5 of the Securities Act or
any state securities laws.
(o) Federal Reserve Regulations. Neither Parent nor any of
its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board). No part of any Advance will be used
directly or indirectly for the purpose of purchasing or carrying any
such margin stock, to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any other purpose
violative of or inconsistent with any of the provisions of Regulation
G, T, U or X of the Board.
(p) Taxes. Lessees, Construction Agents and Guarantors
have filed all tax returns and reports required by law to have been
filed by each of them and have paid all taxes and governmental charges
thereby shown to be owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on their books.
(q) Accuracy of Information. All factual information
heretofore or contempora neously furnished by or on behalf any of the
Lessees, Construction Agents and Guarantors in writing to the
Administrative Agent, Trustee and the Lenders for purposes of or in
connection with this Agreement or any transaction contemplated hereby
is, and all other such factual information hereafter furnished by or on
behalf of any of the Lessees, Construction Agents and Guarantors to the
Administrative Agent, Trustee and the Lenders will be, true and
accurate in every material respect on the date as of which such
information is dated or certified and as of the date of execution and
delivery of this Agreement by the Administrative Agent, Trustee and the
Lenders, and such information is not, or shall not be, as the case may
be, incomplete by omitting to state any material fact necessary to make
such information not misleading.
(r) Licenses, Registrations and Permits. As of any date on
which this representation is made, all licenses, registrations and
permits (other than Gaming Permits and Liquor Permits) required of any
applicable Lessee as of such date by any Governmental Authority having
jurisdiction shall have been obtained for (i) the use,
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occupancy and operation of the applicable Facilities on the
Resort Properties, including, to the extent construction of such
Facilities has been completed, certificates of occupancy therefor or
other legally equivalent permission to occupy such Facilities, and (ii)
if not completed, the construction and installation of the Facilities
and related Facility F,F&E, except where the failure to obtain the
same would not have, individually or the aggregate, a Material Adverse
Effect.
(s) Title to Property. Parent has good and marketable
title to all of its material assets reflected on the financial
statements delivered pursuant to Section 2.1(e), except for such
material assets as have been disposed of in the ordinary course of
business, and all such material assets are free and clear of any Lien,
except as reflected in the financial statements and/or notes thereto or
as otherwise permitted by the provisions hereof or under the Operative
Documents, and except for Permitted Liens. Parent has such trademarks,
trademark rights, trade names, trade name rights, franchises,
copyrights, patents, patent rights and licenses as to allow it to
conduct its business as now operated, without known conflict with the
rights of others, except such conflicts that would not, if determined
adversely to Parent, reasonably be expected to cause a Material Adverse
Effect.
(t) Insurance. Each of the Lessees has obtained or caused
to be obtained insurance coverage covering the Leased Property (if any)
leased by such Lessee, which insurance coverage meets in all respects
the requirements of the Master Lease, and such coverage is in full
force and effect. Each of the Lessees carries insurance with reputable
insurers, or self-insures, in respect of its material assets, in such
manner, in such amounts and against such risks as is customarily
maintained by other Persons of similar size engaged in similar
business.
(u) Defaults. None of Lessees, Parent or the other
Guarantors is in default under any Operative Document, instrument
evidencing any Debt, or under any material agreement relating thereto
or any indenture, mortgage, deed of trust, security agreement, lease,
franchise or other agreement or other instrument to which any such
Person is a party or by which any such Person or any of its material
assets is subject to or bound including the Indenture which would
result in a Material Adverse Effect.
(v) Solvency. The consummation by each of the Lessees or
the Guarantors of the transactions contemplated by the Operative
Documents did not and will not render the Lessees and Guarantors (taken
as a whole) insolvent, nor was it made in contemplation of any Lessee's
or any Guarantor's insolvency; the value of the assets and properties
of the Lessees and Guarantors (taken as a whole) at fair valuation and
at their then present fair
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Participation Agreement
salable value is and, after the transactions, will be greater
than the respective total liabilities, including contingent
liabilities, as they become due of the Lessees and Guarantors; the
property remaining in the hands of the Lessees and of Guarantors (taken
as a whole) was not and will not be an unreasonably small amount of
capital. In addition to the foregoing, the consummation by each of the
Lessees of the transactions contemplated by the Operative Documents
(other than the Guaranty) did not and will not render any Lessee (in
its capacity as Lessee and without inclusion of any contingent
liability as a Guarantor) insolvent.
(w) Appraisal Data. The information provided or to be
provided by Lessees and their Affiliates to the appraiser in connection
with each Appraisal and forming the basis for the conclusions set forth
in such Appraisal, taken as a whole, was (or will be) true and correct
in all material respects as of the date delivered and did not (or will
not, as applicable) omit any information known and available to any
Lessee or any Affiliate of any Lessee necessary to make the information
provided not materially misleading.
(x) Zoning. Each of the Facilities, Facility Sites and
both of the Resort Properties comply in all material respects with all
applicable zoning and subdivision laws, ordinances, regulations and
restrictive covenants, and all requirements thereof necessary for the
use, occupancy and operation of such Facility and related Resort
Property as operated and used on each date this representation is made
have been satisfied in all material respects, except, in the case of
any portion of either of the Resort Properties that does not include
any Facility or Facility Site, where the failure to so comply would not
reasonably be expected to cause a Material Adverse Effect. The current
use and intended use under the Master Lease of each of the Facilities
is a conforming use.
(y) Perfection of Security Interests. With respect to each
Facility and related Facility Site and Facility F,F,&E, upon (i) the
partial release of Liens described in Section 3.2(h), if applicable,
and (ii) the recordation of a Lease Supplement, Ground Lease,
Improvements Deed, Security Agreement and Deed of Trust in the office
of the Chancery Clerk of the County where such Facility is located, and
the filing of appropriate UCC Financing Statements with the Secretary
of State of Minnesota, the Secretary of State of Mississippi and the
office of such Chancery Clerk and, together with a fixture filing or
deed of trust on the Facility Sites (if necessary) in the office of the
Chancery Clerk of the County where the Facility is located, the
Administrative Agent, for the benefit of the Lenders, will have an
enforceable, perfected first priority Lien of record in the Collateral
granted pursuant to the Master Lease with respect to such Facility and
related Facility Site and Facility F,F,&E as against all Persons,
including Lessees and their creditors.
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Participation Agreement
(z) Use and Operation of Leased Property. To the best
knowledge of Parent, and the applicable Lessee after due inquiry, on
and after the Completion Date for any Facility (i) all material
agreements, easements and other rights, public or private, which are
necessary to permit the lawful use and operation of such Facility and
related Facility Site as the applicable Lessee intends to use such
Facility and Facility Site under the Master Lease and related Lease
Supplement(s) and which are necessary to permit the lawful intended use
and operation of all presently intended utilities, driveways, roads and
other means of egress and ingress to and from the same (including
certificates of occupancy) have been obtained and are in full force and
effect and such Lessee has no actual knowledge of any pending
modification or cancellation of any of the same; (ii) the use of such
Facility and Facility Site does not (and the intended use of such
Facility and Facility Site by such Lessee under the Master Lease and
related Lease Supplement(s) will not) depend on any variance, special
exception or other municipal approval, permit or consent that has not
been obtained for its continuing legal use; and (iii) all required
building and use related permits, approvals and consents material to
the use and operation of such Facility and related Facility Site have
been issued and will be in full force and effect and all utilities
required for the operation of such Facility and Facility Site, as such
Lessee intends to use such Facility and Facility Site under the Master
Lease and related Lease Supplement(s), will be available as of such
date.
(aa) Gaming Permits; Liquor Permits. All Gaming Permits and
Liquor Permits required to be held by Lessees, BL Development and Grand
Casinos of Mississippi, Inc. -- Gulfport, a Minnesota corporation, as
of each date this representation is made for the conduct of their
business as then conducted are current and in good standing, including
all Gaming Permits and Liquor Permits necessary for the operation of
the Casinos and the sale of alcoholic beverages at the Resorts for the
locations where such sales are then conducted.
(bb) Location of Gaming Activities. No gaming activities
requiring a Gaming Permit will be maintained at any location at either
of the Resorts other than at a location that has obtained all requisite
Gaming Permits.
(cc) Leased Property. Upon substantial completion of any
Facility, such Facility, its related Facility F,F&E and its related
Facility Site as improved and the contemplated use thereof by the
applicable Lessee and its Affiliates and their respective agents,
assignees, employees, lessees, licensees and tenants will comply in all
material respects with all Requirements of Law (including all zoning
and land use laws and Environmental Laws) and the requirements of all
insurance policies required to be
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Participation Agreement
maintained under the Lease and Construction Agency Agreement
applicable thereto.
(dd) Plans and Specifications. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent domain
or under any Environmental Law) pending or threatened with respect to
any Lessee, any Affiliate of any Lessee, either Casino or any Facility
which adversely affects the title to, or the use, operation or value of
any Facility or Casino. No fire or other casualty with respect to any
Facility or Casino has occurred which fire or other casualty has had a
Material Adverse Effect on such Facility or Casino. Upon substantial
completion of each Facility, each such Facility will have available all
material services, public facilities and other utilities necessary for
use and operation of such Facility for its primary intended purposes
including adequate water, gas and electrical supply, storm and sanitary
sewerage facilities, telephone, other required public utilities,
chiller plant services (if applicable) and means of access between such
Facility and each Casino and public highways for motor vehicles. All
utilities serving any Facility, or proposed to serve such Facility in
accordance with the related Plans and Specifications are located in,
and vehicular access to such Facility is provided by, either public
rights-of-way abutting such Facility or Appurtenant Rights. All
Requirements of Law, easements and rights-of-way, including proof and
dedication, required for (x) the use, treatment, storage, transport,
disposal or disposition of any Hazardous Substance on, at, under or
from each Facility Site during the construction of the related
Facility, and (y) construction of such Facility in accordance with the
applicable Plans and Specifications, and the applicable Construction
Agency Agreement have either been irrevocably obtained from the
appropriate Governmental Authorities having jurisdiction or from
private parties, as the case may be, or will be irrevocably obtained
from the appropriate Governmental Authorities having jurisdiction or
from private parties, as the case may be, prior to commencing any such
construction or use and operation, as applicable.
(ee) Title. Upon appropriate completion by attachment of an
accurate property description and indexing instructions to each Ground
Lease, Improvements Deed, Security Agreement, Deed of Trust and Lease
Supplement to the Master Lease for a Facility and related Facility
Site, such documents shall be in form and substance sufficient to grant
a valid first priority Lien in the applicable Facility and Facility
Site to the Administrative Agent, for the benefit of the Lenders,
subject only to Permitted Liens. Upon appropriate completion by
attachment of an accurate property description and indexing
instructions to the form of Ground Lease, such form shall be in form
and substance sufficient to convey a valid leasehold estate in the
applicable Facility Site Pursuant to the Lessor, subject only to
Permitted Liens. Lessor will at all times during the Lease Term
for any Facility Site have a valid leasehold estate in each applicable
Facility Site
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Participation Agreement
pursuant to the Ground Lease relating thereto and good and marketable
title in fee simple to the Facility located thereon pursuant to the
Improvements Deed, subject only to Permitted Liens. Each applicable
Lessee will have at all times during the Lease Term with respect to
each Facility Site leased by such Lessee marketable title in fee
simple to such Facility Site subject only to Permitted Liens.
(ff) Flood Hazard Areas. Except as otherwise identified on
the applicable survey delivered pursuant to Section 3.3(b), no portion
of any Facility Site is located in an area identified as a special
flood hazard area by the Federal Emergency Management Agency or other
applicable agency. If any Facility Site is located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance has
been obtained for such Facility Site in accordance with the Master
Lease and in accordance with the National Flood Insurance Act of 1968,
as amended.
(gg) Condition and Use of Leased Property. To the best
knowledge of Parent and Lessees after due inquiry, the present
condition and use of the Leased Property conforms in all material
respects with all conditions or requirements of all existing permits
and approvals issued with respect to the Leased Property, and the
present use of the Leased Property and each Lessee's future intended
use of the Leased Property under the Master Lease does not, in any
material respect, violate any Applicable Laws. To the best knowledge
of Parent and Lessees after due inquiry, (i) no notices, complaints or
orders of violation or non-compliance or liability of any nature
whatsoever have been issued or threatened by any Person with respect to
any portion of the Resort Properties or any Leased Property or any
present or intended future use thereof, except for such violations and
instances of non-compliance as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and
they are not aware of any circumstances which could give rise to the
issuance of any such notices, complaints or orders, and (ii) each of
the Resort Properties complies in all material respects with Applicable
Laws to the extent that non-compliance would not have a Material
Adverse Effect.
(hh) Burdensome Agreements. No Lessee is (i) a party to any
agreement, indenture, lease or instrument, or (ii) subject to any
organizational document restriction or any judgment, order, writ,
injunction, decree, rule or regulation that presently, or in the future
may, so far as such Lessee can now foresee, have a Material Adverse
Effect.
(ii) No Change in Name or Entity. No Lessee has, prior to
the date of this Agreement, changed its name, or been the surviving
entity of a merger or consolidation.
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Participation Agreement
(jj) Purchase Price. The Fair Market Value of the items of
Facility F,F&E accepted on the Advance Date is approximately equal to
the invoice cost for the items of Facility F,F&E identified in such
Advance Request plus the Charges properly attributable thereto.
(kk) Completion Date. In Lessees' good faith, reasonable
opinion, the Completion Date for each Facility will occur on or before
the Estimated Completion Date for such Facility except as previously
disclosed by Lessees to the Administrative Agent in writing.
SECTION V.2. Representations and Warranties of Each Lender. Each
Lender represents and warrants, severally and only as to itself, to each of
the other parties hereto as follows:
(a) Due Organization, etc. It is duly organized and
validly existing under the laws of the jurisdiction of its organization
and has the requisite power and authority to enter into and perform its
obligations as a Lender under each Operative Document to which it is or
will be a party and each other agreement, instrument and document to be
executed and delivered by it in connection therewith.
(b) Authorization; No Conflict. The execution and delivery
by it of, the consummation by it of the transactions provided for in,
and the compliance by it with all the provisions of, each Operative
Document to which it is or is to be a party as Lender have been duly
authorized by all necessary corporate action on its part; and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it as Lender with
any of the terms and provisions thereof (i) requires any approval of
its stockholders or approval or consent of any trustee or holders of
any of its indebtedness or obligations, (ii) contravenes or will
contravene any Applicable Laws currently in effect applicable to or
binding on it (except no representation or warranty is made as to any
Applicable Laws to which it or the Leased Property, directly or
indirectly, may be subject because of the lines of business or other
activities of Lessee) or (iii) results in any breach of or constitutes
any default under, any indenture, mortgage, chattel mortgage, deed of
trust, lease, conditional sales contract, loan or credit arrangement,
other material agreement or instrument, corporate charter, by-laws or
other agreement or instrument to which it is a party or by which it or
its properties may be bound or affected.
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Participation Agreement
(c) ERISA. It is purchasing its interest in the Note with
assets that are either (i) not assets of any Plan or Benefit
Arrangement (or its related trust) that is subject to Title I of ERISA
or Section 4975 of the Code, or (ii) assets of any Plan or Benefit
Arrangement (or its related trust) that is subject to Title I of ERISA
or Section 4975 of the Code, but for which there is available an
exemption from the prohibited transaction rules under Section 406(a) of
ERISA and Section 4975 of the Code and such exemption is immediately
applicable to each transaction contemplated by the Operative Documents
to the extent that any other party to such transaction is a "party in
interest" as defined in Section 3(14) of ERISA, or a "disqualified
person" as defined in Section 4975(e)(2) of the Code, with respect to
such plan assets.
(d) Investment in Notes. It is acquiring the Note for its
own account for investment and not with a view to any distribution (as
such term is used in Section 2(11) of the Securities Act) thereof, and
if in the future it should decide to dispose of all or any portion its
interest in its Note or other Operative Documents, it understands that
it may do so only in compliance with the Securities Act and the rules
and regulations of the SEC thereunder and any applicable state
securities laws. Neither it nor anyone authorized to act on its behalf
has taken or will take any action which would subject the issuance or
sale of any Note, the Trust Estate (including the Leased Property
constituting a part thereof), the Collateral or the Master Lease to the
registration requirements of Section 5 of the Securities Act. Subject
to the foregoing, it is understood among the parties that the
disposition of each Lender's property shall be at all times within its
control.
(e) Lessor Liens. The Leased Property is free and clear of
all Lessor Liens attributable to it.
SECTION V.3. Representations and Warranties of Trustee. The Bank,
in its individual capacity, represents and warrants to each of the other
parties hereto as follows:
(a) Chief Executive Office. The Bank's "chief executive
office" and "principal place of business" as such terms are used in
Section 9-103(3) of the UCC and the place where the documents, accounts
and records relating to the transactions contemplated by the Operative
Documents are kept are located at One Hancock Plaza; Gulfport,
Mississippi 39502.
(b) Due Organization, etc. The Bank is a duly organized
and validly existing banking corporation in good standing under the
laws of the State of Mississippi and has full power and authority to
execute, deliver and perform its obligations (i) in its individual
capacity under the Trust Agreement and, to the extent it is a party
hereto in its individual capacity, this Agreement, and (ii) as Trustee
under the Trust Agreement, under
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Participation Agreement
this Agreement and each other Operative Document to which it is
or will be a party as Trustee.
(c) Due Authorization; Enforceability. The Operative
Documents to which the Bank is or will be a party have been or will be,
on the date required to be delivered hereby, duly authorized, executed
and delivered by or on behalf of the Bank (in its individual capacity)
and are, or upon execution and delivery by the Bank will be, legal,
valid and binding obligations of the Bank (in its individual capacity),
enforceable against it in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and
by general equitable principles.
(d) No Conflict. The execution and delivery by (i) the
Bank, in its individual capacity, of the Trust Agreement and, to the
extent it is a party hereto in its individual capacity, this Agreement,
and (ii) the Bank, in its capacity as Trustee, of each Operative
Document to which Trustee is or will be a party, are not and will not
be, and the performance by the Bank, in its individual capacity or as
Trustee, as the case may be, of its obligations under each are not and
will not be inconsistent with the articles of association or by-laws of
the Bank, do not and will not contravene any Applicable Laws of the
United States of America or the State of Mississippi relating to the
banking or trust powers of the Bank, and do not and will not result in
a breach of or constitute a default under (with or without the giving
of notice or lapse of time or both) any indenture, mortgage, deed of
trust, lease, loan or credit agreement or any other agreement or
instrument to which the Bank is a party or by which it or its
properties may be bound or affected.
(e) No Approvals, etc. Neither the execution and delivery
by Trustee in its individual capacity or as Trustee, as the case may
be, of any of the Operative Documents to which it is a party requires
any Governmental Approval by any Governmental Authority under any
Applicable Laws of the United States of America or the State of
Mississippi relating to the banking or trust powers of the Bank.
(f) Litigation. There is no action, proceeding or
investigation pending or threatened against the Bank (in its individual
capacity or as Trustee) which questions the validity of the Operative
Documents or which is reasonably likely to result, individually or in
the aggregate, in any material adverse effect on the ability of the
Bank (in its individual capacity or as Trustee) to perform its
obligations (in either capacity) under the Operative Documents to which
it is a party.
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Participation Agreement
(g) Lessor Liens. The Leased Property is free and clear of
all Lessor Liens attributable to the Bank (in its individual capacity).
(h) Securities Act. Neither the Bank (in its individual
capacity or as Trustee) nor anyone authorized to act on its behalf has,
directly or indirectly, in violation of Section 5 of the Securities Act
or any state securities laws, offered or sold any interest in the
Notes, the Leased Property or the Master Lease, or in any security or
lease the offering of which, for purposes of the Securities Act or any
state securities laws, would be deemed to be part of the same offering
as the offering of the aforementioned securities or leases, or
solicited any offer to acquire any of the aforementioned securities or
leases.
SECTION V.4. Representations and Warranties of the Administrative
Agent. BA Leasing & Capital Corporation, in its individual capacity, hereby
represents and warrants to each of the other parties hereto as follows:
(a) Due Organization, etc. The Administrative Agent is
duly organized and validly existing under the laws of the jurisdiction
of its organization and has the requisite power and authority to
execute, deliver and perform its obligations under the Operative
Documents to which it is or will be a party.
(b) Due Authorization; Enforceability. The Operative
Documents to which the Administrative Agent is or will be a party have
been or will be, on the date required to be delivered hereby, duly
authorized, executed and delivered by the Administrative Agent, and
are, or, upon execution and delivery will be, legal, valid and binding
obligations of the Administrative Agent, enforceable against it in
accordance with their respective terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, or similar laws
affecting creditors' rights generally and by general equitable
principles.
(c) No Conflict. Neither the execution and delivery by the
Administrative Agent of the Operative Documents to which it is or will
be a party, either in its individual capacity or as the Administrative
Agent, or both, nor performance of its obligations thereunder in either
such capacity, results in a breach of, or constitutes a default under
(with or without the giving of notice or lapse of time or both), or
violates the terms, conditions or provisions of: (i) the articles of
incorporation of the Administrative Agent; (ii) any agreement, to which
the Administrative Agent, either in its individual capacity, as the
Administrative Agent, or both, is now a party or by which it or its
property, either in its individual capacity, as Administrative Agent,
or both, is bound or affected, where such breach, default or violation
would be reasonably likely to materially and adversely affect
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Participation Agreement
the ability of the Administrative Agent, either in its individual
capacity or as Administrative Agent or both, to perform its
obligations under any Operative Document to which it is or will be a
party, either in its individual capacity or as Administrative Agent,
or both; or (iii) any Applicable Laws of the United States of America
or the State of New York relating to the banking or trust powers of
the Administrative Agent, where such conflict, breach, default or
violation would be reasonably likely to materially and adversely
affect the ability of the Administrative Agent, either in its
individual capacity, as Administrative Agent or both, to perform its
obligations under any Operative Document to which it is or will be a
party.
(d) No Approvals, etc. No Governmental Approval by any
Governmental Authority under any Applicable Laws of the United States
of America or the State of New York relating to the banking or trust
powers of the Administrative Agent is or will be required in connection
with the execution and delivery by the Administrative Agent of the
Operative Documents to which it is party or the performance by the
Administrative Agent of its obligations under such Operative Documents.
ARTICLE VI
COVENANTS OF LESSEES, CONSTRUCTION AGENTS AND PARENT
SECTION VI.1. Further Assurances. Each of the Lessees and
Construction Agents, at its own cost and expense, will cause to be promptly
and duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as any Lender, Trustee or the Administrative Agent
reasonably may request from time to time in order to carry out more
effectively the intent and purposes of this Agreement and the other
Operative Documents to which it is a party and the transactions contemplated
thereby. Parent, at its own cost and expense, will cause all financing
statements (including precautionary financing statements), fixture filings,
Deeds of Trust and other documents, to be recorded or filed at such places
and times in such manner, and will take all such other actions or cause such
actions to be taken, as may be necessary or as may be reasonably requested
by any Lender, Trustee or the Administrative Agent in order to establish,
preserve, protect and perfect the title of Trustee to the Leased Property
and Trustee's rights under this Agreement and the other Operative Documents
and to perfect, preserve and protect the first and prior Lien of the
Security Agreements on the Trust Estate in favor of the Administrative Agent
for the benefit of the Lenders. Without limiting the foregoing, Parent
shall furnish to each Lender, Trustee and the Administrative Agent,
annually commencing on the fifth anniversary of the Closing Date, an opinion
of counsel with respect to the continued perfection of the security
interests created pursuant to the Operative
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Participation Agreement
Documents.
SECTION VI.2. Consolidation, Merger, Sale, etc.
(a) Subject to Section 5.4, no Lessee shall consolidate
with any Person, merge with or into any Person or convey, transfer or
lease (other than subleases and assignments permitted by the terms of
the Master Lease) to any Person all or substantially all of its assets
in any single transaction (or series of related transactions), unless,
immediately after giving effect to such transaction, the conditions set
forth in clauses (i) through (vii) shall have been satisfied:
(i) the Person formed by such consolidation with or into which
such Lessee shall be merged or the Person which shall acquire by
conveyance, transfer or lease all or substantially all of the
assets of such Lessee (the "Surviving Company") shall be a
corporation, partnership, association or other business entity
that is organized under the laws of the United States of America,
a state thereof or the District of Columbia;
(ii) the Surviving Company (if other than such Lessee) shall
execute and deliver to each of the parties hereto an agreement, in
form and substance reasonably satisfactory to the Lenders, Trustee
and the Administrative Agent, containing the assumption by the
Surviving Company of the due and punctual payment, performance and
observation of each obligation, covenant and agreement of such
Lessee under this Agreement and each other Operative Document to
which, immediately prior to such transaction, such Lessee was a
party;
(iii) each Guarantor shall execute and deliver to each of the
parties hereto a reaffirmation, in form and substance satisfactory
to the Lenders, Trustee and the Administrative Agent, that each
and all of the obligations of such Guarantor under this Agreement
and the Guaranty remain, and will remain, in full force and
effect, notwithstanding the transaction or transactions giving
rise to the requirement that such reaffirmation be delivered
hereunder;
(iv) no Lease Default, Lease Event of Default, Event of Loss
or Construction Agency Event of Default shall have occurred or
would occur as a result thereof;
(v) the title of Trustee to the Leased Property and Trustee's
rights
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Participation Agreement
under this Agreement and the other Operative Documents and the
first and prior Lien granted to Trustee in the Master Lease shall
not be adversely affected;
(vi) the Surviving Company (if other than such Lessee) shall
have obtained all permits and licenses, if any, legally necessary
for the continued operation of each of the Facilities and, if such
Lessee had held or otherwise owned any Gaming Permit or Liquor
Permit prior to such transaction, the Surviving Company shall have
obtained from the applicable Governmental Authorities, to the
extent legally required, the right to continue to use such Gaming
Permit or Liquor Permit; and
(vii) such Lessee shall have delivered to the Lenders, Trustee
and the Administrative Agent a certificate of a Responsible
Officer of such Lessee and an opinion of counsel reasonably
satisfactory to each such Person stating that such transaction
complies with this Section 5.2(a), that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Action required in connection with such transaction
has been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company shall
succeed to, and be substituted for, and may exercise every right and power of,
Lessees immediately prior to such transaction under this Agreement and each
other Operative Document to which such Lessee was a party immediately prior to
such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 5.2(a), no conveyance, transfer or lease of all or substantially all of
the assets of any Lessee shall release such Lessee, any Construction Agent or
any Guarantor from its respective payment or other obligations under this
Agreement or any other Operative Document without the written consent of
Trustee, the Administrative Agent and each Lender.
(b) No Guarantor shall consolidate with any Person, merge
with or into any Person or convey, transfer or lease to any Person all or
substantially all of its assets in any single transaction (or series of related
transactions), unless, immediately after giving effect to such transaction, the
conditions set forth in clauses (i) through (vii) shall have been satisfied:
(i) the Person formed by such consolidation with or into which
such Guarantor shall be merged or the Person which shall acquire by
conveyance, transfer or lease all or substantially all of the assets of
such Guarantor (the
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Participation Agreement
"Surviving Company"), if other than a Guarantor immediately
prior to such transaction, shall be a corporation, partnership,
association or other business entity that is organized under the
laws of the United States of America, a state thereof or the
District of Columbia;
(ii) the Surviving Company (if other than a Guarantor)
immediately prior to such transaction, shall execute and deliver
to each of the parties hereto an agreement, in form and substance
reasonably satisfactory to the Lenders, Trustee and the
Administrative Agent, containing the assumption by the Surviving
Company of the due and punctual payment, performance and
observation of each obligation, covenant and agreement of such
Guarantor under this Agreement and each other Operative Document
to which, immediately prior to such transaction, such Guarantor
was a party;
(iii) If the Surviving Company was a Guarantor immediately
prior such transaction, such Guarantor shall execute and deliver
to each of the parties hereto a reaffirmation, in form and
substance satisfactory to the Lenders, Trustee and the
Administrative Agent, that each and all of the obligations of such
Guarantor under this Agreement and the Guaranty remain, and will
remain, in full force and effect, notwithstanding the transaction
or transactions giving rise to the requirement that such
reaffirmation be delivered hereunder;
(iv) no Lease Default, Lease Event of Default, Event of Loss or
Construction Agency Event of Default shall have occurred or would
occur as a result thereof;
(v) the Surviving Company (if other than a Guarantor) shall
have obtained all requisite Gaming Permits and Liquor Permits, as
well as a finding by the applicable Gaming Authorities that Parent
is suitable to own the capital stock of the Surviving Company, as
then required by Applicable Law;
(vi) Parent and such Guarantor shall have delivered to the
Lenders, Trustee and the Administrative Agent a certificate of a
Responsible Officer of Parent and such Guarantor and an opinion
of counsel reasonably satisfactory to each such Person stating
that such transaction complies with this Section 5.2(b), that all
conditions to the consummation of such transaction have been
fulfilled and that all Governmental Action required in connection
with such transaction has been obtained, given or made; and
(vii) immediately after the consummation of such transaction,
no
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Change of Control shall have occurred.
Upon the consummation of such transaction, the Surviving Company
shall succeed to, and be substituted for, and may exercise every right
and power of, a Guarantor immediately prior to such transaction under
this Agreement and each other Operative Document to which any
Guarantor was a party immediately prior to such transaction, with the
same effect as if the Surviving Company had been named herein and
therein. Notwithstanding the foregoing provisions of this Section
5.2(b), no conveyance, transfer or lease of all or substantially all
of the assets of any Guarantor shall release any Lessee or
Construction Agent or Guarantor from its payment or other obligations
under this Agreement or any other Operative Document without the
written consent of Trustee, the Administrative Agent, and each Lender.
SECTION VI.3. Corporate Existence. Subject to Section 5.2, each
Guarantor, Lessee and Construction Agent shall at all times maintain its
existence as a corporation in good standing under the laws of its respective
jurisdiction of incorporation and shall use commercially reasonable efforts to
preserve and keep in full force and effect its franchises material to its
business.
SECTION VI.4. Ownership of Lessee. Parent shall at all times
maintain ownership of 100% of the issued and outstanding capital stock of each
of the Lessees and Construction Agents (including all rights to subscribe for,
purchase (including by conversion of any other security) or otherwise acquire
any such capital stock), free and clear of all Liens other than a pledge of the
all of the issued and outstanding shares of capital stock of Lessees to the
Indenture Trustee.
SECTION VI.5. Liens. None of the Lessees, Construction Agents,
Guarantors or Parent shall incur or suffer to exist any Lien on any of its
right, title or interest in and to any of the Leased Property or the other
Collateral other than Permitted Liens.
SECTION VI.6. Financial Covenant Compliance Certificates.
(a) Annual Certificate. Within 90 days after the close of
each Fiscal Year, Lessees shall deliver to Trustee and the
Administrative Agent a certificate of Lessees signed by a Responsible
Officer of Lessees to the effect that the signer is familiar with or
has reviewed the relevant terms of this Agreement, the Master Lease and
each other Operative Document to which any Lessee is a party and has
made, or caused to be made under his or her supervision, a review of
the transactions contemplated hereby and thereby and the condition of
the Leased Property during the preceding Fiscal Year, and that such
review has not disclosed the existence during such Fiscal Year of any
condition
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or event which constitutes a Lease Event of Default or Casualty
(except as described therein), nor does the signer have knowledge,
after due inquiry, of the existence as at the date of such
certificate, of any condition or event which constitutes a Lease
Default, a Lease Event of Default or Casualty or, if any such
condition or event existed or exists, specifying the nature and period
of existence thereof and what action each applicable Lessee has taken
or is taking or proposes to take with respect thereto.
(b) Financial Covenant Compliance Certificate. Within 45
days after the end of each Fiscal Quarter, Lessees shall deliver or
cause to be delivered to the Administrative Agent and Trustee a
Financial Covenant Compliance Certificate (with appropriate insertions)
of Parent signed by a Responsible Officer of Parent showing (in
reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agents) compliance with the financial
covenants set forth in Section 5.16 and any other related information
requested by the Agents.
(c) Pricing Ratio Certificate. Within 15 Business Days
after the end of each Fiscal Quarter, Lessees shall deliver or cause to
be delivered to the Administrative Agent and Trustee a Pricing Ratio
Certificate of Parent signed by a Responsible Officer of Parent (in
reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agents). Except as otherwise set
forth below, the Applicable Commitment Fee Rate for any Fiscal Quarter
and Applicable Margin for any Interest Period commencing in any Fiscal
Quarter shall be based on the Pricing Ratio determined as of the end of
the immediately preceding Fiscal Quarter. If Lessees fail to deliver
or cause to be delivered such Pricing Ratio Certificate on or before
the date such information is required to be delivered, then (i) for the
purposes of Section 2.6 of the Loan Agreement and Section 2.11, the
Applicable Commitment Fee Rate shall be .500% for the period commencing
on the first date of the Fiscal Quarter in which such Pricing Ratio
Certificate was supposed to be delivered and ending on the date of
delivery of the Pricing Ratio Certificate (at which time the Applicable
Commitment Fee Rate shall be calculated based on the Pricing Ratio
Certificate), and (ii) the Applicable Margin shall be 2.50% for each
Interest Period occurring during each month of the Fiscal Quarter in
which the Pricing Ratio Certificate was supposed to be delivered (and
upon delivery of the Pricing Ratio Certificate, the next commencing
Interest Period shall be based upon such Pricing Ratio Certificate
unless a more current Pricing Ratio Certificate has been delivered in
respect of a new Fiscal Quarter).
SECTION VI.7. Investigation by Governmental Authorities. Each of
the Lessees shall deliver to Trustee, each Lender and to the Administrative
Agent promptly upon Lessee's receiving written notice of the intent by a
Governmental Authority to (w) revoke, suspend,
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enjoin, restrict or modify any Gaming Permit or Liquor Permit necessary for
the ownership or operation of either of the Casinos or gaming operations in
respect thereof, or any Facility, (x) take an action which would constitute
a requisition of title to any of the Leased Property, (y) investigate the
Leased Property for a material violation of any Applicable Laws with
respect to the Leased Property, including any Environmental Law, under
which liability may be imposed upon Trustee, any Lender, the Administrative
Agent or Lessee, or (z) investigate the Leased Property (other than routine
fire, life-safety and similar inspections) for any violation of Applicable
Laws under which criminal liability may be imposed upon Trustee, any
Lender, the Administrative Agent or Lessee.
SECTION VI.8. Books and Records. Each of the Lessees will, and
Parent will cause each of the other Obligor Subsidiaries to, at all times
maintain corporate books and records separate from those of any other Person
in accordance with GAAP.
SECTION VI.9. Payment of Taxes, Etc. Each of the Lessees shall
pay and discharge before the same shall become delinquent, (i) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
property (including the Leased Property), and (ii) all lawful claims that,
if unpaid, might by law become a Lien upon its property, other than those
arising from Permitted Liens.
SECTION VI.10. Inspection. Each of the Lessees shall permit the
Administrative Agent, Trustee and the Lenders or any agents or
representatives thereof annually (or upon demand during an Event of Default)
to (upon reasonable notice) examine and make copies of and abstracts from
the records and books of account of such Lessee (except for any proprietary
information which involves trade secrets of such Lessee) and to discuss the
affairs, finances and accounts of such Lessee with any of its officers. The
Administrative Agent, Trustee, the Lenders and any agents or representatives
thereof shall keep confidential and not disclose any confidential written
information received from such Lessee in connection with such inspections,
subject to the Administrative Agent's, Trustee's or the Lenders' (a)
obligation to disclose such information pursuant to an order under
Applicable Laws and regulations or pursuant to a subpoena or other legal
process, (b) right to disclose any such information to its bank examiners,
Affiliates, auditors, counsel and other professional advisors but only on a
need to know basis in connection with the Operative Documents and only if
such Persons are similarly bound in a separate writing to the provisions of
this Section 5.10, (c) right to disclose any such information in connection
with any litigation or dispute involving Parent and such Lessee or any of
its Subsidiaries and Affiliates and (d) right to provide such information to
participants to which sales of participating interests are permitted
pursuant to this Agreement and prospective assignees to which assignments of
interest are permitted pursuant to this Agreement, but only if such
participant or prospective assignee agrees in writing to maintain the
confidentiality of such information on
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terms substantially similar to those of this Section as if it were a
"Lender" party hereto. Notwithstanding the foregoing, any such information
supplied to a participant or prospective assignee under this Agreement shall
cease to be confidential information if it is or becomes known to such
Person by other than unauthorized disclosure, or if it becomes a matter of
public knowledge. Each of the Lessees shall upon reasonable notice from the
Administrative Agent (except that no notice shall be required if an Event of
Default has occurred and is continuing) permit the Administrative Agent,
Trustee and the Lenders and their respective authorized representatives to
inspect the Leased Property during normal business hours, provided that such
inspections shall not unreasonably interfere with such Lessee's business
operations at the applicable Leased Property. Annual inspections by the
Administrative Agent and all inspections following the occurrence of an
Event of Default shall be conducted at the cost and expense of Lessee.
SECTION VI.11. Maintenance of Property, etc. Each of the Lessees
shall maintain and preserve all material assets used or useful in the
conduct of its business in good working order and condition.
SECTION VI.12. Maintenance of Insurance. Each of the Lessees
shall maintain insurance coverage covering its Leased Property which meets
in all respects the requirements of Article IX of the Master Lease, and such
coverage shall remain in full force and effect. Without limiting the
foregoing, each of the Lessees shall carry insurance with reputable
insurers, or self-insure, in respect of its material assets, in such manner,
in such amounts and against such risks as is customarily maintained by other
Persons of similar size engaged in similar business.
SECTION VI.13. Change of Name or Principal Place of Business. Each
of the Lessees shall furnish to Trustee and the Administrative Agent notice
on or before the thirtieth day before any relocation of its chief executive
office, principal place of business or the office where it keeps its records
concerning its accounts or contract rights relating to the Leased Property
or the Resort Properties or such Lessee changes its name, identity or
corporate structure.
SECTION VI.14. Financial and Other Information. Parent and
Lessees shall deliver to Trustee and the Administrative Agent (with
sufficient copies for distribution to the Lenders) the following financial
and other information:
(a) Audited Statements. As soon as available and in any
event within 90 days after the end of each Fiscal Year of Parent, (i)
a consolidated balance sheet of Parent and its the consolidated
Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, cash flows and common
shareholders' equity for such Fiscal Year, (ii) consolidating (in
accordance with past consolidating practices of
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Parent) balance sheets and statements of operations, cash flows
and common shareholders' equity of Parent and its Subsidiaries
(including the Stratosphere Entities), setting forth in each case in
comparative form the figures for the previous Fiscal Year, and (iii)
supplemental schedules to the foregoing consolidated and consolidating
financial statements prepared for the purpose of providing additional
analysis of the financial condition of Parent and the Obligor
Subsidiaries, with such consolidated financial statements audited (and
in the case of the information described in clause (iii), subjected to
the auditing procedures applied in connection with preparing the
audited consolidated financial statements) by independent public
accountants of nationally recognized standing acceptable to the
Administrative Agent, which such report shall be without qualifications
other than qualifications acceptable to all Lenders, together with a
certificate from such accountant containing a computation of, and
showing compliance with, each of the financial ratios and levels
contained in Section 5.16 and to the effect that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or Event of
Default that has occurred and is continuing, or, if they have become
aware of such Default or Event of Default, describing such Default or
Event of Default and the steps, if any, being taken to cure it.
(b) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each of the first three quarters
of each Fiscal Year of Parent, (i) the consolidated balance sheet of
Parent and the Obligor Subsidiaries as of the end of such quarter and
the related consolidated statement of operations and cash flows of
Parent and the Obligor Subsidiaries for the portion of Parent's Fiscal
Year ended at the end of such quarter and (ii) consolidating (in
accordance with past consolidating practices of Parent) balance sheets
and statements of operations, cash flows, and common shareholders'
equity of Parent and its Subsidiaries (including the Stratosphere
Entities), as at and for the portion of the Fiscal Year ended with such
Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding quarter of, and the corresponding portion
of Parent's preceding Fiscal Year, all certified (subject, in the case
of such quarterly financial statements, to normal year-end auditing
adjustments) by the chief financial officer of Parent as to fairness
of presentation and preparation in accordance with GAAP applied on a
basis consistent with those used in preparing the financial statements
referred to in Section 5.14(a) (subject to such changes in accounting
principles as shall be described in such certificate and shall have
been approved in writing attached to such certificate by Parent's
independent accountants).
(c) Pension Plan. If and when any member of the ERISA
Group (1) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a
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termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (2)
receives notice of complete or partial withdrawal liability under Title
IV of ERISA or notice that any Multiemployer Plan is in reorganization,
is insolvent or has been terminated, a copy of such notice; (3)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (4) applies for a waiver of the minimum funding
standard under Section 412 of the Code, a copy of such application; (5)
gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC;
(6) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (7) fails to make any payment or
contribution due any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of the
chief financial officer or the chief accounting officer of Parent
setting forth details as to such occurrence and action, if any, which
Parent or applicable member of the ERISA Group is required or proposes
to take.
(d) Default. As soon as possible and in any event within
three Business Days after the occurrence of each Default or Event of
Default under any Operative Document a statement of an officer of
Parent setting forth details of such Default or Event of Default and
the action that Parent proposes to take with respect thereto.
(e) Condition. Promptly upon becoming aware thereof,
written notice of any Material Adverse Effect.
(f) Proceedings. Promptly upon becoming aware thereof,
written notice of the commencement or existence of any proceeding
against Parent or any Affiliate of Parent by or before any
Governmental Authority that might, in the reasonable judgment of
Parent, result in a Material Adverse Effect.
(g) Environmental. As soon as possible and in any event
within ten days after the occurrence of any Environmental Violation or
alleged Environmental Violation, a statement of an authorized officer
setting forth the details of such violation or alleged violation and
the action which Parent proposes to take with respect thereto.
(h) Security Reports. As soon as available and in any
event within 60 days
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after the end of each of the first three Fiscal Quarters of each
Fiscal Year of Parent, Form 10Qs of Parent shall have been delivered
to Trustee (with copies for each Lender) and within 105 days after the
end of each Fiscal Year of Parent, Form 10K of Parent shall have been
delivered to Trustee (with copies for each Lender).
(i) Condemnation; Casualties. Promptly, and in any event
within ten days after obtaining knowledge thereof, written notice of
any Condemnation or Casualty the cost to repair which is reasonably
expected by Lessees to exceed $500,000.
(j) Property Sales. As soon as possible and in any event
within ten days after the occurrence thereof, written notice of the
sale of any interest in either of the Resorts or any portion thereof.
(k) Other Information. Promptly upon written request
therefore, any other information in respect of Parent or any Lessee
reasonably requested by the Administrative Agent.
SECTION VI.15. Securities. None of the Lessees or Parent, nor
anyone authorized to act on behalf of any of them, will take any action
which would subject the issuance or sale of the Notes, the Leased Property
or the Master Lease, or in any security or lease the offering of which, for
purposes of the Securities Act or any state securities laws, would be deemed
to be part of the same offering as the offering of the aforementioned
securities or leases to the registration requirements of Section 5 of the
Securities Act or any state securities laws.
SECTION VI.16. Financial Covenants.
(a) Fixed Charge Coverage. Parent shall maintain a ratio
of Consolidated Adjusted EBITDA to Consolidated Fixed Charges,
calculated as of the last day of each Computation Period, of not less
than the ratio set forth below:
Period Ratio
------ -----
Closing Date through 12/28/97 1.15:1.0
12/29/97 and thereafter 1.25:1.0
(b) Consolidated Net Worth. The Consolidated Net Worth of
Parent shall not at any time be less than an amount equal to the sum of
(x) $439,672,000 plus (1) 75% of Consolidated Net Income of Parent
beginning with the first Fiscal Quarter of the 1997 Fiscal Year (but
excluding any Consolidated Net Losses for any Fiscal Quarter incurred
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during or after the first Fiscal Quarter of the 1997 Fiscal
Year) and calculated quarterly thereafter for each subsequent Fiscal
Quarter, plus (2) beginning December 30, 1996 and thereafter, 100% of
the proceeds from the issuance by Parent of any equity interest in
Parent to one or more Persons unaffiliated with Parent, or the
Ownership Percentage Interest of the proceeds from the issuance by a
Subsidiary (other than the Stratosphere Entities) of any equity
interest in such Subsidiary to one or more Persons unaffiliated with
Parent.
(c) Consolidated Senior Funded Debt/Consolidated Adjusted
EBITDA Ratio. Parent shall maintain a ratio of Consolidated Senior
Funded Debt to Consolidated Adjusted EBITDA, calculated as of the last
day of each Computation Period, of not greater than the ratio set forth
below:
Period Ratio
------ -----
9/28/97 4.50:1.0
12/28/97 through 1/2/99 4.00:1.0
1/3/99 through 1/2/2001 3.50:1.0
1/3/2001 and thereafter 3.00:1.0
(d) Consolidated Total Funded Debt/Consolidated Adjusted
EBITDA Ratio. Parent shall maintain a ratio of Consolidated Total
Funded Debt to Consolidated Adjusted EBITDA, calculated as of the last
day of each Computation Period, of not greater than the ratio set forth
below:
Period Ratio
------ -----
9/28/97 4.50:1.0
12/28/97 and thereafter 4.00:1.0
(e) For purposes of computing the financial covenants set
forth in Sections 5.16(a), (c) and (d), acquisitions, dispositions and
discontinued operations that have been made by Parent or any of the
Obligor Subsidiaries, including all mergers, consolidations and
dispositions, during the Computation Period, shall be calculated on a
pro forma basis assuming that all such acquisitions, dispositions,
discontinued operations, mergers and consolidations (and the reduction
of any associated fixed charge obligations resulting therefrom) had
occurred on the first day of the Computation Period in question.
SECTION VI.17. Searches and Estoppel Certificates. Within 30
days after the
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Completion Date for any Facility, the applicable Lessee shall deliver to
the Administrative Agent (a) a report prepared by a search company
reasonably acceptable to the Administrative Agent, of judgment liens, lis
pendens, tax liens and UCC filings with respect to Lease Supplements
relating thereto, which are filed of record with the applicable state and
local filing offices in the jurisdictions or jurisdictions in which such
Leased Property is located and the state in which such Lessee has its
"principal place of business" and "chief executive office" (as such terms
are used in Section 9-103(c) of the UCC), (b) an estoppel certificate
addressed to the Administrative Agent and Trustee from each vendor listed
on the Disclosure Schedule to the effect that the purchase price for the
items of Facility F,F&E sold to such Lessee by the vendor pursuant to the
purchase orders or purchase contracts listed on the Disclosure Schedule
opposite its name have been paid in full and (c) a revised Schedule III to
the applicable Lease Supplement(s) indicating the total Facility F,F&E Cost
for all items of Facility F,F&E then subject to the Master Lease. Such
revised Schedule(s) III shall be based upon the purchase orders and
purchase contracts, as modified from time to time after the Closing Date,
in accordance with the Operative Documents.
SECTION VI.18. Amendment of Levee Board Lease. Each of the
applicable Lessees agrees that it shall at all times comply with and
diligently perform its obligations under the Levee Board Lease, if any.
SECTION VI.19. Changes to Contracts for a System. Lessees may
enter into modifications of the contracts for any System, provided that any
modifications, when taken together with any previous modifications to such
System, that would reduce the fair market value or economic useful life or
utility of such System shall not be made without the Agents' prior written
consent, which consent will not be unreasonably withheld.
SECTION VI.20. Additional Construction Covenants. During the
Construction Period for any Project, each applicable Lessee shall: (a)
provide CSG upon written request (i) such information (including without
limitation, copies of all invoices and payment receipts which exceed
$100,000 relating to the acquisition, construction and development of such
Project, the Change Order log relating to such Project and related Project
detail reports) and (ii) access to such Project and the individuals employed
by such Lessee, the Architect and the Prime Contractor as CSG may reasonably
request in order to permit CSG to monitor the construction of the Project;
(b) promptly provide the Administrative Agent and CSG, upon written request,
with copies of all changes to the Plans and Specifications, Facility Cost
Analysis, Construction Documents, Architect's Agreement, Prime Construction
Contract and Primary Construction Contracts for such Project, and with an
advance draft copy of any proposed change to any of the foregoing that
involves more than $1,000,000, (c) assist and cooperate with CSG in all
respects reasonably requested by CSG in order to permit CSG to provide such
periodic construction progress reports to the Administrative Agent as may be
reasonably requested by the
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Administrative Agent; and (d) promptly provide to the Administrative Agent
and CSG such information and documents respecting such Project as either
may reasonably request from time to time, including without limitation
detailed identification of each significant subcontractor or supplier to
such Project and the nature and dollar amount of the related subcontract or
supply contract. Notwithstanding the foregoing, so long as no Default or
Event of Default shall have occurred and be continuing, CSG and the
Administrative Agent will conduct on-site Project inspections and analyses
no more frequently than once per three-month period. During such on-site
inspections and analyses, each of the applicable Lessees shall provide CSG
access upon reasonable advance notice and during business hours to any and
all books and records of such Lessee and the applicable Project as may be
requested by CSG.
SECTION VI.21. Compliance with Laws. With respect to the Leased
Property and the operation of the Facilities, each of the Lessees,
Construction Agents and Guarantors shall comply with Applicable Laws, except
for any violations which, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION VI.22. Fiscal Year. None of the Lessees, Parent or other
Guarantors shall change its Fiscal Year for financial accounting purposes
without the prior written consent of the Required Lenders.
SECTION VI.23. May 10, 1996 Lease Documents. BL Development
hereby covenants and agrees that (a) ten days prior to the date upon which
BL Development or any of its Affiliates enter into any amendment,
modification or waiver of or to any of the May 10, 1996 Lease Documents (or
any shorter period prior thereto to which the Administrative Agent may
agree), BL Development shall provide to the Administrative Agent a copy of
the proposed amendment, modification or waiver, (b) to the extent that such
amendment, modification or waiver (i) contains any material covenant or
condition not contained in this Agreement or any of the other Operative
Documents, (ii) is otherwise more restrictive upon BL Development or its
Affiliates than the provisions of this Agreement or any of the other
Operative Documents, or (iii) is otherwise more favorable to the "Lessor" or
"Lenders" under the May 10, 1996 Lease Documents, in each case as determined
by the Required Lenders in their reasonable discretion from the perspective
of secured lenders, and the Administrative Agent so notifies BL Development
and Lessees of that determination, then each of the Lessees shall, and shall
cause its relevant Affiliates to, concurrently enter into a similar
amendment, modification or waiver of the provisions of this Agreement and
the other Operative Documents, as applicable, providing substantively
identical benefits to the Administrative Agent, Lessor and Lenders. In the
event that Lessees or their Affiliates fail to enter into any such
amendment, modification or waiver when and as requested by the
Administrative Agent on behalf of the Required Lenders, then the provisions
of this Agreement and the other Operative Documents, as applicable, shall be
deemed
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automatically amended in the manner contemplated above without further
action of the parties.
SECTION VI.24. Year 2000. Each Lessee will use its best efforts
to develop and implement a comprehensive, detailed program to address on a
timely basis the "Year 2000 Problem" (that is, the risk that computer
applications used by such Lessee may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any
date after December 31, 1999) and each Lessee reasonably anticipates that it
will on a timely basis successfully resolve the Year 2000 Problem for all
material computer applications used by it.
ARTICLE VII
COVENANTS OF TRUSTEE, AGENTS AND LENDERS
SECTION VII.1. Covenants of Trustee, Agents and the Lenders.
(a) Discharge of Liens. Each of the Lenders and Trustee
covenants as to itself, and not jointly with any other Lender, that it
will not, directly or indirectly, create, incur, assume or permit to
exist at any time, and will, at its own cost and expense, take such
action as may be necessary to promptly discharge, or to cause to be
discharged, any Lessor Liens attributable to it, and will indemnify the
Trust Estate in the amount of any diminution of the value thereof and
any costs and expenses associated therewith as a result of its failure
to comply with its obligations under this Section 6.1(a).
Notwithstanding the foregoing, none of the Lenders or Trustee, as the
case may be, shall be required to so discharge any such Lessor Lien
while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall not
involve any risk of invalidity or the loss of priority of the Lien of
any Deed of Trust or any risk of the sale, forfeiture, foreclosure or
loss of, and shall not interfere with the use or disposition of, any
part of the Leased Property, the Master Lease or the Trust Estate or
title thereto or any interest therein or the payment of Rent; provided,
however, that each Lender and Trustee shall discharge any such Lessor
Lien, whether or not subject to contest as provided above, upon the
purchase of the Leased Property by any Lessee pursuant to the Master
Lease.
(b) Trust Agreement. Without prejudice to any right under
the Trust Agreement of Trustee to resign, or the Lenders' or Lessee's
right under the Trust Agreement to remove Trustee, Trustee hereby
agrees with Lessees, the Lenders and the Administrative Agent (i) not
to terminate or revoke the trusts created by the Trust Agreement except
as permitted by Article IV of the Trust Agreement prior to the later of
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the Lease Termination Date or the payment in full of the
obligations under the Notes, (ii) not to amend, supplement or otherwise
modify or consent to any amendment, supplement or modification of any
provision of the Trust Agreement prior to the Lease Termination Date in
any manner which would have a Material Adverse Effect on the rights of
any such party thereto, and (iii) to comply with all of the terms of
the Trust Agreement applicable to it except for such nonperformance
which would adversely affect Trustee in its individual capacity.
(c) Successor Trustee. Trustee or any successor may resign
or be removed by the Lenders or Lessees as Trustee, a successor Trustee
may be appointed, and a corporation may become Trustee under the Trust
Agreement, only in accordance with the provisions of Article III of the
Trust Agreement. Notwithstanding anything to the contrary contained in
this Agreement or the Trust Agreement, so long as no Event of Default
shall be continuing, the appointment of a successor Trustee shall be
subject to the consent of Lessees (such consent is not to be
unreasonably withheld or delayed).
(d) Indebtedness; Other Business. Trustee on behalf of the
Trust shall not contract for, create, incur or assume any indebtedness,
or enter into any business or other activity, other than pursuant to or
under the Operative Documents and, for the benefit of Lessees, the
Administrative Agent and the Lenders, agrees to be bound by Section
1.2(b) of the Trust Agreement.
(e) Change of Principal Place of Business. Trustee shall
give prompt notice to the Lenders, Lessees and the Administrative Agent
if Trustee's principal place of business or chief executive office, or
the office where the records concerning the accounts or contract rights
relating to any of the Facilities or the transactions contemplated by
the Operative Documents are kept, shall cease to be located at One
Hancock Plaza, Gulfport, Mississippi 39502, or if it shall change its
name, identity or corporate structure.
(f) Loan Agreement. Trustee, the Administrative Agent,
Lessees and each Lender hereby agree that, so long as the Master Lease
is in effect, Trustee shall not consent to or permit any amendment of
the terms and provisions of the Loan Agreement, any Deed of Trust, any
Ground Lease or any Note, whether or not any Lease Event of Default
shall have occurred and be continuing, if any such amendment or action
would have the effect of increasing the obligations of any Lessee or
decreasing the rights of any Lessee, in each case without the prior
written consent of such Lessee, except that without such consent,
Trustee may waive performance by the Administrative Agent of
obligations to Trustee the non-performance of which does not adversely
affect any Lessee. Each Lender agrees to comply with Section 7.7 of
the Loan Agreement.
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(g) Funding. Trustee shall give prompt notice to the
Lenders, Lessees and the Administrative Agent in the event any Lender
does not fund the full amount to be funded by such Lender on any
Advance Date as described in Article II.
(h) Lessee Financing Party Removal. If any of the Lessor,
Trustee, the Lenders, the Co-Agents, the Lead Manager, the Arranger or
the Administrative Agent (and any successors thereto) (each a "Lease
Financing Party") is found by any Gaming Authority to be unsuitable or
unqualified for any license, registration, approval or finding of
suitability to serve as Lessor, Trustee, Lender, Co-Agent, Lead
Manager, Arranger or Administrative Agent, or otherwise to be
associated with any Lessee or Guarantor, or the Board of Directors of
Parent determines in its reasonable judgment that such Lease Financing
Party's continued association with any Lessee or Guarantor may result
in (i) the disapproval, modification, or non-renewal of any contract
under which Parent or any Subsidiary thereof has sole or shared
authority to manage any gaming operations, or (ii) the loss or
non-reinstatement of any license, registration, approval, finding of
suitability or franchise from any Gaming Authority held by Parent or
any Subsidiary thereof to conduct any portion of the business of Parent
or any Subsidiary thereof, such Lease Financing Party agrees, upon
receiving payment in cash in full of all outstanding principal amounts,
accrued interest, fees and all other amounts payable to it under the
Operative Documents, to cooperate with Parent with respect to the
assignment, sale or transfer of such Lease Financing Party's interest
in the Operative Documents as Lessor, Trustee, Lender, Co-Agent, Lead
Manager, Arranger or Administrative Agent, as appropriate, to a
suitable party and complete such assignment, sale or transfer within
thirty (30) days of a request by Parent to do so (or such lesser period
of time as required by any Gaming Authority).
SECTION VII.2. Restrictions On and Effect of Transfer. No Lender
shall assign and delegate all or any portion of its right, title or interest
in, to or under any of the Operative Documents, its Commitment, the Loans or
any Note, except that (x) any Lender may pledge, assign or grant a security
interest in its interest to any Federal Reserve Board or any other central
bank authority with respect to such Lender, (y) upon satisfaction of the
conditions set forth in clauses (a) through (e) of this Section 6.2 any
Lender may transfer all or any ratable portion of its interest to an
Affiliate or to any other existing Lender or any Affiliate of such Lender
and, upon compliance with any applicable provisions of Section 6.3(a), may
sell, assign or otherwise transfer a participation in its interest in any of
the foregoing; provided, that no Participating Entity (as hereinafter
defined) shall become, by means of such transfer, a Lender under the
Operative Documents, and Lessees shall be entitled to continue to deal for
all purposes under the Operative Documents exclusively with the Lender who
has transferred such participation, and (z) any Lender may assign and
delegate any ratable portion or all of such right, title and interest
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upon the satisfaction of each of the following conditions (which
conditions will not be applicable to a transfer pursuant to clause (x) or
(y) of this Section 6.2 unless otherwise provided above):
(a) Required Notice and Effective Date. Any Lender
desiring to effect a transfer of its interest shall give written notice
of each such proposed transfer to Parent, Lessees and the
Administrative Agent at least seven (7) Business Days prior to such
proposed transfer, setting forth the name of such proposed transferee,
the percentage of interest to be retained by such Lender, if any, and
the date on which such transfer is proposed to become effective. All
reasonable out-of-pocket costs incurred by Trustee or the
Administrative Agent in connection with any such disposition by a
Lender under this Section 6.2 shall be borne by such Lender. In the
event of a transfer under this Section 6.2, any expenses incurred by
the transferee in connection with its review of the Operative Documents
and its investigation of the transactions contemplated thereby shall be
borne by such transferee or the relevant Lender, as they may determine,
but shall not be considered costs and expenses which Lessees are
obligated to pay or reimburse under Section 9.8.
(b) Assumption of Obligations. Any transferee pursuant to
this Section 6.2 shall have executed and delivered to the
Administrative Agent and the Bank a letter in substantially the form of
the Investor's Letter attached hereto as Exhibit K, and thereupon the
obligations of the transferring Lender under the Operative Documents
shall be proportionately released and reduced to the extent of such
transfer. Upon any such transfer as above provided, (i) the
transferring Lender shall still be entitled to the benefit of Article
VII, and (ii) the transferee shall be deemed to be bound by all
obligations (whether or not yet accrued) under, and to have become a
party to, all Operative Documents to which its transferor was a party,
shall be deemed the pertinent "Lender" for all purposes of the
Operative Documents and shall be deemed to have made that portion of
the payments pursuant to this Agreement previously made or deemed to
have been made by the transferor represented by the interest being
conveyed; and each reference herein and in the other Operative
Documents to the pertinent "Lender" shall thereafter be deemed a
reference to the transferee, to the extent of such transfer, for all
purposes. Upon any such transfer, Schedules I, II, and III to this
Agreement, as applicable, shall be deemed to be revised to reflect the
relevant information for such new Lender and the Commitment of such new
Lender (and the revised Commitment of the transferor Lender if it shall
not have transferred its entire interest).
(c) Employee Benefit Plans. No Lender may make any such
assignment, conveyance or transfer to or in connection with any
arrangement or understanding in any way involving any Plan or Benefit
Arrangement (or its related trust), or with the assets of
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any such Plan or Benefit Arrangement (or its related trust),
within the meaning of Section 4975(e)(1) of the Code (other than a
governmental plan, as defined in Section 3(32) of ERISA), with respect
to which Lessees or such Lender or any of their Affiliates is a party
in interest within the meaning of ERISA Section 3(14) or a
"disqualified person" within the meaning of Section 4975(e)(2) of the
Code.
(d) Representations and Warranties. Notwithstanding
anything to the contrary set forth above, no Lender may assign, convey
or transfer its interest to any Person unless such Person shall have
delivered to the Administrative Agent and Lessees a certificate
confirming the accuracy of the representations and warranties set forth
in Section 4.2 with respect to such Person (other than as such
representation or warranty relates to the execution and delivery of
Operative Documents).
(e) Amounts. Any transfer of Notes shall be in a principal
amount which is equal to or greater than $5,000,000, or, if less, the
full amount of such Lender's Loan or Commitment.
(f) Financial Condition of Transferee. So long as the
Commitments are outstanding, no transfer by a Lender shall be effective
against the other parties to this Agreement unless the transferee is
(A) a bank or other financial institution with a combined capital,
surplus and undivided profits of at least $100,000,000, or (B) any
subsidiary of such a bank or financial institution, provided that such
bank or financial institution furnishes a guaranty with respect to the
transferee's obligations as a Lender, or (C) any other entity, provided
the transferee's obligations as a Lender are guaranteed by the
transferor Lender.
(g) Effect. From and after any transfer of its Notes,
except for guaranty obligations (if any) as set forth in Section
6.2(f), the transferring Lender shall be released, to the extent
assumed by the transferee, from its liability and obligations hereunder
and under the other Operative Documents relating to the Leased Property
to which such transferor is a party in respect of obligations to be
performed on or after the date of such transfer. Upon any transfer by
a Lender as above provided, any such transferee shall be deemed a
"Lender" for all purposes of such documents and each reference herein
to a Lender shall thereafter be deemed a reference to such transferee
for all purposes, except as the context may otherwise require.
(h) Lessee Consent. So long as the Commitments are
outstanding, the transferees of an interest transferred pursuant to
this Section 6.2 shall have obtained the prior written consent of
Lessees (so long as Lessees are not in Default under the terms of
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any Operative Document), which consent may not be unreasonably
withheld or delayed by Lessee.
Notwithstanding any transfer pursuant to this Section 6.2, the
transferor shall continue to be entitled to all benefits accrued and all rights
vested prior to such transfer, including rights to indemnification under this
Agreement or any other Operative Document.
SECTION VII.3. Participations.
(a) Participations. Each Lender covenants and agrees that
it will not grant participations in its Notes to any Person (a
"Participating Entity") unless such Person (i) is a bank or other
financial institution and (ii) represents and warrants, in writing, to
such Lender for the benefit of the Lenders and Lessees that no part of
the funds used by it to acquire an interest in the Notes constitutes
assets of any Employee Benefit Plan or its related trust. Any such
transferor Lender shall require any transferee of its interest in the
Notes to make the representations and warranties set forth in the
preceding sentence, in writing, to such Person for its benefit and the
benefit of the Lenders and Lessees. In the event of any such sale by a
Lender of a participating interest to a Participating Entity such
Lender's obligations under this Agreement and under the other Operative
Documents shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the
holder of its Note for all purposes under this Agreement and under the
other Operative Documents, and Trustee, the Administrative Agent and,
except as set forth in Section 6.3(b), Lessees shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and under the other
Operative Documents, and such Lender shall retain the sole right to
enforce the obligations of Lessees and the Guarantors under the
Operative Documents and to approve any amendment, modification or
waiver of any provision of any Operative Document. Any Lender selling
a participation shall give notice thereof to Lessees and Parent within
ten (10) Business Days after such sale.
(b) Transferee Indemnities. Each Participating Entity
shall be entitled to the benefits of Sections 2.9, 2.10, 2.11 and 2.12
of the Loan Agreement and Articles VII and VIII with respect to its
participation in the Notes and Advances outstanding from time to time;
provided, that no Participating Entity in respect of its participation
shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive
in respect of the amount of the participation in the Notes transferred
by such transferor Lender to such Participating Entity had no such
transfer of a participation occurred.
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SECTION VII.4. Required Transfers. If at any time during the
Lease Term any Lender shall request from Trustee or Lessees reimbursement
for any costs pursuant to Section 2.9, 2.10 or 2.11 of the Loan Agreement
(which cost Lessees are obligated to pay as Supplemental Rent under Section
3.2 of the Master Lease), such Lender shall, upon request of Lessees or the
Administrative Agent, attempt in good faith to promptly sell to a Person who
would qualify under Section 6.3(a) the Notes held by such Lender, the
Commitment of such Lender and any other interests of such Lender hereunder
and under the other Operative Documents, in accordance with this Section
6.4, in exchange for an amount equal to the outstanding principal amount of
such Lender's Notes together with all interest accrued thereon and unpaid to
the date of such purchase and all other amounts then due and payable
hereunder or under the other Operative Documents to such Lender (including
any requested reimbursement amounts).
SECTION VII.5. Reciprocal Easement Arrangements. If at any time
the Trustee, any Co-Agent, any of the Lenders or their respective
successors or assigns shall acquire fee ownership or take possession or
control of any Facility, then upon the request of the applicable Lessee,
they and such Lessee agree to execute and deliver a reciprocal easement
agreement that mutually benefits and burdens each Facility Site pertaining
to such Facility (the "Site") and the Resort Property of which the Site is a
part for the sole purpose of unrestricted shared parking over and on each of
said parcels of the Resort Property and, in the event a cooling and heating
plant is hereafter constructed on any part of the Gulfport Resort Property
(including the Facility Site pertaining to the Gulfport Hotel) for the sole
purpose of providing cooling and heating utility services to the burdened
and benefitted parcels and related improvements in a manner sufficient to
meet all then required and reasonably foreseeable future demand for such
improvements, which agreements, in each case, shall contain standard and
customary terms reasonably acceptable to each of the parties thereto and the
Lenders.
ARTICLE
GENERAL INDEMNITY
SECTION VIII.1. General Indemnification. Each of the Lessees and
Parent agree, whether or not any of the transactions contemplated hereby
shall be consummated, to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee on an After-Tax Basis from
and against any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee (whether because of action or omission by
such Indemnitee or otherwise), whether or not such Indemnitee shall also be
indemnified as to any such Claim by any other Person and whether or not such
Claim arises or accrues prior to the Closing Date or
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after the Lease Termination Date, in any way relating to or arising out
of (a) any of the Operative Documents or any of the transactions
contemplated thereby or any investigation, litigation or proceeding in
connection therewith, and any amendment, modification or waiver in respect
thereof; or (b) either of the Resort Properties or any part thereof or
interest therein; or (c) the acquisition, mortgaging, design, construction,
preparation, installation, inspection, delivery, non-delivery, acceptance,
rejection, purchase, ownership, possession, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, operation, condition, sale (including any transfer pursuant to
Section 5.2 of the Master Lease or any sale pursuant to Section 5.1 of the
Master Lease), return or other disposition of all or any part of any
interest in the Leased Property or the imposition of any Lien (or incurring
of any liability to refund or pay over any amount as a result of any Lien)
thereon, including: (i) Claims or penalties arising from any violation of
law or in tort (strict liability or otherwise), (ii) latent or other
defects, whether or not discoverable, and (iii) any Claim for patent,
trademark or copyright infringement, provided that the matters in this
clause (c) shall be without duplication of any matter for which
indemnification is provided pursuant to the Environmental Indemnity
contained in Section 7.2; (d) the offer, issuance, sale or delivery of the
Notes; (e) the breach or alleged breach by any Lessee of any representation
or warranty made by it or deemed made by it in any Operative Document; (f)
the transactions contemplated hereby or by any other Operative Document
(except for any violation of Section 4.2(c), in respect of the application
of Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited
transaction described in Section 4975(c) of the Code or (g) any other
agreement entered into or assumed by any Lessee in connection with any of
the Leased Property; provided, however, none of the Lessees or Parent shall
be required to indemnify under this Section 7.1 for any of the following:
(1) as to an Indemnitee, any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee or, if such Indemnitee is
the Bank, ordinary negligence for the handling of funds (other than willful
misconduct or gross negligence imputed to such Indemnitee by reason of its
participation in the transactions contemplated hereby) or the breach by such
Indemnitee of any representation, warranty or covenant of such Indemnitee
set forth in any Operative Document, (2) as to an Indemnitee, any Claim
resulting from a transfer by such Indemnitee of all or any part of its
interest in the Master Lease, the other Operative Documents or the Leased
Property, other than any such transfer either required by the Master Lease
(including a transfer as a result of a Casualty or a transfer pursuant to
Section 5.1 or 5.2 of the Master Lease) or any other Operative Document or
while a Lease Event of Default shall have occurred and be continuing, (3)
any Claims in respect of Taxes (such Claims to be subject to Article VIII),
other than a payment necessary to make payments under this Section 7.1 on an
After-Tax Basis, provided, that this exclusion does not apply to any taxes
or penalties included in Claims against which the Indemnitee is provided an
indemnification under subsection (f) of this Section 7.1 and (4) as to an
Indemnitee, any Claim resulting from Lessor Liens which such Indemnitee is
responsible for discharging under the Operative Documents. Lessees shall be
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entitled to credit against any payments due under this Section 7.1 any
insurance recoveries received by an Indemnitee in respect of the related Claim
under or from insurance paid for by Lessees or assigned to Trustee by Lessees.
If any Lessee shall obtain actual knowledge of any Claim indemnified
against under this Section 7.1, such Lessee shall give prompt notice thereof to
the appropriate Indemnitee or Indemnitees, and if any Indemnitee shall obtain
actual knowledge of any Claim indemnified under this Section 7.1, such
Indemnitee shall give prompt notice thereof to Lessees, provided that failure to
so notify Lessees shall release Lessees from their obligations to indemnify
hereunder only if and to the extent that such failure results in a forfeiture by
Lessees of substantive rights and defenses. With respect to any amount that
Lessees are requested by an Indemnitee to pay by reason of this Section 7.1,
such Indemnitee shall, if so requested by Lessees and prior to any payment,
submit such additional information to Lessees as Lessees may reasonably request
and which is reasonably available to such Indemnitee to substantiate properly
the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee for which the Indemnitee is indemnified under this Section 7.1 or
7.2, such Indemnitee shall notify Lessees of the commencement thereof, and
Lessees shall be entitled, at their expense, acting through counsel reasonably
acceptable to such Indemnitee, to participate in, and, to the extent that
Lessees desire to, assume and control the defense thereof; provided, however,
that Lessees shall have acknowledged in writing their obligation to fully
indemnify such Indemnitee in respect of such action, suit or proceeding; and
provided, further, that Lessees shall not be entitled to assume and control the
defense of any such action, suit or proceeding if and to the extent that, (A) in
the reasonable opinion of such Indemnitee, (x)(i) such action, suit or
proceeding involves any risk of imposition of criminal liability or (ii) such
action, suit or proceeding involves any material risk of material civil
liability on such Indemnitee or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien)
on the Leased Property, the Trust Estate or any part thereof, unless, in the
case of this clause (x)(ii), Lessees shall have posted a bond or other security
satisfactory to the relevant Indemnitees in respect to such risk or (y) the
control of such action, suit or proceeding would involve a bona fide conflict of
interest, (B) such proceeding involves Claims not fully indemnified by Lessees
which Lessees and the Indemnitee have been unable to sever from the indemnified
Claim(s), (C) a Default or a Lease Event of Default has occurred and is
continuing or (D) such action, suit or proceeding involves matters which extend
beyond or are unrelated to the transactions contemplated by the Operative
Documents and if determined adversely could be materially detrimental to the
interests of such Indemnitee notwithstanding indemnification by Lessees.
Indemnitee, on the one hand, and Lessees and Parent, on the other hand, may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by the other in accordance with the foregoing.
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Each Indemnitee shall at Lessees' expense supply Lessees with such
information and documents reasonably requested by Lessees as are necessary or
advisable for Lessees to participate in any action, suit or proceeding to the
extent permitted by this Section 7.1 or 7.2. Unless a Lease Event of Default
shall have occurred and be continuing, no Indemnitee shall enter into any
settlement or other compromise with respect to any Claim which is entitled to be
indemnified under this Section 7.1 or 7.2 without the prior written consent of
Lessees, which consent shall not be unreasonably withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Section 7.1 or 7.2
with respect to such Claim. In addition, if an Indemnitee, in violation of
Lessees' right to assume and control the defense of any Claim, refuses to permit
Lessees to control the defense after written demand by Lessees for such control,
such Indemnitee waives its right to be indemnified under Section 7.1 or 7.2 with
respect to such Claim.
Upon payment in full of any Claim by Lessees pursuant to this Section
7.1 to or on behalf of an Indemnitee, Lessees, without any further action, shall
be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with Lessees and give such further
assurances as are necessary or advisable to enable Lessees vigorously to pursue
such claims.
Any amount payable to an Indemnitee pursuant to this Section 7.1 shall
be paid to such Indemnitee promptly upon receipt of a written demand therefor
from such Indemnitee, accompanied by a written statement describing the basis
for such indemnity and the computation of the amount so payable and, if
requested by Lessees, such determination shall be verified by a nationally
recognized independent accounting firm mutually acceptable to Lessees and the
Indemnitee at Lessees' expense.
SECTION VIII.2. Environmental Indemnity. Without limitation of
the other provisions of this Article VII, each of the Lessees hereby agrees
to indemnify, hold harmless and defend each Indemnitee on an After-Tax Basis
from and against any and all Claims (including third party Claims for
personal injury or real or personal property damage), all costs incurred in
connection with any investigation or monitoring of site conditions or any
clean-up, remedial, removal or restoration work by any federal, state or
local government agency, arising in whole or in part, out of or in any way
relating to
(i) the presence or alleged presence on or under any of the
Resort
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Property of any Hazardous Material, or any releases or
discharges of any Hazardous Material on, under, from or onto such
Resort Property;
(ii) any activity, including construction, carried on or
undertaken on or off any of the Resort Property, whether by any
Lessee or any predecessor in title or any employees, agents,
contractors or subcontractors of any Lessee or any predecessor in
title, or any other Persons (including such Indemnitee), in
connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous
Material that are located or present on or under or that migrate,
flow, percolate, diffuse or in any way move onto or under any such
Resort Property,
(iii) loss of or damage to any property or the environment
(including clean-up costs, response costs, remediation and removal
costs, costs of corrective action, costs of financial assurance,
fines and penalties and natural resource damages), or death or
injury to any Person, and all expenses associated with the
protection of wildlife, aquatic species, vegetation, flora and
fauna, and any mitigative action required by or under
Environmental Laws, in connection with any of the Resort Property,
any activities undertaken thereon or the actions of any Lessee or
Construction Agent,
(iv) in connection with any of the Resort Property, any
activities undertaken thereon or the actions of any Lessee or
Construction Agent, any claim concerning lack of compliance with
Environmental Laws, or any act or omission causing an
environmental condition that requires remediation or would allow
any Governmental Authority to record a Lien on the land records,
or
(v) any residual contamination on or under any of the Resort
Property, including any such contamination affecting any natural
resources, and any contamination of any property or natural
resources arising in connection with the generation, use,
handling, storage, transport or disposal of any Hazardous
Substances on such Resort Property or by any Lessee or
Construction Agent, and irrespective of whether any of such
activities were or will be undertaken in accordance with
applicable laws, regulations, codes and ordinances;
but Lessees shall not be required to indemnify any Indemnitee under this
Section 7.2 for (1) any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee, or any Affiliate of such
Indemnitee (it being understood that, unless the applicable Indemnitee was in
possession of the Land and caused the Claim, Lessees shall be required to
indemnify an Indemnitee even if the ordinary (but not gross) negligence of such
Indemnitee, or any Affiliate of such Indemnitee, caused or contributed to such
Claim) or (2) except with respect to Trustee, any
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Claim to the extent attributable to acts or events occurring after the
expiration of the Lease Term so long as Trustee and the Lenders are not
exercising remedies against Lessees in respect of the Operative Documents. The
indemnity provided for herein shall not include any matters with respect to
Taxes. The indemnity provided for herein shall survive the expiration or
termination of and shall be separate and independent from any remedy under the
Master Lease or any other Operative Document.
ARTICLE IX
GENERAL TAX INDEMNITY
SECTION IX.1. General Tax Indemnity. Except as otherwise provided in
this Section 8.1, each of the Lessees shall pay on an After-Tax Basis, and on
written demand shall indemnify and hold each Indemnitee harmless from and
against, any and all fees (including documentation, recording, license and
registration fees), taxes (including income (whether net, gross or adjusted
gross, whether domestic or foreign), gross receipts, sales, rental, use,
turnover, value-added, property, excise and stamp taxes), levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever, together
with any penalties, fines or interest thereon or additions thereto (any of the
foregoing being referred to herein as "Taxes" and individually as a "Tax")
imposed on or with respect to any Indemnitee, any of the Resort Property, the
Leased Property or any portion thereof, any Operative Document or any Lessee or
any sublessee or user of the Leased Property, by any foreign authority, the
United States or by any state or local government or other taxing authority in
the United States in connection with or in any way relating to (i) the
acquisition, mortgaging, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, purchase, ownership,
possession, rental, lease, sublease, repossession, maintenance, repair,
alteration, modification, addition or substitution, storage, transfer of title,
redelivery, use, financing, refinancing, operation, condition, sale, return or
other application or disposition of all or any part of any of the Resort
Property or any of the Leased Property or any portion thereof or the imposition
of any Lien (or incurrence of any liability to refund or pay over any amount as
a result of any Lien) thereon, (ii) Rent or the receipts or earnings arising
from or received with respect to the Leased Property or any part thereof, or
any interest therein or any applications or dispositions thereof, (iii) any
other amount paid or payable pursuant to the Notes, or any other Operative
Documents, the property or the income or other proceeds with respect to the
property held in the Trust Estate, (iv) the Leased Property or any part thereof
or any interest therein, (v) all or any of the Operative Documents, any other
documents contemplated thereby and any amendments and supplements thereto, and
(vi) otherwise with respect to or in connection with the transactions
contemplated by the Operative Documents; provided, that Lessees'
indemnification obligation hereunder in respect of
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any Tax shall be net of any foreign, federal, state or local income tax
benefits which are recognized by the relevant Tax Indemnitee as a result of the
imposition of such Tax.
SECTION IX.2. Exclusions from General Tax Indemnity. Section 8.1
shall not apply to:
(a) Taxes on, based on, or measured by or with respect to
the net income of an Indemnitee (including minimum Taxes, capital gains
Taxes, Taxes on or measured by items of tax preference or alternative
minimum Taxes) other than (A) any such Taxes that are, or are in the
nature of, sales, use, rental (other than Taxes imposed on net rental
income) or property Taxes, (B) withholding Taxes imposed by the United
States or Mississippi (I) on payments with respect to the Notes, or
(II) on Rent, to the extent the net payment of Rent after deduction of
such withholding Taxes would be less than amounts currently payable
with respect to the Notes and (C) any such Taxes imposed on such
Indemnitee by any state (other than Mississippi) or local taxing
authority in such state to the extent such Taxes are imposed as a
result of any Lessee moving the Leased Property or any part thereof to
such state;
(b) Taxes that are based on, measured by or imposed with
respect to the fees or other compensation received by a Person acting
as Trustee or Administrative Agent (in their respective individual
capacities) or any Affiliate of any thereof for acting as trustees
under the Trust Agreement or the Loan Agreement, respectively;
(c) Taxes that result from any act, event or omission, or
are attributable to any period of time, that occurs after the earliest
of (A) the expiration of the Lease Term with respect to the Leased
Property and, if the Leased Property is required to be returned to
Trustee in accordance with the Master Lease, such return and (B) the
discharge in full of Lessees' obligations to pay the Lease Balance, or
any amount determined by reference thereto, with respect to the Leased
Property and all other amounts due under the Master Lease and other
Operative Documents, unless such Taxes (and interest, penalties and
late charges related thereto) relate to acts, events or matters
occurring prior to the earliest of such times or are imposed on or with
respect to any payments due or actions required under the Operative
Documents after such expiration or discharge; or
(d) Taxes imposed on an Indemnitee that result from any
voluntary sale, assignment, transfer or other disposition by such
Indemnitee or any related Indemnitee of any interest in the Leased
Property or any part thereof, or any interest therein or any interest
or obligation arising under the Operative Documents or any Notes, or
from any sale, assignment, transfer or other disposition of any
interest in such Indemnitee or any related Indemnitee, it being
understood that each of the following shall not be considered
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a voluntary sale, assignment, transfer or other disposition:
(A) any substitution, replacement or removal of any of the Leased
Property by any Lessee, (B) any sale or transfer resulting from the
exercise by any Lessee of any early termination option, (C) any
transfer under Section 5.2 of the Master Lease or Section 3.11 of the
Trust Agreement and (D) any sale or transfer while a Lease Event of
Default shall have occurred and be continuing under the Master Lease.
SECTION IX.3. Contests. If any Claim shall be made against any
Indemnitee or if any proceeding shall be commenced against any Indemnitee
(including a written notice of such proceeding) for any Taxes as to which
Lessees may have an indemnity obligation pursuant to Section 8.1, or if any
Indemnitee shall determine that any Taxes as to which Lessees may have an
indemnity obligation pursuant to Section 8.1 may be payable, such Indemnitee
shall promptly notify Lessees. Lessees shall be entitled, at its expense,
acting through counsel reasonably acceptable to such Indemnitee, to participate
in, and, to the extent that Lessees desire to, assume and control the defense
thereof; provided, however, that Lessees shall have acknowledged in writing
their obligation to indemnify fully such Indemnitee in respect of such action,
suit or proceeding; and, provided, further, that Lessees shall not be entitled
to assume and control the defense of any such action, suit or proceeding if and
to the extent that (A) Lessees are not able to provide such Indemnitee with a
legal opinion of counsel reasonably acceptable to such Indemnitee that such
action, suit or proceeding does not involve (x) a risk of imposition of
criminal liability or (y) any material risk of material civil liability on such
Indemnitee and will not involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien) on any of the
Leased Property, any Deed of Trust Estate, the Trust Estate or any part
thereof, unless, in the case of this clause (y), Lessees contemporaneously with
such opinion shall have posted a bond or other security satisfactory to the
relevant Indemnitee in respect to such risk, (B) the control of such action,
suit or proceeding would involve a bona fide conflict of interest, (C) such
proceeding involves Claims not fully indemnified by Lessees which Lessees and
the Indemnitee have been unable to sever from the indemnified claim(s), (D) a
Lease Event of Default has occurred and is continuing or (E) such action, suit
or proceeding involves matters which extend beyond or are unrelated to the
transaction contemplated by the Operative Documents and if determined adversely
could be materially detrimental to the interests of such Indemnitee
notwithstanding indemnification by Lessees. The Indemnitee, on the one hand,
and Lessees and Parent, on the other hand, may participate in a reasonable
manner at its own expense and with its own counsel in any proceeding conducted
by each other in accordance with the foregoing.
Each Indemnitee shall at Lessees' expense supply Lessees with such
information and documents reasonably requested by Lessees as are necessary or
advisable for Lessees to participate in any action, suit or proceeding to the
extent permitted by this Section 8.3. Unless a
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Lease Event of Default shall have occurred and be continuing, no Indemnitee
shall enter into any settlement or other compromise with respect to any Claim
which is entitled to be indemnified under this Section 8.3 without the prior
written consent of Lessees, which consent shall not be unreasonably withheld,
unless such Indemnitee waives its right to be indemnified under this Section
8.3 with respect to such Claim. In addition, if an Indemnitee, in violation of
Lessees' right to assume and control the defense of any Claim, refuses to
permit Lessees to control the defense, such Indemnitee waives its right to be
indemnified under Section 8.1 with respect to such Claim.
Notwithstanding anything contained herein to the contrary, an Indemnitee
will not be required to contest (and Lessees shall not be permitted to contest)
(a) a Claim with respect to the imposition of any Tax if such Indemnitee shall
waive its right to indemnification under this Section 8.3 with respect to such
claim (and any related claim with respect to other taxable years the contest of
which is precluded or otherwise adversely affected as a result of such waiver)
and (b) any Claim if the subject matter thereof shall be of a continuing nature
and shall have previously been decided adversely. Each Indemnitee and Lessees
shall consult in good faith with each other concerning each step and decision
regarding the conduct of such contest controlled by either, including the forum
in which the claim is most likely to be favorably resolved.
SECTION IX.4. Payments. Any Tax indemnifiable under this Article
VIII shall be paid directly when due to the applicable taxing authority if
direct payment is practicable and permitted. If direct payment to the
applicable taxing authority is not permitted or is otherwise not made, any
amount payable to an Indemnitee pursuant to Section 8.1 shall be paid within
thirty days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the amount
so payable, but not before the date that the relevant Taxes are due. Any
payments made pursuant to Section 8.1 directly to the Indemnitee entitled
thereto or Lessees, as the case may be, shall be made in immediately available
funds at such bank or to such account as specified by the payee in written
directions to the payor, or, if no such direction shall have been given, by
check of the payor payable to the order of the payee by certified mail, postage
prepaid at its address as set forth in this Agreement. Upon the request of any
Indemnitee with respect to a Tax that Lessees are required to pay, Lessees
shall furnish to such Indemnitee the original or a certified copy of a receipt
for Lessees' payment of such Tax or such other evidence of payment as is
reasonably acceptable to such Indemnitee.
SECTION IX.5. Reports. If any report, return or statement is
required to be filed with respect to any Taxes that are subject to
indemnification under this Article VIII, Lessees shall, if Lessees are
permitted by Applicable Laws, timely prepare and file such report, return or
statement; provided, however, that if Lessees are not permitted by Applicable
Laws to file any
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such report Lessees will promptly so notify the appropriate Indemnitee, in
which case the Indemnitee will file any such report after preparation thereof
by Lessees.
SECTION IX.6. Withholding Tax Exemption. At least ten Business Days
prior to the first date on which any payment is due under any Note for the
account of any Lender which is a "foreign corporation," "foreign partnership"
or "foreign trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of U.S. withholding tax under Section 1441 or
1442 of the Code, such Lender agrees that it will have delivered to each of the
Lessees, Trustee and the Administrative Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under the Operative
Documents without deduction or withholding of any United States Federal income
taxes in accordance with Section 7.10 of the Loan Agreement.
ARTICLE X
MISCELLANEOUS
SECTION X.1. Survival of Agreements. The representations,
warranties, covenants, indemnities and agreements of the parties provided for
in the Operative Documents, and the parties' obligations under any and all
thereof, shall survive the execution and delivery and the termination or
expiration of this Agreement and any of the Operative Documents, the transfer
of the interest in any and all of either of Resort Properties or any Facility
Site and/or any of the Facilities or Facility F,F&E to or by Trustee as
provided herein or in any other Operative Documents (and shall not be merged
into the applicable Deed of Trust or any other conveyance or transfer
document), any disposition of any interest of Trustee in the Leased Property,
the purchase and sale of the Notes, payment therefor and any disposition
thereof and shall be and continue in effect notwithstanding any investigation
made by any party hereto or to any of the other Operative Documents and the
fact that any such party may waive compliance with any of the other terms,
provisions or conditions of any of the Operative Documents.
SECTION X.2. No Broker, etc. Except for Lessees' engagement of BA
Leasing & Capital Corporation as Arranger in connection with the transactions
contemplated hereby, none of the Lenders has retained or employed any broker,
finder or financial advisor to act on its behalf in connection with this
Agreement, nor authorized any broker, finder or financial advisor retained or
employed by any other Person so to act, nor incurred any fees or commissions to
which Trustee or any Lender might be subjected by virtue of their entering into
the transactions contemplated by this Agreement. BA Leasing & Capital
Corporation's compensation for acting hereunder other than as a Lender is the
receipt of the amounts provided for in the Operative
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Documents and in the Arranger Fee Letter. Any party who is in breach of this
representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.
SECTION X.3. Notices. Unless otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been given (i) in the case of notice by
letter, the earlier of when delivered to the addressee by hand or courier if
delivered on a Business Day and, if not delivered on a Business Day, the first
Business Day thereafter or on the fourth Business Day after depositing the same
in the mails, registered or certified mail, postage prepaid, return receipt
requested, and (ii) in the case of notice by facsimile or bank wire, when
receipt is confirmed if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter, addressed as provided in
Schedule III, or to such other address as any of the parties hereto may
designate by written notice.
SECTION X.4. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION X.5. Amendments. Neither this Agreement nor any of the other
Operative Documents nor any of the terms hereof or thereof may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification shall be sought and consented to
by the Required Lenders; and no such termination, amendment, supplement, waiver
or modification shall be effective unless a signed copy thereof shall have been
delivered to Trustee, Lessees and the Administrative Agent. Trustee and Lessees
shall not be permitted to amend, modify or supplement the Master Lease without
the written consent of the Required Lenders; provided, that without the prior
written consent of each Lender, Trustee shall not:
(a) modify any of the provisions of this Section 9.5,
change the definition of "Required Lenders", or modify or waive any
provision of any Operative Document requiring action by any of the
foregoing, or release any Collateral (except as otherwise specifically
provided in any Operative Document);
(b) reduce the amount or change the time of payment of any
amount of principal owing or payable under any Note or interest owing
or payable on any Note, reduce the amount or change the time of payment
of any fee, or modify any of the provisions of Section 2.2 of the Trust
Agreement;
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(c) modify, amend, waive or supplement any of the
provisions of Sections 3.1, 3.2, 3.4, 4, 5.1, 5.2, Article VII and
Article X of the Lease;
(d) reduce, modify, amend or waive any indemnities in favor
of any Lender;
(e) reduce the amount or change the time of payment of Rent
or the Lease Balance, or reduce the amount or change the time of
payment of any such payment under any Guaranty with respect to any such
payment;
(f) consent to any assignment of the Master Lease releasing
any Lessee from its obligations to pay Rent or the Lease Balance or
changing the absolute and unconditional character of such obligations;
(g) modify, amend, waive or supplement the Guaranty,
consent to any amendment thereof or release any of the guarantees of
any Guarantor; or
(h) permit the creation of any Lien on the Trust Estate or
any part thereof except as contemplated by the Operative Documents, or
deprive any Lender of the benefit of the security interest and Lien
secured by the Trust Estate.
SECTION X.6. Headings, etc. The Table of Contents and headings of
the various Articles and Sections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof.
SECTION X.7. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN,
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES OF SUCH STATE, EXCEPT TO THE EXTENT THAT THE EXERCISE OF CERTAIN
RIGHTS OR REMEDIES HEREUNDER OR UNDER THE OTHER OPERATIVE DOCUMENTS MAY REQUIRE
COMPLIANCE WITH THE GAMING LAWS.
SECTION X.8. Transaction Costs. Lessees shall pay all Transaction
Costs whether or not the transactions contemplated hereby are consummated. In
addition, each of the Lessees agrees to pay or reimburse the Indemnitees on
demand for all other out-of-pocket costs and expenses, including attorneys'
fees (and the reasonable charges of in-house counsel of Arranger), reasonably
incurred in connection with: (a) entering into, or the giving or withholding
of, any future amendments, supplements, waivers or consents with respect to the
Operative Documents;
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(b) any Casualty or termination of the Master Lease or any other Operative
Documents; (c) the negotiation and documentation of any restructuring or
"workout," whether or not consummated, of any Operative Document; (d) the
enforcement or attempted enforcement, or preservation of any rights or remedies
under the Operative Documents; (e) any transfer by an Indemnitee of any
interest in the Loan or the Notes during the continuance of an Event of
Default; and (f) any transfer by Trustee to a successor Trustee.
SECTION X.9. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law; but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
SECTION X.10. Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors and permitted
assigns, and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
SECTION X.11. Final Agreement. THIS AGREEMENT, TOGETHER WITH THE
OPERATIVE DOCUMENTS, REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND THE OTHER OPERATIVE
DOCUMENTS. THIS AGREEMENT CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED
OR CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION X.12. No Third-Party Beneficiaries. Nothing in this
Agreement or the other Operative Documents shall be deemed to create any right
in any Person not a party hereto or thereto (other than the permitted
successors and assigns of Lessees and Parent), and such agreements shall not be
construed in any respect to be a contract in whole or in part for the benefit
of any third party except as aforesaid.
SECTION X.13. Release of Lien; Termination of Ground Lease. In
addition to the obligations of Trustee under Section 12.2 of the Master Lease:
(a) Each Lender hereby instructs Trustee to release, and the
Administrative Agent shall also release, the Liens created by the
Master Lease and Security Documents, respectively, against all Leased
Property and other Collateral, and reconvey all
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Improvements, promptly upon Lessees' termination of the Commitments
and payment in full in immediately available funds of the Lease
Balance and of all other amounts then due and owing under the
Operative Documents.
(b) If any applicable Lessee elects to purchase any Facility
and the related Facility F,F&E pursuant to Section 5.1 of the Master
Lease, each Lender hereby instructs Trustee upon receipt of all amounts
due pursuant to such Section 5.1 in connection therewith to (i)
release, and the Administrative Agent shall also release, the Liens
created by the Master Lease and the Security Documents, respectively,
against such Facility and Facility F,F&E related thereto, (ii) and
reconvey the applicable Improvements, and (iii) terminate the
applicable Ground Lease.
(c) No sooner than the later of (i) the end of the
Commitment Period and (ii) the delivery by the applicable Lessee to the
Administrative Agent of the search reports required under Section 5.17,
and then only if no Default or Event of Default exists, such Lessee may
deliver to Trustee (with sufficient copies for the Agents and the other
Lenders) a request to release the Liens created by the Master Lease and
the Security Documents against the items of Facility F,F&E described in
the request, together with a certificate to the effect that (A) all
vendors of items of Facility F,F&E that are to remain subject to the
Master Lease have been paid in full, (B) the Administrative Agent, for
the benefit of the Lenders, has a first priority lien of record on the
Facility F,F&E that remains subject to the Master Lease (other than the
released Facility F,F&E) as against all Persons, including such Lessee
and its creditors, and (C) no Default or Event of Default exists. Each
Lender hereby instructs Trustee to release upon receipt of the request
and a conformed certificate of release, and the Administrative Agent
shall also release, their respective Liens against the items of
Facility F,F&E described in the request.
(d) Each Lender, the Administrative Agent and Trustee, at
the expense of Lessees, will promptly and duly execute and deliver all
documents and take such further action as may be necessary to release
the Liens in accordance with Section 9.13(a), (b) or (c), including if
requested by Lessees the recording or filing of any document evidencing
the release of such Liens in accordance with the laws of the
appropriate jurisdictions.
(e) Upon Lessees' termination of the Commitments and payment
in full in immediately available funds of the Lease Balance and of all
other amounts due and owing under the Operative Documents, each Lender
hereby instructs Trustee upon receipt of all amounts due under the
Operative Documents to execute a termination statement in recordable
form in respect of each applicable Ground Lease and to execute such
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documents as may be required to release and reconvey the liens
created by the Master Lease and the Security Documents, respectively,
against the applicable Leased Property.
(f) Each Lender, the Administrative Agent and Trustee shall
at any time and from time to time during the Lease Term, promptly, but
in no event later than twenty (20) Business Days after the request by
any Lessee or Parent, execute and deliver to such Lessee, Parent and
any prospective lessor, lender, mortgagee or assignee of Debt (if (i)
such financing party has signed a commitment letter to lease or lend to
such Lessee or Parent, (ii) the real or personal property (the
"Financed Property") that is to be leased or encumbered thereby does
not constitute any Leased Property, and (iii) the Financed Property is
to be located on or at any Facility and/or Facility Site) (1) a
certificate stating that neither the Lenders, Agents nor Trustee has
any right, title or interest in the Financed Property, and (2) if
requested by any such financing party, partial releases covering the
Financed Property mutually acceptable to such financing party, such
Lessee and the Lenders to confirm such interests and to provide for the
respective rights of such financing party and the Lenders in their
respective collateral securing any such Debt. The certificate
delivered pursuant to this Section 9.13(f) is rendered only to such
financing party and may not be relied upon by any other Person.
SECTION X.14. Reproduction of Documents. This Agreement, all
documents constituting Schedules or Exhibits hereto, and all documents
relating hereto received by a party hereto, including: (a) consents, waivers
and modifications that may hereafter be executed; (b) documents received by
Lessor in connection with Lessor's receipt and/or acquisition of any of the
Facility F,F&E; and (c) financial statements, certificates, and other
information previously or hereafter furnished to Lessor may be reproduced by
Lessor by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. Each of the Lenders agrees and
stipulates that, to the extent permitted by law, any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by Lessor in the regular course of
business) and that, to the extent permitted by law, any enlargement,
facsimile, or further reproduction of such reproduction shall likewise be
admissible in evidence; provided, however, that no such reproduction shall
be presented or accepted in lieu of the original of such reproduction for
purposes of Article 9 of the UCC or any other applicable laws regarding
chattel paper.
SECTION X.15. Submission to Jurisdiction. Lessor may bring suit
to enforce any claim arising out of the Operative Documents in any state or
Federal court located in New York, New York having subject matter
jurisdiction, and with respect to any such claim. Each of the Lessees and
each of the Guarantors hereby irrevocably: (a) submits to the jurisdiction
of such
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courts; and (b) consents to the service of process out of said courts by
mailing a copy thereof, by registered mail, postage prepaid, to any Lessee
or any Guarantor at their respective addresses specified in this Agreement,
and agrees that such service, to the fullest extent permitted by law: (i)
shall be deemed in every respect effective service of process upon it in any
such suit, action or proceeding; and (ii) shall be taken and held to be
valid personal service upon and personal delivery to it. Each of the
Lessees and Guarantors irrevocably waives, to the fullest extent permitted
by law: (A) any claim, or any objection, that it now or hereafter may have,
that venue is not proper with respect to any such suit, action or proceeding
brought in such a court located in New York, New York, including any claim
that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum; and (B) any claim that any Lessee or any
Guarantor is not subject to personal jurisdiction or service of process in
such forum. Nothing herein contained shall preclude Trustee, Lessor or any
Lender from bringing an action or proceeding in respect hereof in any other
state or federal court within the United States having subject matter
jurisdiction with respect to such action and personal jurisdiction over the
parties to such action. Each of the Lessees and Guarantors agrees that a
final judgment in any action or proceeding in a state or Federal court
within the United States may be enforced in any other jurisdiction by suit
on the judgment or in any other manner provided by law.
SECTION X.16. Jury Trial. EACH LESSEE AND EACH GUARANTOR WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OPERATIVE DOCUMENT OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM
ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OPERATIVE
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
SECTION X.17. Payments Set Aside. To the extent that any Lessee
makes a payment to Trustee, the Administrative Agent or the Lenders, or
Trustee, the Administrative Agent or the Lenders exercise their right of
set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any discretion)
to be repaid to a trustee, receiver or any other party, in connection with
any insolvency of any Lessee, Guarantor or Subsidiary thereof that is a
sublessee, assignee or transferee of any Leased Property or otherwise, then
(a) to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such set-off had not
occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its pro rata share of any amount so recovered for
distribution by the Administrative
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Agent in accordance with the Loan Agreement.
SECTION X.18. Trust Agreement. The provisions of Section 5.1 of the
Trust Agreement limiting the reimbursement and indemnification obligations
of the Lenders are incorporated by reference into this Agreement.
SECTION X.19. Consent to Conflict of Interest. The parties
hereto acknowledge that the Bank is entering into and will be bound by the
Operative Documents in multiple capacities, including individually, as
Trustee, as Lessor, as Borrower, as Lender and as agent to the
Administrative Agent. Each party hereto consents to the same and hereby
waives any conflict of interest which may exist or arise as a result
thereof.
SECTION X.20. No Marshaling/Other Loans and Set-Off.
Notwithstanding any provis ions in documents related to other credit
facilities or other agreements between any Lender and any Lessee or
Guarantor, no Lender hereunder may be compelled to marshal any collateral or
other assets it may hold from or for the benefit of any such Lessee or
Guarantor. Any Lender may make other extensions of credit, or renew or
extend any existing extensions of credit to any Lessee or Guarantor or have
other relationships with any Lessee or Guarantor. No Lender shall have any
right or interest in any property taken as collateral for such other
extensions of credit or in any property or deposit in the possession or
control of any other Lender that may be or become collateral for or
otherwise available for payment of the obligations hereunder by reason of
the inclusion of any "cross-reference" provisions in the documentation
associated with such other extensions of credit, provided, however, if any
Lender with such rights elects to exercise any such right of
cross-collateralization or set-off, all Lenders shall be entitled to a pro
rata share of such proceeds realized as a result of such exercise.
SECTION X.21. Joint and Several. Each of the Lessees shall be
obligated for all of the Obligations on a joint and several basis,
notwithstanding which of the Lessees may have directly received the proceeds
of any particular Advance. Each of the Lessees acknowledges and agrees that,
for purposes of the Operative Documents, Parent, Lessees and the other
Obligor Subsidiaries constitute a single integrated financial enterprise and
that each receives a benefit from the availability of credit under the
Operative Documents to all Lessees. Each of the Lessees waives all
suretyship defenses arising under Applicable Laws in connection with its
joint and several obligations under this Agreement. Without limiting the
generality of the foregoing waiver, each of the Lessees agrees that the
consents, waivers and agreements regarding suretyship matters set forth in
Sections 2, 3 and 5 of the Guaranty are incorporated herein, mutatis
mutandis, and shall be fully applicable to such Lessee in connection with
its joint and several obligations hereunder.
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SECTION X.22. Further Additional Lessees. Parent and/or any
Lessee may request that one or more of Parent's wholly-owned Subsidiaries
become a "Lessee" under this Agreement and, therefore, become jointly and
severally liable for all Obligations of Lessees under the Operative
Documents. Any such request shall be subject to the prior written approval
of the Required Lenders (which approval may be withheld by the Required
Lenders in their reasonable discretion). In the event the Required Lenders
approve the addition of any such Subsidiary as a Lessee, such Subsidiary
shall execute and deliver to the Administrative Agent a Joinder Agreement
and such Operative Documents, and other agreements, financing statements,
and documents as the Administrative Agent or the Required Banks may
reasonably request.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have coused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date firs above written.
BL RESORT I, LLC, as Lessee
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, LLC, as Lessee
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
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GRAND CASINOS, INC., as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS RESORTS, INC., as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC.
- GULFPORT, as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC.
- BILOXI , as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
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Participation Agreement
GRAND CASINOS BILOXI THEATER, INC.,
as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
MILLE LACS GAMING CORPORATION,
as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC.--
TUNICA-BILOXI, as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. -
COUSHATTA, as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
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<PAGE> 92
Participation Agreement
GCA ACQUISITION SUBSIDIARY, INC.,
as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL DEVELOPMENT CORP., as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, INC., as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, INC., as Guarantor
By:
-----------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
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<PAGE> 93
Participation Agreement
BL RESORTS I, LLC , as Guarantor
By:
----------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, LLC , as Guarantor
By:
----------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
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<PAGE> 94
Participation Agreement
HANCOCK BANK, not in its individual
capacity, except as specifically provided
herein, but solely as Lessor, Borrower
and Trustee
By:
----------------------------------------
Name: Arnold Wethey
Title: Vice President & Trust Officer
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Participation Agreement
BALEASING & CAPITAL CORPORATION, not in
its individual capacity except as
specifically provided herein, but solely
as Administrative Agent
By:
----------------------------------------
Name: Sonia T. Delen
Title: Assistant Vice President
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<PAGE> 96
Participation Agreement
BA LEASING & CAPITAL CORPORATION, as a
Lender
By:
----------------------------------------
Name: David F. Scully, Jr.
Title: Vice President
-91-
<PAGE> 97
Participation Agreement
SOCIETE GENERALE, as a Lender
By:
----------------------------------------
Name: Donald L. Schubert
Title: Vice President
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<PAGE> 98
Participation Agreement
THE SUMITOMO BANK, LIMITED, as a Lender
By:
----------------------------------------
Name: Hiroyuki Iwami
Title: Joint General Manager
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<PAGE> 99
Participation Agreement
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By:
----------------------------------------
Name: David J. Kramer
Title: Vice President
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<PAGE> 100
Participation Agreement
THE MITSUBISHI TRUST AND BANKING
CORPORATION, as a Lender
By:
----------------------------------------
Name: Yasushi Satomi
Title: Senior Vice President
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<PAGE> 101
Participation Agreement
BANK OF SCOTLAND, as a Lender
By:
----------------------------------------
Name: Annie Chin Tat
Title: Vice President
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<PAGE> 102
Participation Agreement
HANCOCK BANK, as a Lender
By:
----------------------------------------
Name: Keith A. Williams
Title: Vice President
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<PAGE> 103
Participation Agreement
MITSUI LEASING (U.S.A.), INC., as a Lender
By:
----------------------------------------
Name: Masato Utsumi
Title: President
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<PAGE> 104
Participation Agreement
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as a Lender
By:
----------------------------------------
Name: David P. Williams
Title: Vice President
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<PAGE> 105
Participation Agreement
THE PEOPLES BANK, as a Lender
By:
----------------------------------------
Name: Robert M. Tucei
Title: Senior Vice President
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<PAGE> 106
APPENDIX 1
to
Participation Agreement
DEFINITIONS AND INTERPRETATION
B. Interpretation. In each Operative Document, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by the
Operative Documents, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Operative Documents
and reference to any promissory note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or
Appendix, Schedule or Exhibit thereto;
(vii) "hereunder", "hereof", "hereto" and words of similar import shall be
deemed references to an Operative Document as a whole and not to any
particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term, and, for purposes
<PAGE> 107
APPENDIX 1
of each Operative Document, the rule of ejusdem generis shall not be
applicable to limit a general statement, which is followed by or referable to
an enumeration of specific matters, to matters similar to the matters
specifically mentioned; and
(ix) relative to the determination of any period of time, "from" means
"from and including" and "to" means "to but excluding".
C. Accounting and Financial Determinations. Unless otherwise specified, all
accounting terms used in each Operative Document shall be interpreted, all
accounting determinations and computations thereunder (excluding with respect
to Section 5.16 of the Participation Agreement) shall be made, and all
financial statements required to be delivered thereunder shall be prepared in
accordance with, GAAP applied in the preparation of the financial statements
referred to in Section 4.1(f) of the Participation Agreement. Unless otherwise
specified, all accounting determinations and computations to be made pursuant
to the Operative Documents with respect to Parent shall not include in such
determination or computation any amount, value, expense, liability or other
applicable component item attributable to any Subsidiary of Parent that is not
an Obligor Subsidiary, it being the intention of the parties to the Operative
Documents that such determinations and computations (unless otherwise
specified) be made as if Parent had no such non-Obligor Subsidiaries.
D. Legal Representation of the Parties. The Operative Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Documents
to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Defined Terms. Unless a clear contrary intention appears, terms defined
herein have the respective meanings indicated below when used in each Operative
Document.
"Account" is defined in Section 2.6 of the Participation Agreement.
"Additional Costs" means the amounts payable pursuant to Sections 2.9, 2.10,
2.11 and 2.12 of the Loan Agreement and the other amounts due and payable by
the Borrower under any Loan Document other than principal and interest on the
Notes.
"Administrative Agency Fees" means the agency fees payable to the
Administrative Agent from time to time in the amounts set forth in the
Administrative Agent Fee Letter.
"Administrative Agent" means BA Leasing & Capital Corporation, a California
corporation, and includes each other Person as shall have subsequently been
appointed as the successor Administrative Agent pursuant to Section 7.9 of the
Loan Agreement.
"Administrative Agent-Related Persons" means BA Leasing & Capital Corporation
and any successor Administrative Agent arising under Section 7.9 of the Loan
Agreement, together
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<PAGE> 108
APPENDIX 1
with their respective Affiliates (including, in the case of BA Leasing &
Capital Corporation, in its capacity as Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Administrative Agent Fee Letter" means the letter agreement, dated July 15,
1997, between the Administrative Agent and Parent.
"Advance" means, as the context may require, any Construction Advance or
Revolving Advance.
"Advance Date(s)" means each of the actual dates on which any Advance is made
pursuant to the Participation Agreement.
"Advance Request" is defined in Section 2.4(a) of the Participation
Agreement.
"Affected Facility" is defined in Section 9.1(a) of the Master Lease.
"Affiliate" means, when used with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities or by contract or otherwise;
provided (but without limiting the foregoing), that no pledge of voting
securities of any Person without the current right to exercise voting rights
with respect thereto shall by itself be deemed to confer control over such
Person upon the pledgee.
"After-Tax Basis" means, with respect to any payment to be received (taking
into account any tax savings or reductions in the amount of any Tax not
indemnifiable hereunder as a result of circumstances giving rise to a Tax for
which an indemnity payment has been made), the amount of such payment increased
so that, after deduction of the amount of all taxes required to be paid by the
recipient with respect to the receipt by the recipient of such amounts, such
increased payment (as so reduced) is equal to the payment otherwise required to
be made. In making a determination of the increased payment, it shall be
assumed that the Indemnitee was subject to taxation at the highest marginal
Federal rates applicable to widely-held corporations for the year in which such
income is taxed and the state and local income tax rate shall be assumed to be
8.5%.
"Agents" means, collectively, the Administrative Agent and each of the
Co-Agents.
"Allocated Share", with respect to any Lease Supplement, means, as of any
date of determination, a fraction (expressed as a percentage) the numerator of
which is the sum of (a) the Facility Costs to the extent funded with proceeds
of Construction Advances in respect of the
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<PAGE> 109
APPENDIX 1
Leased Property then subject to the Lease Supplement in question less (b) the
aggregate amount of any prepayments (excluding any Collateral Shortfall
Payments) made by Lessees and their Affiliates on or before such date with
respect to such Construction Advances plus (c) the aggregate original principal
amount of Revolving Advances, if any, made with respect to such Lease
Supplement and remaining outstanding as of such date, and the denominator of
which is the sum of (x) the aggregate Facility Costs of all Leased Property
then subject to the Master Lease and Lease Supplements less (y) the aggregate
amount of any prepayments (excluding (i) any Collateral Shortfall Payments and
(ii) any payments made pursuant to Section 2.7(d) of the Participation
Agreement) made by Lessees and their Affiliates on or before such date plus (z)
the aggregate original principal amount of Revolving Advances, if any, made
with respect to all then existing Lease Supplements and remaining outstanding
as of such date.
"Alteration" means a Permitted Alteration or a Required Alteration.
"Alternate Base Rate" means, for any day, an interest rate per annum (rounded
upwards, if necessary, to the highest 1/8 of 1%) equal to the higher of (A) the
rate of interest in effect for such day as publicly announced by Bank of
America National Trust and Savings Association in San Francisco, California
from time to time as its reference rate for calculating interest on certain
loans (the "Reference Rate"), which need not be the lowest interest rate
charged by Bank of America National Trust and Savings Association and (B) the
Federal Funds Effective Rate most recently determined by the Administrative
Agent, plus 1/2 of 1% per annum. "Federal Funds Effective Rate" means, for any
period, a fluctuating interest rate per annum equal for each day during such
period to the weighted average of the rate on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. For purposes of this Agreement,
any change in the Alternate Base Rate due to a change in the Federal Funds
Effective Rate or the Reference Rate shall be effective on the effective date
of such change.
"Alternate Base Rate Loan" means a Loan bearing interest by reference to the
Alternate Base Rate.
"Applicable Commitment Fee Rate" means a rate per annum determined by the
pricing schedule below:
Commitment
Pricing Ratio Fee
------------- ----------
< 1.0x .375%
> 1.0x but < 2.0x .375%
-
-4-
<PAGE> 110
APPENDIX 1
> 2.0x but < 3.0x .500%
-
> 3.0x .500%
-
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Environmental Laws and Gaming Laws) statutes, treaties,
codes, ordinances, permits, certificates, orders and licenses of and
interpretations by, any Governmental Authority, and applicable judgments,
decrees, injunctions, writs, orders or like action of any court, arbitrator or
other administrative, judicial or quasi-judicial tribunal or agency of
competent jurisdiction (including those pertaining to health, safety or the
environment (including wetlands) and those pertaining to the construction or
operation of the facilities).
"Applicable Margin" means, with respect to LIBO Rate Loans, a margin above
the LIBO or IBO Rate determined by the pricing schedule below:
Pricing Ratio LIBO Rate
------------- Margin
---------
< 1.0x 1.75%
> 1.0x but < 2.0x 2.00%
-
> 2.0x but < 3.0x 2.25%
-
> 3.0x 2.50%
-
"Appraisal" means, with respect to any Facility, an appraisal, prepared by
Hospitality Real Estate Counselors, Inc., Atlantic Hospitality Advisors,
Cushman & Wakefield or another reputable appraiser selected by the
Administrative Agent and approved by the Required Lenders, of such Facility
(including the Facility F,F&E relating thereto) in accordance with the
applicable Plans and Specifications, to be delivered pursuant to Section 3.3(i)
of the Participation Agreement.
"Approved Project" is defined in Article XV of the Master Lease.
"Appurtenant Rights" means, with respect to any Facility Site, (i) all
agreements, easements, rights of way or use, rights of ingress or egress,
privileges, appurtenances, tenements, hereditaments and other rights and
benefits at any time belonging or pertaining to such Facility Site or the
improvements relating thereto, including the use of any streets, ways, alleys,
vaults or strips of land adjoining, abutting, adjacent or contiguous to such
Facility Site and (ii) all permits, licenses and rights, whether or not of
record, appurtenant to such Facility Site.
"Architect" means, collectively, Cuningham Hamilton Quiter, P.A., and any
other reputable additional or substitute architect engaged from time to time by
any Lessee in connection with construction of any of the Facilities. Any
requirement in any Operative
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<PAGE> 111
APPENDIX 1
Document that a certificate of the Architect be delivered shall be satisfied by
delivery of certificate(s) from one or more of the foregoing so long as such
certificates collectively satisfy the requirements set forth in such Operative
Documents.
"Architect's Agreement" means the agreements pursuant to which architects,
engineers and other design professionals have agreed with any Lessee to provide
services in connection with any of the Projects.
"Arrangement Fee" means the arrangement fee payable to the Arranger in the
amount set forth in the Arranger Fee Letter.
"Arranger" means BA Leasing & Capital Corporation.
"Arranger Fee Letter" means the letter agreement, dated April 24, 1997,
between the Arranger and Parent.
"Assigned Agreements" means each of the Master Lease, the Lease Supplements,
the Construction Agency Agreements, the Construction Documents, the Bills of
Sale, the Certificates of Acceptance and each other document assigned to the
Administrative Agent as Collateral pursuant to any of the Security Agreements.
"Assumed Rate" means, as of the date of any Advance by a Lender, the Interest
Rate that would have been applicable for purposes of calculating interest on
such Lender's Notes in the event that the Advance Date to which such Advance
relates had occurred on the date specified in the applicable Advance Request.
"Available Commitments" means, as of any date of determination, an amount
equal to the excess, if any, of (a) the applicable Commitment Amount as of such
date minus (b) the aggregate outstanding principal amount of all Loans as of
such date.
"Bank" means Hancock Bank, in its individual capacity and not in its capacity
as Trustee, and any successor or replacement institution appointed to serve in
such capacity.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Bill of Sale" means a bill of sale, substantially in the form of Exhibit I
to the Participation Agreement, to be delivered to the Administrative Agent
pursuant to the provisions of the Participation Agreement.
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<PAGE> 112
APPENDIX 1
"BL Development" means BL Development Corp., a Minnesota corporation.
"BL Utility" means BL Utility Corp., a Minnesota corporation.
"Board" means the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower" means Trustee, not in its individual capacity, but solely in its
trust capacity under the Trust Agreement as the borrower under the Loan
Agreement.
"Building Costs" means, with respect to any Facility, all costs which the
applicable Construction Agent shall be required to pay under the terms of the
Construction Documents for such Facility and all other costs paid or incurred
for land acquisition and development, architectural, engineering and other soft
costs, labor, materials, supplies, machinery, equipment (other than Facility
F,F&E relating thereto) and to contractors, suppliers, builders and materialmen
in connection with such Facility and all professional fees and bonding costs
payable in connection therewith, but specifically excluding all insurance
premiums, working capital of any Lessee and any profit to any Lessee for work
performed by such Lessee.
"Business Day" means any day other than a Saturday or Sunday or other than a
day on which
(a) banks in New York, New York, San Francisco, California, Minneapolis,
Minnesota or Gulfport, Mississippi are permitted or required to be closed;
and
(b) relative to the making, continuing, prepaying or repaying any LIBO Rate
Loans, any day on which banks are not open for dealings in Dollars in the
London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" means all obligations under Capital Leases of
any Person, in each case taken at the amount thereof accounted for as
liabilities in accordance with GAAP.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentally
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<PAGE> 113
APPENDIX 1
thereof having maturities of not more than six months from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of twelve months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case with any commercial bank having capital and surplus in
excess of $300 million, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within one year after the date of
acquisition and (vi) investment funds investing solely in securities of the
types described in clauses (ii) through (v) above.
"Casinos" means, collectively, the Gulfport Casino and the Tunica Casino.
"Casualty" means an event or occurrence in which a Facility or an item of
Facility F,F&E is lost, stolen, totally destroyed, irreparably damaged from any
cause whatsoever, damaged beyond economic repair, or rendered permanently unfit
for normal use for any reason whatsoever (other than obsolescence) or damaged
so as to result in an insurance settlement on the basis of a total loss or a
constructive or compromised total loss, or taken or requisitioned by
Condemnation.
"Casualty Item Amount" means for any item of Facility F,F&E the product of
the applicable Lease Supplement Balance on the date of determination times a
fraction the numerator of which is the Facility F,F&E Cost of such item of
Facility F,F&E subject to a Lease Supplement suffering the Casualty and the
denominator of which is total Facility F,F&E Cost for all Facility F,F&E then
subject to such Lease Supplement.
"Casualty Recoveries" means the proceeds of any recovery in respect of any
Casualty from insurance, a Governmental Authority or otherwise.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. Section Section 9601 et seq., as amended by
the Superfund Amendments and Reauthorization Act of 1986.
"Certificate of Acceptance" means any Certificate of Acceptance, fully
executed by the applicable Lessee, accepting any applicable Facility or any
Facility F,F&E, as the case may be, under the applicable Lease Supplement,
substantially in the form of Exhibit J to the Participation Agreement.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of transactions, of all or
substantially all of the assets of Parent and its Subsidiaries, taken as a
whole; (ii) Parent becomes aware of (by way of a report or any other filing
pursuant to Section 13(d) of the Securities Exchange Act of 1934, proxy, vote,
written
-8-
<PAGE> 114
APPENDIX 1
notice or otherwise) the acquisition by any person or group (within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934,
or any successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Securities Exchange Act of 1934), other than Lyle Berman,
or any immediate family member or descendant or Person controlled by Lyle
Berman, or any trust established for the benefit of Lyle Berman or any member
of the immediate family or descendant of Lyle Berman, in a single transaction
or in a related series of transactions, by way of merger, consolidation or
other business combination or purchase of beneficial ownership (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, or any
successor provision) of 50% or more of the voting stock of Parent on a
fully-diluted basis, or (iii) the first day within any two-year period on which
a majority of the members of the Board of Directors of Parent on the first day
of such period do not continue to be members of the Board of Directors of
Parent.
"Change Orders" shall mean, with respect to any Facility, the change orders
to the Plans and Specifications for such Facility (excluding only on-site
modifications to working drawings necessitated by minor measurement variances
or substitutions of materials or components of equivalent quality).
"Charges" means freight, installation and applicable sales, use or similar
taxes imposed upon an item of Facility F,F&E.
"Claims" means liabilities, obligations, damages, losses, demands, penalties,
fines, claims, actions, suits, administrative and judicial proceedings
(including informal proceedings), judgments, orders, enforcement actions of any
kind and settlements, and any costs, fees, expenses and disbursements
(including legal fees and expenses and costs of investigation which, in the
case of counsel or investigators retained by an Indemnitee, shall be
reasonable) of any kind and nature whatsoever related to any of the foregoing
imposed on, incurred by or asserted against an Indemnitee.
"Closing Date" is defined in Section 2.1 of the Participation Agreement.
"Co-Agents" means, collectively, Societe Generale, The Sumitomo Bank, Limited
and Wells Fargo Bank, National Association.
"Co-Agents Fee" means the fee payable to each Co-Agent in the amount set
forth in each Co-Agents Fee Letter.
"Co-Agents Fee Letter" means each letter agreement, dated September 22, 1997,
between each Co-Agent and the Arranger.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time.
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<PAGE> 115
APPENDIX 1
"Collateral" means all of the Trust Estate now owned or hereafter acquired,
upon which a Lien is purported to be created by the Security Documents.
"Collateral Shortfall Payment" is defined in Section 5.1(c) of the Master
Lease.
"Commitment" means (i) with respect to each Lender, the obligation of the
Lender to make Advances to Trustee at the request of any Lessee in an aggregate
principal amount not to exceed the amount set forth opposite the Lender's name
on Schedule II to the Participation Agreement, and (ii) with respect to
Trustee, the obligation of Trustee to make Advances to any Lessee (to the
extent Trustee receives Advances from the Lenders).
"Commitment Amount" means, subject to Sections 2.7(a) and (b) of the
Participation Agreement, $100,000,000.
"Commitment Fee" is defined in Section 2.12 of the Participation Agreement.
"Commitment Percentage" means, as to any Lender, the initial percentage set
forth opposite such Lender's name under the heading "Commitment Percentage" on
Schedule II to the Participation Agreement and after the initial Advance, the
relative amounts advanced by each Lender.
"Commitment Period" means the period from and including the Closing Date to
but not including the Commitment Termination Date.
"Commitment Termination Date" means March 30, 2002 or such earlier date on
which the Commitments shall terminate as provided in the Operative Documents.
"Completion Date" is defined in Section 3.7 of the Participation Agreement.
"Completed Facility" means a Facility that shall have been fully constructed,
completed and operational prior to becoming Leased Property and for which only
one Construction Advance shall be made. In determining whether a Facility has
been "fully constructed, completed and operational," the conditions set forth
in Section 3.7 of the Participation Agreement shall apply, mutatis mutandis.
"Computation Period" means with respect to Parent and the Obligor
Subsidiaries a period of four consecutive Fiscal Quarters (or such shorter
period commencing on the Closing Date) and ending on the last day of the then
most recently completed Fiscal Quarter.
"Condemnation" means any condemnation, requisition, confiscation, seizure or
other taking or sale of the use, access, occupancy, easement rights or title to
the Leased Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power
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<PAGE> 116
APPENDIX 1
of eminent domain or otherwise, or any transfer made in lieu of any such
proceeding or action. A "Condemnation" shall be deemed to have occurred on the
earliest of the dates that use, occupancy or title vests in the condemning
authority.
"Consolidated Adjusted Cash Balances" means, as of any date of determination,
all amounts which would be included as cash and Cash Equivalents of Parent and
the Obligor Subsidiaries on such date minus the larger of (i) actual cage cash
for all casinos directly owned by Parent or any of the Obligor Subsidiaries or
(ii) $15,000,000.
"Consolidated Adjusted EBITDA" means, for each Computation Period, with
respect to Parent and the Obligor Subsidiaries (i) Consolidated Net Income (or
Loss) for such period, before giving effect to any extraordinary gains or
losses for such period, changes resulting from accounting convention changes
and gains and losses from discontinued operations, plus, (ii) to the extent
deducted in the calculation of Consolidated Net Income (or Loss) for such
period, the sum of (A) Consolidated Interest Expense, (B) any provisions for
federal, state, local and foreign income taxes, (C) depreciation, (D)
amortization expense, and (E) all other non-cash expenses;
provided, however, that in computing Consolidated Adjusted EBITDA for
(x) the first Fiscal Quarter (which may be less than three full calendar
months) in which the Tunica Casino commences operations (the "Commencement
Quarter"), Consolidated Adjusted EBITDA for the Tunica Subsidiaries for such
Fiscal Quarter shall be multiplied by .90 (the product of which being
referred to as the "Initial Commencement Quarter EBITDA"), the product of
which shall be multiplied by four;
(y) the first full Fiscal Quarter following the Commencement Quarter, the
sum of Consolidated Adjusted EBITDA for the Tunica Subsidiaries for such
Fiscal Quarter and the Initial Commencement Quarter EBITDA shall be
multiplied by two; and
(z) the second full Fiscal Quarter following the Commencement Quarter,
the sum of Consolidated Adjusted EBITDA for the Tunica Subsidiaries for such
Fiscal Quarter and the immediately preceding Fiscal Quarter, plus the Initial
Commencement Quarter EBITDA shall be multiplied by 1.333.
"Consolidated Adjusted Funded Debt" means, for any date, Consolidated Total
Funded Debt minus Consolidated Adjusted Cash Balances.
"Consolidated Fixed Charges" means, for each Computation Period (except as
provided in clause (v) below), the sum of (i) Consolidated Interest Expense
payable in cash, plus (ii) capitalized interest accrued by Parent and the
Obligor Subsidiaries for such period, plus (iii) the aggregate amount of all
federal, state, local and foreign income taxes currently due and payable by
Parent and the Obligor Subsidiaries for such period, plus (iv) Maintenance
Capital Expenditures of Parent and the Obligor Subsidiaries which for purposes
of this clause (iv) shall
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not be less than two percent of consolidated gross revenues of such Persons for
the period from the Closing Date through the Final Maturity Date, plus (v) the
aggregate amount of scheduled amortization of all Debt of Parent and the
Obligor Subsidiaries for the next following Computation Period, plus (vi)
without duplication, the aggregate amount of all capital contributions and
payments made by Parent to Stratosphere Corporation under the Standby Equity
Commitment for such period.
"Consolidated Interest Expense" means, for each Computation Period, the
aggregate amount of interest expense of Parent and the Obligor Subsidiaries
deducted in computing Consolidated Net Income (or Loss) for such period.
"Consolidated Net Income (or Loss)" means, for each Computation Period, all
amounts which would be included as net income (or loss) on the consolidated
statement of earnings of Parent and the Obligor Subsidiaries for such period.
"Consolidated Net Worth" means, as of any date of determination, all amounts
(without duplication) which, in accordance with GAAP, would be included under
shareholder's equity on the consolidated balance sheet of Parent and the
Obligor Subsidiaries, less the aggregate amount of all investments (whether
reflected as stock, capital contribution, loan, guaranty, debt or other equity
or debt participation or interest) then made by Parent or any of the Obligor
Subsidiaries in (a) Subsidiaries that are not Obligor Subsidiaries and (b) any
Stratosphere Entity.
"Consolidated Senior Funded Debt" means as of any date the outstanding
principal amount of all Debt of Parent and the Obligor Subsidiaries on a
consolidated basis, but excluding Debt payable to any Person for which Parent
or any of the Obligor Subsidiaries is directly and primarily liable and which
is expressly subordinated to the Obligations.
"Consolidated Total Funded Debt" means as of any date the outstanding
principal amount of all Debt of Parent and the Obligor Subsidiaries on a
consolidated basis.
"Construction" means, with respect to any Facility, the construction and
installation of all Improvements thereon contemplated by the Plans and
Specifications applicable to such Facility.
"Construction Advance" means, as the context may require, each advance of
funds by the Lenders to Trustee pursuant to Section 2.2(a) of the Participation
Agreement and each advance of funds by Trustee to any Lessee pursuant to
Section 2.4(b) of the Participation Agreement, in each case for the purpose of
financing Facility Costs with respect to any Facility including any Completed
Facility.
"Construction Agency Agreement" means, with respect to any Facility (other
than a Completed Facility), the Construction Agency Agreement pertaining to the
Construction of such Facility, to be executed and delivered by and between
Trustee and the applicable Construction Agent, substantially in the form of
Exhibit E to the Participation Agreement.
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APPENDIX 1
"Construction Agency Agreement Supplement" means any duly executed and
delivered Supplement to any Construction Agency Agreement substantially in the
form attached to any Construction Agency Agreement as Exhibit A thereto.
"Construction Agency Collateral" means the "Construction Agency Collateral"
as defined in any Construction Documents Assignment.
"Construction Agency Event of Default" means a "Construction Agency Agreement
Event of Default" as defined in Section 5.1 of any Construction Agency
Agreement.
"Construction Agents" means, collectively, Lessees, in their capacity as
construction agents under the Construction Agency Agreements.
"Construction Documents" means, with respect to any Facility, all
engineering, procurement and construction contracts relating to the design,
engineering, identification, acquisition, construction, installation, testing
and placement into service of such Facility.
"Construction Documents Assignment" means the Assignment of Construction
Documents that is attached to any Construction Agency Agreement as Exhibit B.
"Construction Period" means, with respect to any Facility, the period
commencing on the commencement of construction of such Facility and ending on
the earlier of (i) the Completion Date for such Facility or (ii) the
Construction Termination Date.
"Construction Termination Date" means September 30, 2001.
"Contracts" means, with respect to any Facility, all contracts with providers
of goods and services for or in connection with construction, ownership,
operation and maintenance of such Facility and the Facility Site related
thereto.
"Corporate Trust Department" means the principal corporate trust office of
Trustee, located at One Hancock Plaza; Gulfport, Mississippi 39502, Attention:
Corporate Trust Department, or such other office at which the corporate trust
business of Trustee is administered and which Trustee specifies by notice in
writing to Lessees, Administrative Agent and each Lender.
"CSG" means Bank of America Construction Services Group.
"Debt" means, for any Person, (i) all obligations of such Person for borrowed
money or for the deferred purchase price of property or services and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (ii) all obligations of such Person under any conditional
sale or other title retention agreement relating to property purchased by such
Person, (iii) all indebtedness secured by (or for which the holder of such
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APPENDIX 1
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any property owned by such Person, whether or not such indebtedness
has been assumed by such Person or is limited in recourse, (iv) all Capitalized
Lease Obligations of such Person, (v) all obligations of such Person under
letters of credit issued for the account of such Person whether or not drawn,
(vi) all obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clause (i)
through (v) above, except contingent obligations under the Standby Equity
Commitment, and (vii) all current or past due liabilities of such Person in
respect of unfunded vested benefits under plans covered by Title IV of ERISA.
"Deed of Trust" means, with respect to any Facility and Facility Site related
thereto, the Deed of Trust, Assignment of Rents and Leases and Security
Agreement for such Facility and Facility Site, to be executed and delivered by
and among Trustee and Lessee as trustors, James R. McIlwain individually as
trustee and the Administrative Agent as beneficiary, substantially in the form
of Exhibit G-1 to the Participation Agreement.
"Default" means any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Defaulted Amount" is defined in Section 2.2(d) of the Participation
Agreement.
"Defaulting Lender" is defined in Section 2.2(d) of the Participation
Agreement.
"Disclosure Schedule" means the Disclosure Schedule attached to the
Participation Agreement as Schedule VI.
"Dollars" and "$" mean dollars in lawful currency of the United States of
America.
"Environmental Assessment" means, with respect to either the Tunica Resort
Property, or the Facility Site pertaining to the Gulfport Hotel, an
environmental site assessment (the scope and performance of which meets or
exceeds the then most current ASTM Standard Practice E1527-93 for Environmental
Site Assessments: Environmental Site Assessment Process) of such property.
"Environmental Engineer" means, collectively, ATEC, and any other reputable
additional or substitute environmental engineering firm engaged from time to
time by any Lessee and approved by the Administrative Agent and the Required
Lenders in their sole discretion.
"Environmental Law" means, whenever enacted or promulgated, any applicable
federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, guideline,
administrative or court order, judgment, decree, injunction, code or
requirement or any agreement with a Governmental Authority:
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APPENDIX 1
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation thereof, or any other response thereto), or the regulation or
protection of human health, safety or the environment, including air, water,
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage, recycling,
treatment, generation, discharge, emission, Release or threatened Release,
transportation, processing, handling, labeling, containment, production,
disposal or remediation of any Hazardous Substance, Hazardous Condition or
Hazardous Activity.
in each case as amended and as now or hereafter in effect, and any common law
or equitable doctrine (including injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries (whether personal or property) or damages due to or
threatened as a result of the presence of, exposure to, or ingestion of, any
Hazardous Substance, whether such common law or equitable doctrine is now or
hereafter recognized or developed. Applicable laws include, but are not
limited to, CERCLA; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section Section 7401
et seq.; the National Environmental Policy Act, 42 U.S.C. Section 4321; the
Refuse Act, 33 U.S.C. Section Section 401 et seq.; the Hazardous Materials
Transportation Act of 1975, 49 U.S.C. Section Section 1801-1812; the Toxic
Substances Control Act, 15 U.S.C. Section Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section Section 136 et
seq.; the Safe Drinking Water Act, 42 U.S.C. Section Section 300f et seq.,
each as amended and as now or hereafter in effect, and their state and local
counterparts or equivalents, including any regulations promulgated thereunder.
"Environmental Violation" means any activity, occurrence or condition that
violates or results in non-compliance with any Environmental Law in which
damages and penalties in excess of $2,000,000 may be imposed.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time or any successor federal statute.
"ERISA Affiliate" means each entity required to be aggregated with any
applicable Lessee pursuant to the requirements of Section 414(b) or (c) of the
Code.
"ERISA Group" means Parent and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Parent, are treated as a single employer
under Section 414(b) or (c) of the Code.
"Estimated Completion Date" means, for any Facility, the date specified on
Schedule IV to the Participation Agreement as the applicable Lessee's estimate
of the Completion Date for
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APPENDIX 1
such Facility.
"Event of Default" means a Lease Event of Default, a Construction Agency
Event of Default, or a Loan Event of Default.
"Excluded Amounts" means
(a) all indemnity payments other than Additional Costs and expenses to
which Trustee, the Bank, the Administrative Agent or any Lender (or the
respective successors, assigns, agents, officers, directors or employees of
any such Person) is entitled pursuant to the Operative Documents;
(b) any amounts payable under any Operative Documents to reimburse
Trustee, the Bank, the Administrative Agent or any Lender (including the
reasonable expenses of Trustee, the Bank, the Administrative Agent and any
Lender incurred in connection with any such payment) for performing any of
the obligations of Lessees under and as permitted by any Operative Document;
(c) any insurance proceeds under policies maintained by Trustee, the
Bank, the Administrative Agent or any Lender and not required to be
maintained by any Lessee under the Master Lease and Lease Supplements;
(d) any insurance proceeds (or corresponding amounts with respect to
risks that are self-insured by any Lessee and the amounts of any policy
deductibles) under liability policies payable to Trustee in its individual
capacity, the Administrative Agent or any Lender (or the respective
successors, assigns, agents, officers, directors or employees of the Bank,
the Administrative Agent or of any Lender);
(e) any amount payable in respect of Transaction Costs; and
(f) any payments of interest on payments referred to in clauses (a)
through (e) above.
"Facilities" means, collectively, the Tunica Hotel, Tunica Convention Center,
Tunica Restaurant and Gulfport Hotel as and when and to the extent any one or
more of them shall become subject to a Facility Lease, and includes any
Substitution Facility permitted by Section 7.3 of the Master Lease.
"Facility" means any one of the Facilities.
"Facility Costs" means, with respect to any Facility, the sum of (i) the
aggregate Building Costs for such Facility plus (ii) the aggregate Facility
F,F&E Costs for such Facility, in each case, to the extent funded or reimbursed
with proceeds of Advances.
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APPENDIX 1
"Facility Cost Analysis" is defined in Section 3.3(f) of the Participation
Agreement.
"Facility F,F&E " means, with respect to any Facility subject to a Facility
Lease, equipment (other than Gaming Equipment), Systems, apparatus, furniture,
fixtures, fittings and personal property of every kind and nature whatsoever
purchased, leased, or otherwise acquired by Lessor using the proceeds of the
Advances and now or subsequently attached to, contained in or used or usable in
any way in connection with any operation or letting of such Facility, together
with any substitutions therefor, replacements thereof and additions thereto
from time to time pursuant to the Operative Documents.
"Facility F,F&E Costs" means the invoice cost of each item of Facility F,F&E
plus the contract price for all Systems plus up to an additional twenty percent
(20%) of such Facility F,F&E for Charges (unless, with respect to the contract
price for any System, such Charges are included in such contract price).
"Facility Lease" is defined in Section 2.2 of the Master Lease.
"Facility Schedule" is defined in Section 3.3(f) of the Participation
Agreement.
"Facility Site" means, with respect to any Facility, subject to a Facility
Lease, the parcel of real property on which such Facility is to be located as
described on Exhibit B to the applicable Lease Supplement, together with all
Appurtenant Rights attached thereto.
"Facility Term" is defined in Section 2.3 of the Master Lease.
"Fair Market Sales Value" with respect to the Leased Property or any portion
thereof shall mean, as of the date of the determination, the fair market sales
value as determined by an independent appraiser chosen by the Administrative
Agent (at the direction of the Required Lenders) that would be obtained in an
arm's-length transaction between an informed and willing buyer (other than a
buyer currently in possession) and an informed and willing seller, under no
compulsion to buy or sell, and neither of which is related to Trustee or any
Lessee, for purchase of the Leased Property.
"Final Construction Advance" means, with respect to any Facility, the last
Construction Advance which is permitted to be made with respect thereto,
concurrently with or after the occurrence of the Completion Date therefor.
"Final Maturity Date" means March 30, 2002.
"Financial Covenant Compliance Certificate" means a certificate duly executed
by a Responsible Officer of Parent, substantially in the form of Exhibit P to
the Participation Agreement.
"FIRREA" means the Financial Institution Reform, Recovery and Enforcement Act
of
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APPENDIX 1
1989, as it may be amended from time to time.
"Fiscal Quarter" means any quarter of a Fiscal Year consistent with GAAP.
"Fiscal Year" means any 52 or 53 week period ending on the Sunday in December
or January closest to December 31; any reference to a Fiscal Year with a number
corresponding to any calendar year refers to the Fiscal Year ended on the
Sunday closest to December 31 of such calendar year (e.g., "1996 Fiscal Year"
refers to the Fiscal Year ended on Sunday, December 29, 1996).
"GAAP" means United States generally accepted accounting principles
(including principles of consolidation), in effect from time to time.
"Gaming Authority" means, collectively, the Mississippi Gaming Commission,
the Mississippi State Tax Commission and any other agency of any state, county,
city or other political subdivision of the United States government which has
jurisdiction over the gaming activities of Lessee and its Affiliates at the
Resorts, or any successor to such authority.
"Gaming Equipment" means slot machines and other devices which constitute
gaming devices (as defined in the Gaming Laws), and related equipment.
"Gaming Laws" means the Mississippi Gaming Control Act, Miss. Code Ann.
Section 75-76-1, et seq., and the rules and regulations promulgated
thereunder, together with any local rules, regulations or ordinances applicable
to the conduct of games of chance at the Resorts.
"Gaming Permits" means, collectively, every license, franchise, permit,
registration, finding of suitability, approval or other authorization required
to own, operate and otherwise conduct gaming operations at the Resorts,
including all licenses, registrations, findings of suitability and approvals
granted by the Gaming Authorities and all other applicable Governmental
Authorities.
"Governmental Action" means, with respect to any Resort Property, all
permits, authorizations, registrations, consents, approvals, waivers,
exceptions, variances, orders, judgments, written interpretations, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any Applicable
Law, and shall include all environmental and operating permits and licenses
that are required for the full use, occupancy, zoning and operation of such
Resort Property.
"Governmental Authority" means any foreign, federal, state or local
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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APPENDIX 1
"Ground Lease" means, with respect to any Facility Site, a Ground Lease for
such Facility Site to be executed and delivered by and between Lessor and the
applicable Lessee, substantially in the form of Exhibit G-2 to the
Participation Agreement.
"Guarantors" means, collectively, Parent, each of its Subsidiaries listed on
Schedule I to the Participation Agreement and any other Obligor Subsidiary that
executes and delivers a guaranty (by joinder to the Guaranty or otherwise) in
favor of the Administrative Agent or the Lenders in respect of the Obligations.
"Guaranty" means the Guaranty dated as of the Closing Date, made by the
Guarantors in favor of the Administrative Agent for the benefit of the Lenders
substantially in the form of Exhibit F to the Participation Agreement.
"Gulfport Casino" means the casino owned and operated by Grand Casinos of
Mississippi, Inc. -- Gulfport, a Minnesota corporation, located in Gulfport,
Mississippi.
"Gulfport Hotel" means the hotel facility to contain at least 500 rooms to be
constructed in Gulfport, Mississippi at a site on the North side of Highway 90
across from the Gulfport Casino.
"Gulfport Resort" means the destination gaming resort featuring the Gulfport
Casino, hotels (including the Gulfport Hotel) and other amenities in Harrison
County, Mississippi being developed by Parent and its Affiliates.
"Gulfport Resort Property" means the parcels of real property on which the
Gulfport Resort is located.
"Hazardous Activity" means any activity, process, procedure or undertaking
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition that materially violates or
threatens to materially violate, or that results in or threatens material
noncompliance with, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any petroleum or
petroleum product, explosives, radioactive materials, asbestos,
ureaformaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste, or pollutant, in each case whether
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APPENDIX 1
naturally occurring, man-made or the by-product of any process, that is toxic,
harmful or hazardous to the environment or human health or safety, as defined
under any Environmental Law; or (iii) any substance, material, product,
derivative, compound or mixture, mineral, chemical, waste, gas, medical waste
or pollutant that would support the assertion of any claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law.
"IBO Rate" means, with respect to each LIBO Rate Loan for any Interest
Period, the rate of interest per annum determined by the Administrative Agent
to be the rate at which Dollar deposits in immediately available funds are
offered by the Administrative Agent's Grand Cayman Branch, Grand Cayman B.W.I.
(or such other office as may be designated for such purpose by the
Administrative Agent, whether or not outside the United States), to major banks
in the offshore Dollar interbank market at their request at approximately 11:00
a.m. (New York City time) two Business Days before the first day of the
Interest Period.
"Improvements" means all buildings, structures, fixtures, Facility F,F&E and
other improvements of every kind existing at any time and from time to time
(including those constructed pursuant to any Construction Agency Agreement and
those purchased with amounts advanced by the Lenders pursuant to the
Participation Agreement) on or under any Facility Site or any portion thereof,
together with any and all appurtenances to such buildings, structures or
improvements, including sidewalks, utility pipes, conduits and lines, parking
areas and roadways, and including all Alterations and other additions to or
changes in the Improvements at any time.
"Improvements Deed" means, with respect to any Facility, the Improvements
Deed for such Facility to be executed and delivered by the applicable Lessee to
Trustee, substantially in the form of Exhibit R to the Participation Agreement.
"Indemnified Liabilities" means all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including all fees and expenses of legal counsel) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any Administrative Agent-Related Person in any way relating to or
arising out of any Operative Document or any document contemplated by or
referred to in any Operative Document, or any action taken or omitted by any
Administrative Agent-Related Person under or in connection with any of the
foregoing.
"Indemnitee" means Trustee, in its individual capacity and in its capacity as
Trustee, James R. McIlwain, the Local Trustee, the Bank, each Lender, the
Administrative Agent, each Co-Agent, any additional separate or co-trustee
appointed in accordance with the terms of the Trust Agreement and the
respective successors, assigns, directors, shareholders, partners, officers,
employees and agents of each of the foregoing.
"Indenture" means the Indenture dated as of November 30, 1995, and as amended
by the First Amendment to Indenture
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APPENDIX 1
dated as of May 10, 1996, the Second Amendment to Indenture dated as of
September 16, 1997, and the Third Amendment to Indenture dated as of September
25, 1997, executed by and among Parent, as Issuer, certain Subsidiaries of
Parent, as guarantors, and the Indenture Trustee.
"Indenture Trustee" means Firstar Bank of Minnesota, N.A., as successor by
merger to American Bank National Association, as trustee for the benefit of the
noteholders under the Indenture.
"Initial Construction Advance Date" means, with respect to any Facility, the
date of the initial Construction Advance for such Facility.
"Initial Lessees" means, collectively, BL Resorts I, LLC, a Minnesota limited
liability company, and GCG Resorts I, LLC, a Minnesota limited liability
company.
"Initial Reduction Date" means March 31, 1999.
"Inspecting Engineer" is defined in Section 3.6(c) of the Participation
Agreement.
"Insurance Requirements" means all terms and conditions of any insurance
policy either required by the Master Lease to be maintained by any Lessee or
required by any Construction Agency Agreement to be maintained by any
Construction Agent, and all requirements of the issuer of any such policy.
"Interest Period" means, with respect to any LIBO Rate Loan, (i) initially
the period commencing on (and including) the day on which the LIBO Rate Loan is
made and ending on (but excluding) the last Business Day of the calendar month
in which such Loan is made and (ii) thereafter, each period commencing on (and
including) the last day of the preceding Interest Period and ending on (but
excluding) the last Business Day of the next succeeding calendar month;
provided that, the foregoing provisions relating to Interest Periods are
subject to the following:
(b) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day; and
(c) any Interest Period that would otherwise extend beyond the Final
Maturity Date shall end on the Final Maturity Date.
"Interest Rate" means the rate per annum at which interest accrues
(a) on that portion of a Loan maintained from time to time as an
Alternate Base Rate Loan equal to the Alternate
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APPENDIX 1
Base Rate from time to time in effect; and
(b) on that portion of a Loan maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the LIBO Rate or IBO Rate then
in effect, plus the Applicable Margin.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Investor's Letter" means the Investor's Letter in substantially the form of
Exhibit K to the Participation Agreement.
"Joinder Agreement" means a joinder agreement, substantially in the form of
Exhibit V to the Participation Agreement, to be executed by a wholly-owned
Subsidiary of Parent and delivered to the Administrative Agent pursuant to the
provisions of Section 9.22 of the Participation Agreement.
"Lead Manager" means The Mitsubishi Trust and Banking Corporation.
"Lease Balance" means, as of any date of determination, the sum of the
aggregate outstanding principal amount of the Notes.
"Lease Default" means any event, condition or failure which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" means any event, condition or failure designated as
a "Lease Event of Default" in Article X of the Master Lease.
"Lease Supplement" means, with respect to any Facility, a Lease Supplement
for such Facility as referred to in Section 2.1(a) of the Master Lease, in the
form of Exhibit A to the Master Lease, executed and delivered by the applicable
Lessee to Trustee.
"Lease Supplement Balance" means the product of the Allocated Share of the
applicable Lease Supplement and the Lease Balance.
"Lease Term" is defined in Section 2.3 of the Master Lease.
"Lease Termination Date" means the last day of the Lease Term, or any other
date on which the Master Lease is terminated, including pursuant to Article V
or X of the Master Lease.
"Leased Property" means, as of any date of determination, each of the
Facilities, the related Facility F,F&E and the Facility Sites, in each case to
the extent then subject to the Master Lease and any Lease Supplement.
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APPENDIX 1
"Lender" means a holder of a Note.
"Lender Financing Statements" means UCC financing statements appropriately
completed and executed for filing in the applicable jurisdiction(s) in order to
protect the Administrative Agent's (on behalf of the Lenders) interests under
the Security Documents.
"Lending Office" means, as to any Lender, the office or offices of such
Lender specified as its "Lending Office" on Schedule III of the Participation
Agreement, or such other office as such Lender may from time to time notify the
Borrower and the Agent.
"Lessees" means, collectively, the Initial Lessee and any other wholly-owned
Subsidiary of Parent that becomes a Lessee under the Operative Documents by
execution and delivery of a Joinder Agreement and related documents as provided
in Section 9.22 of the Participation Agreement.
"Lessee Collateral" is defined in Section 14.1 of the Master Lease.
"Lessor" means Trustee as lessor or mortgagee under the Master Lease.
"Lessor Financing Statements" means UCC financing statements appropriately
completed and executed for filing in the applicable jurisdiction(s) in order to
protect Lessor's interest under the Master Lease and the Lease Supplements.
"Lessor Lien" means any Lien on or against any or all of the Facilities, the
Facility F,F&E, the Master Lease, the Trust Estate or any payment of Rent which
results from (a) any act of, or any Claim against, Trustee, in its individual
capacity, any Lender or the Administrative Agent, in its individual capacity,
in any case unrelated to the transactions contemplated by the Operative
Documents, (b) any Tax owed by any such Person, except for any Tax required to
be paid by any Lessee under the Operative Documents, including any Tax for
which such Lessee is obligated to indemnify such Person, or (c) any act or
omission of such Person which is prohibited by the Operative Documents.
"Levee Board Lease" means the Port Facility Lease Agreement, dated as of
December 29, 1993, between BL Development and the Board of Commissioners for
the Yazoo-Mississippi Delta.
"LIBO Rate" means, with respect to each LIBO Rate Loan for any Interest
Period, the interest rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined by the Administrative Agent to be the average of
the rates per annum at which Dollar deposits in immediately available funds are
offered to the Administrative Agent's LIBOR Office in an amount approximately
equal to the amount of the Administrative Agent's LIBO Rate Loan for which such
determination is being made for a period comparable to such Interest Period,
commencing on the first day of such Interest Period by leading banks in the
London Eurodollar
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APPENDIX 1
interbank market at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of the Interest Period. The
Administrative Agent will give notice promptly to Lessees upon determining the
applicable LIBO Rate; provided, that the Administrative Agent's failure to give
such notice will not relieve such Lessees of their obligations relating to any
LIBO Rate Loan. In the event that the Administrative Agent determines that the
LIBO Rate is unavailable for any Interest Period, each LIBO Rate Loan shall
bear interest at the IBO Rate.
"LIBO Rate Loans" means Loans bearing interest by reference to a LIBO Rate or
IBO Rate basis.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such in Schedule III to the Participation Agreement, or such
other office of a Lender designated from time to time by notice from such
Lender to Trustee and the Administrative Agent, whether or not outside the
United States.
"Lien" means any mortgage, deed of trust, pledge, deposit arrangement,
security interest, encumbrance, lien (statutory or otherwise), easement,
servitude or charge of any kind, including, any irrevocable license,
conditional sale or other title retention agreement, any lease in the nature
thereof, or any other right of or arrangement with any creditor to have its
claim satisfied out of any specified property or asset with the proceeds
therefrom prior to the satisfaction of the claims of the general creditors of
the owner thereof, whether or not filed or recorded, or the filing of, or
agreement to execute as "debtor", any financing or continuation statement under
the Uniform Commercial Code of any jurisdiction or any federal, state or local
lien imposed pursuant to any Environmental Law.
"Liquor Authority" means the Mississippi Alcoholic Beverage Commission and
any agency of any state, county, city or other political subdivision of the
State of Mississippi which has jurisdiction over the sale by Lessees and their
Affiliates of alcoholic beverages at the Resorts, or any successor to such
authority.
"Liquor Permits" means, collectively, every license, franchise, permit,
approval, finding of suitability or other authorization required to sell
alcoholic beverages at the Resorts, including all licenses and approvals
granted by the Liquor Authority and all other applicable Governmental
Authorities.
"Loan" is defined in Section 2.1 of the Loan Agreement.
"Loan Agreement" means the Reducing Revolving Loan Agreement, dated as of the
Closing Date, among Trustee, as Borrower, and the Lenders, substantially in the
form of Exhibit B to the Participation Agreement.
"Loan Default" means any event, act or condition which with notice or lapse
of time, or
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APPENDIX 1
both, would constitute a Loan Event of Default.
"Loan Documents" means the Loan Agreement, the Notes, the Security Documents
and all other documents and instruments executed and delivered in connection
with each of the foregoing.
"Loan Event of Default" is defined in Article VI of the Loan Agreement.
"Maintenance Capital Expenditures" means, for each Computation Period, all
capital expenditures of a Person so classified in accordance with GAAP for the
maintenance, repair, restoration or refurbishment of a fixed asset other than
capital expenditures incurred in connection with the construction or
acquisition of a fixed asset before it is placed in service.
"Master Lease" means the Master Lease and Deed of Trust, dated as of the
Closing Date, between Lessor and Lessees, substantially in the form of Exhibit
A to the Participation Agreement.
"Material Adverse Effect" means, with respect to any Lessee or Parent, as the
case may be, any change or changes, effect or effects or condition or
conditions that individually or in the aggregate are or are likely to be
materially adverse to (i) the assets, business, operations or financial
condition of Parent and the Obligor Subsidiaries on a consolidated basis, (ii)
the ability of Parent and the Obligor Subsidiaries on a consolidated basis to
perform their obligations under the Operative Documents to which they are
respectively a party, (iii) the validity or enforceability of any of the
Operative Documents or any rights or remedies under any thereof or (iv) the
value of the Collateral or worth of the Collateral as collateral security.
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $1,000,000.
"May 10, 1996 Documents" means, collectively, (a) that certain Participation
Agreement dated as of May 10, 1996 by and among BL Development, as lessee, the
"Guarantors" named therein, Trustee (both in its individual and trust
capacities), the "Lenders", "Co-Agents" and "Lead Manager" parties thereto and
BA Leasing & Capital Corporation, as "Arranger" and "Agent" and (b) the
"Operative Documents" (as such term is used and defined in the foregoing
described Participation Agreement), in each case either as originally executed
or as the same may from time to time be amended, supplemented, modified,
renewed, extended or supplanted.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
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APPENDIX 1
"Net Proceeds" means all amounts paid in connection with any Casualty or
Condemnation or any sale of the Leased Property pursuant to Lessor's exercise
of remedies under Section 10.2 of the Master Lease, and all interest earned
thereon, less the expense of claiming and collecting such amounts, including
all costs and expenses in connection therewith for which the Lender or Lessor
is entitled to be reimbursed pursuant to the Master Lease.
"Non-Casualty Loss" is defined in Section 9.2(a) of the Master Lease.
"Non-Casualty Recoveries" means the proceeds of any recovery in respect of
any Non-Casualty Loss from insurance, a Governmental Authority or otherwise.
"Non-Defaulting Lender" is defined in Section 2.2(d) of the Participation
Agreement.
"Note" is defined in Section 2.2 of the Loan Agreement.
"Obligations" means all obligations (monetary or otherwise) of each of the
Lessees under the Operative Documents.
"Obligor Subsidiaries" means, collectively, each of the Lessees and
Guarantors (other than Parent).
"Operative Documents" means the following:
(b) the Participation Agreement;
(c) the Notes;
(d) the Master Lease;
(e) each Lease Supplement;
(f) the Trust Agreement;
(g) the Loan Agreement;
(h) the Guaranty;
(i) each Security Agreement;
(j) each Deed of Trust;
(k) each Ground Lease;
(l) each Construction Agency Agreement;
(m) each Construction Agency Agreement Supplement;
(n) each Construction Documents Assignment; and
(o) each Improvements Deed.
"Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, any Operative Document.
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APPENDIX 1
"Ownership Percentage Interest" means the percentage interest of outstanding
shares of capital stock directly or indirectly owned by Parent of a Subsidiary.
"Overdue Rate" means the lesser of (i) the highest interest rate permitted by
Applicable Law and (ii) an interest rate per annum equal to the Interest Rate
plus 2% per annum.
"Parent" means Grand Casinos, Inc., a Minnesota corporation.
"Participating Entity" is defined in Section 6.3(a) of the Participation
Agreement.
"Participation Agreement" means the Participation Agreement, dated as of
September 29, 1997, among Lessees, Guarantors, Trustee, Lenders, Lead Manager,
the Co-Agents and the Arranger and the Administrative Agent.
"Payment Date" means (a) the Final Maturity Date; (b) the date of any payment
(whether or not scheduled) of principal outstanding on a Loan; (c) with respect
to the payment of interest on Loans for which the Interest Rate is determined
by means of the Alternate Base Rate, the last Business Day of each calendar
month; and (d) with respect to the payment of interest on LIBO Rate Loans, the
last day of each applicable Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Periodic Rent" means an amount payable on each Scheduled Payment Date equal
to the aggregate amount of interest and principal, if any, due and payable on
such Scheduled Payment Date on the Notes.
"Permitted Alteration" is defined in Section 7.2(b) of the Master Lease.
"Permitted Contest" means actions taken by a Person to contest in good faith,
by appropriate proceedings initiated timely and diligently prosecuted, the
legality, validity or applicability to the Leased Property or any location
whereon or wherein the Leased Property or any portion thereof are located or to
be located, or any interest therein of any Person of (a) any law, regulation,
rule, judgment, order, or other legal provision or judicial or administrative
requirements, (b) any term or condition of, or any revocation or amendment of,
or other proceeding relating to, any authorization or other consent, approval
or other action by any Governmental Authority or (c) any Lien or Tax, if the
initiation and prosecution of such contest would not: (i) result in, or
materially increase the risk of, the imposition of any criminal liability on
any Indemnitee; (ii) materially and adversely affect the security interests
created by the Operative Documents or the rights and interests of Lessor in or
to any Facility or the right of Lessor, the Administrative Agent or any Lender
to receive payment of all or any portion of the principal of or interest on any
Note, Rent, Lease Balance or any other amount payable under the Operative
Documents; (iii) permit, or pose a material risk of, the sale or forfeiture of,
or
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APPENDIX 1
foreclosure on, any of the Leased Property or (iv) materially and adversely
affect the fair market value, utility or remaining useful life of the Leased
Property or any interest therein or the continued economic operation thereof;
provided, further, that in any event adequate reserves in accordance with GAAP
are maintained by such Person against any adverse determination of such
contest.
"Permitted Liens" means (i) the respective rights and interests of Lessees,
the Lenders and Trustee, as provided in any of the Operative Documents; (ii)
materialmen's, mechanics', workers', artisan's, repairmen's, employees' or
other like Liens securing payment of the price of goods or services rendered in
the ordinary course of business for amounts the payment of which is not overdue
or is being contested pursuant to a Permitted Contest; (iii) Lessor Liens; (iv)
Liens for current Taxes which are not delinquent or the validity of which is
being contested pursuant to a Permitted Contest; (v) the rights of any
sublessee or assignee under a sublease or an assignment permitted by the terms
of the Master Lease; (vi) Liens arising out of judgments or awards not
constituting an Event of Default with respect to which appeals or other
proceedings for review are being prosecuted pursuant to a Permitted Contest;
(vii) with respect to any Facility, Liens securing purchase money or lease
financings incurred in connection with the acquisition of any additional
furniture, fixtures or equipment to be located at such Facility and that is not
Facility F,F&E; and (viii) easements, rights of way and other encumbrances on
title to real property not interfering in any material respect with the rights
of Lessor under the Master Lease and the Lease Supplements.
"Person" means any individual, corporation, partnership, limited liability
company, limited liability partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental authority or any
other legal entity.
"Plan" means an employee benefit or other plan (other than a Multiemployer
Plan) established or maintained by Parent or any member of the ERISA Group and
which is covered by Title IV of ERISA.
"Plans and Specifications" means, with respect to any Facility, the plans
and specifications delivered by any Lessee pursuant to Section 3.3(f) of the
Participation Agreement for the construction of such Facility, as modified from
time to time by Change Orders permitted under Section 2.4(c) of the
Construction Agency Agreement.
"Premium" is defined in Section 2.4(d) of the Loan Agreement.
"Pricing Ratio" means the ratio of Consolidated Adjusted Funded Debt to
Consolidated Adjusted EBITDA.
"Pricing Ratio Certificate" means a certificate duly executed by a
Responsible Officer of Parent, substantially in the form of Exhibit Q to the
Participation Agreement.
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APPENDIX 1
"Prime Construction Contract" means, with respect to any Facility, the
contract between the applicable Construction Agent and the Prime Contractor for
such Facility, as it may be amended from time to time in accordance with the
Construction Agency Agreement.
"Prime Contractor" means Roy Anderson Corp. or such other Person who shall,
with the prior written consent of the Lenders, have been designated by the
applicable Lessee to act as the general contractor for purposes of constructing
any Facility.
"Primary Construction Contracts" is defined in Section 3.4 of the
Construction Agency Agreement.
"Project" means, with respect to any Facility, the construction of such
Facility and the acquisition of the Facility F,F&E relating thereto.
"Property Value" means, as of any date of determination, the aggregate fair
market value of all Leased Property subject to the Master Lease as of such
date, with such value determined by the Administrative Agent based on new or
"validated" Appraisals obtained, at Lessees' expense, by the Administrative
Agent for the purpose of making such determination.
"Purchase Order Assignment" means the Purchase Order Assignment, dated as of
the Closing Date, between Construction Agent and Trustee, substantially in the
form of Exhibit L to the Participation Agreement.
"Qualified Stratosphere Subsidiary" means all Persons that are consolidated
with Stratosphere Corporation for financial reporting purposes in accordance
with GAAP, except any Subsidiary of Stratosphere Corporation that owns, leases
or otherwise controls any assets formerly owned, leased or otherwise controlled
by Parent or any of the Obligor Subsidiaries.
"Reduction Amount" means, with respect to each Reduction Date, $2,500,000.
"Reduction Date" means the Initial Reduction Date and each June 30, September
30, December 31 and March 31 thereafter.
"Release" means any release, pumping, pouring, emptying, injecting, escaping,
leaching, dumping, seepage, spill, leak, flow, discharge, disposal or emission
of a Hazardous Substance.
"Rent" means Periodic Rent and Supplemental Rent.
"Required Alteration" is defined in Section 7.2(a) of the Master Lease.
"Required Lenders" means, as of the date of the determination, Lenders having
aggregate investments in the transactions contemplated by the Operative
Documents (as measured by the outstanding principal amount of the Loans then
outstanding) equal to at least 66 2/3% of all such
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APPENDIX 1
investments.
"Requirements of Law" means, as to any Person, any current or hereinafter
enacted law (statutory or common), treaty, rule or regulation or determination
of an arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Reserve Amount" means, with respect to any Facility for which construction
shall have commenced but shall not have been completed, an amount equal to the
Required Lenders' reasonable estimate (based in whole or in part on statements
of professional opinion from either or both of the applicable Prime Contractor
and Construction Agent for such Facility, delivered for the purpose of making
such estimate) of the then unpaid Building Costs and Facility F,F&E Costs
necessary to complete construction and equipping of such Facility on or before
its Estimated Completion Date.
"Resort Properties" means, collectively, the Gulfport Resort Property and the
Tunica Resort Property.
"Resorts" means, collectively, the Gulfport Resort and the Tunica Resort.
"Responsible Officer" means with respect to Trustee, any officer in its
Corporate Trust Department, with respect to any other Person, the Chairman or
Vice Chairman of the Board of Directors, the Chairman or Vice Chairman of the
Executive Committee of the Board of Directors, the President, the Chief
Financial Officer, any Senior Vice President or Executive Vice President, any
Vice President, any Assistant Vice President, the Secretary, the Treasurer, and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Revolving Advance" means, as the context may require, each advance of funds
by the Lenders to Trustee pursuant to Section 2.2(a) of the Participation
Agreement and each advance of funds by Trustee to any Lessee pursuant to
Section 2.4(b) of the Participation Agreement, in each case for the purpose of
making an advance pursuant to Section 2.2(c) of the Participation Agreement.
"Scheduled Payment Date" means the last day of each Interest Period (or, if
the Loans are bearing interest at the Alternate Base Rate, the last Business
Day of each calendar month) and the Final Maturity Date.
"Securities Act" means the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
"Security Agreement" means, with respect to any Facility and its related
Facility Site and Facility F,F&E, the Security Agreement and Assignment of
Rents and Leases pertaining thereto,
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APPENDIX 1
to be executed and delivered by and between the Borrower and the Administrative
Agent, substantially in the form of Exhibit D to the Participation Agreement.
"Security Documents" means the collective reference to each Security
Agreement, each Deed of Trust, each Ground Lease, the Guaranty, and all other
security documents hereafter delivered to the Administrative Agent granting a
Lien on any asset or assets of any Person to secure the obligations and
liabilities of Trustee under the Loan Agreement and/or under any of the other
Operative Documents.
"Solvent" means with respect to any Person on a particular date, that on such
date (i) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person,
(ii) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business, (iv) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature, and (v) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will
be computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability taking into account any subrogation and
contribution rights.
"Standby Equity Commitment" means the Standby Equity Commitment, dated March
9, 1995, between Parent and Stratosphere Corporation.
"Stratosphere Entities" means, collectively, Stratosphere Corporation,
Stratosphere Gaming Corporation and the Qualified Stratosphere Subsidiaries.
"Sublease" has the meaning set forth in Article IV of the Master Lease.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
more than 50% of the outstanding ownership interests, at the time any
determination is being made, is directly or indirectly owned by such Person, by
such Person and one or more of its Subsidiaries or by one or more of such
Person's Subsidiaries.
"Substitution Facility" is defined in Section 7.3(b) of the Master Lease.
"Supplemental Rent" means any and all amounts, liabilities and obligations (i)
which
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APPENDIX 1
Trustee assumes or agrees or is otherwise obligated or designated to pay under
the Loan Agreement or any other Operative Document (whether or not designated
as Supplemental Rent) to the Administrative Agent, the Lenders or any other
Person, including Additional Costs and damages for breach of any
representations, warranties or agreements made in its fiduciary capacity or
(ii) which any Lessee agrees or is otherwise obligated or designated to pay
(other than Periodic Rent) under the Master Lease or any other Operative
Document (whether or not designed as Supplemental Rent) to Trustee.
"System" means any system identified on Schedule III to any applicable Lease
Supplement, as modified from time to time by Lessees and the applicable Prime
Contractor(s) in conformity with the Operative Documents.
"Taxes" and "Tax" are defined in Section 8.1 of the Participation Agreement.
"Termination Date" is defined in 10.2(e) of the Master Lease.
"Title Insurance Company" means Commonwealth Land Title Insurance Company,
together with such reinsurers with direct access as requested by the
Administrative Agent or other title insurance company or companies as may be
acceptable to the Administrative Agent.
"Transaction Costs" means legal and other fees, costs and expenses incurred
by the Arranger, Trustee, the Administrative Agent and the Lenders in
connection with the consummation and closing of the transactions contemplated
by the Operative Documents, and the preparation, negotiation, execution and
delivery of the Operative Documents, including (i) fees of Trustee and
Trustee's legal counsel; (ii) allocated time charges and expenses of Bank of
America Legal Department, acting as counsel to the Administrative Agent, and
reasonable fees and expenses of Sheppard, Mullin, Richter & Hampton LLP,
special counsel to the Lenders; (iii) costs of the Appraisals, Environmental
Assessments and other required environmental reports and studies, and the
Inspecting Engineer; (iv) all filing and recording fees, title insurance
premiums, escrow charges and other search costs required by the Operative
Documents; (v) an upfront fee payable on the Closing Date to the Administrative
Agent for the account of each Lender and the Co-Agents Fee payable on the
Closing Date to each Co-Agent; and (vi) without duplication of any of the
foregoing, fees owing to the Arranger pursuant to the Arranger Fee Letter and
fees owing to the Administrative Agent pursuant to the Administrative Agent Fee
Letter.
"Trust" is defined in Section 1.1 of the Trust Agreement.
"Trust Agreement" means the Trust Agreement, to be executed and delivered by
and between the Initial Lessees and Trustee, substantially in the form of
Exhibit C to the Participation Agreement.
"Trustee" means Hancock Bank, a Mississippi banking corporation, not in its
individual
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APPENDIX 1
capacity, but solely as Trustee under the Trust Agreement, and any successor or
replacement Trustee expressly permitted under the Operative Documents.
"Trustee Fee Letter" means the letter agreement, dated September 22, 1997,
between the Bank and Parent.
"Trust Estate" means all estate, right, title and interest of Lessor in, to
and under the Leased Property, the Trust Agreement, the Master Lease and all of
the other Operative Documents, including (i) all amounts (other than Excluded
Amounts) of Rent and other payments due or to become due of any kind for or
with respect to the Leased Property or payable under any of the foregoing, (ii)
any or all payments or proceeds received by Lessor after the termination of the
Master Lease with respect to the Leased Property as the result of the sale,
lease or other disposition thereof, (iii) proceeds of the Loans, together with
any other moneys, proceeds or property at any time received by Lessor under or
in connection with the Operative Documents and (iv) the assignment of the Prime
Construction Contract and the Architect's Agreement.
"Tunica Casino" means the dockside barge casino consisting of three barges
situated on the Tunica Resort and all improvements located thereon.
"Tunica Convention Center" means the convention center and exhibition hall
located adjacent to the Grand Veranda Hotel at the Tunica Resort.
"Tunica Hotel" means the hotel facility to contain at least 400 rooms to be
located on a portion of the Tunica Resort Property.
"Tunica Resort" means the destination gaming resort featuring the Tunica
Casino, hotels (including the Tunica Hotel and the hotel commonly referred to
as the Grand Veranda Hotel) and other amenities (including the Tunica
Convention Center and Tunica Restaurant) in Tunica County, Mississippi being
developed by Parent, BL Development and their Affiliates.
"Tunica Resort Property" means the parcels of real property on which the
Tunica Resort is located.
"Tunica Restaurant" means the restaurant facility commonly referred to as
Marceliene's Restaurant, to be located on a portion of the Tunica Resort
Property.
"Tunica Subsidiaries" means, collectively, the Subsidiaries of Parent owning
or leasing any interest in the Tunica Resort.
"UCC Financing Statements" means collectively the Lender Financing Statements
and the Lessor Financing Statements.
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APPENDIX 1
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such
benefits (excluding any accrued but unpaid contributions), all determined as of
the then most recent valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member of the ERISA Group to
the PBGC or any other Person under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
effect in any applicable jurisdiction.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
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<PAGE> 1
EXHIBIT 10.2
Prepared by and when recorded mail to:
[EXECUTION COPY]
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Mark A. Spitzer, Esq.
(213) 620-1780
MASTER LEASE AGREEMENT AND DEED OF TRUST
dated as of September 29, 1997
between
HANCOCK BANK,
not in its individual capacity
except as expressly stated herein
but solely as Trustee, as Lessor,
and
BL RESORTS I, LLC and
GCG RESORTS I, LLC,
as Initial Lessees
ALL RIGHT, TITLE AND INTEREST OF LESSOR UNDER THIS MASTER LEASE AND THE
PROPERTY RIGHTS SUBJECT HERETO HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF BA LEASING & CAPITAL CORPORATION, AS THE
ADMINISTRATIVE AGENT (THE "ADMINISTRATIVE AGENT"), UNDER ONE OR MORE SECURITY
AGREEMENTS, EXECUTED BY LESSOR FROM TIME TO TIME, FOR THE BENEFIT OF THE
ADMINISTRATIVE AGENT AND THE LENDERS REFERRED TO IN SUCH SECURITY AGREEMENT(S).
THIS MASTER LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF
ANY, THAT THIS MASTER LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED
IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS MASTER LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE ORIGINAL EXECUTED "LESSOR'S
COPY", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY THE ADMINISTRATIVE AGENT ON OR FOLLOWING THE SIGNATURE
PAGE THEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL EXECUTED LESSOR'S COPY.
This instrument secures a line of credit to be used primarily for business,
commercial or agricultural purposes and is entitled to the lien protection
provisions in Section 89-1-49 of the Mississippi Code of 1972 as amended.
INDEXING INSTRUCTIONS:
This instrument is to be filed and indexed in the Indefinite Index of the
Chancery Clerk's Office in Tunica County, Mississippi and in the
Indefinite Index of the First Judicial District of the Harrison County Chancery
Clerk's Office,
<PAGE> 2
Gulfport, Mississippi.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS; LESSEE LIABILITY.........................................................1
ARTICLE II MASTER LEASE OF CERTAIN PROPERTY; LEASE TERM..........................................1
2.1. Acceptance and Lease of Facility Sites, Facilities and Facility F,F&E..............1
2.2. Acceptance Procedure................................................................2
2.3. Lease Term; Facility Term...........................................................2
2.4. Title...............................................................................3
ARTICLE III RENT; QUIET ENJOYMENT; NET LEASE......................................................3
3.1. Periodic Rent.......................................................................3
3.2. Supplemental Rent...................................................................3
3.3. Place and Manner of Payment.........................................................3
3.4. Late Payment........................................................................4
3.5. Quiet Enjoyment.....................................................................4
3.6. Net Lease; No Setoff, Etc...........................................................4
3.7. No Bar..............................................................................6
3.8. Intent of the Parties...............................................................6
ARTICLE IV POSSESSION, ASSIGNMENTS AND SUBLEASING................................................7
4.1. Possession, Assignments and Subleases Generally.....................................7
4.2. Additional Provisions regarding Subleases...........................................7
4.3. Space Subleases of Certain Facilities...............................................8
ARTICLE V EARLY PURCHASE OPTION; LEASE TERMINATION..............................................9
5.1. Early Purchase Option - Partial.....................................................9
5.2. Early Purchase Option - Entirety...................................................10
5.3. Lease Termination and Transfer.....................................................10
ARTICLE VI DISCLAIMER AND ASSIGNMENT OF WARRANTIES..............................................10
6.1. Disclaimer of Warranties...........................................................10
6.2. Assignment of Warranties...........................................................11
ARTICLE VII MAINTENANCE AND REPAIR; ALTERATIONS ADDITIONS
AND SUBSTITUTIONS..................................................................12
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
7.1. Maintenance and Repair; Compliance With Law........................................12
7.2. Alterations........................................................................12
7.3. Replacement and Substitution.......................................................13
7.4. Removal............................................................................14
7.5. Maintenance and Repair Reports.....................................................15
ARTICLE VIII USE; UTILITY CHARGES................................................................15
8.1. Use................................................................................15
8.2. Utility Charges....................................................................15
ARTICLE IX CASUALTY; REPLACEMENT; INSURANCE.....................................................16
9.1. Casualty...........................................................................16
9.2. Non-Casualty Losses ...............................................................19
9.3. Required Coverages.................................................................19
9.4. Delivery of Insurance Certificates.................................................21
ARTICLE X LEASE EVENTS OF DEFAULT..............................................................21
10.1. Lease Events of Default............................................................21
10.2. Remedies ..........................................................................24
10.3. Waiver of Certain Rights...........................................................28
10.4. Power of Attorney..................................................................28
10.5. Remedies Cumulative; No Waiver; Consents...........................................29
ARTICLE XI LESSOR'S RIGHT TO CURE...............................................................29
11.1. Lessor's Right to Cure Lessee's Lease Defaults.....................................29
ARTICLE XII WARRANT OF TITLE; EASEMENTS; ADDITIONAL FINANCINGS..................................30
12.1. Warrant of Title...................................................................30
12.2. Grants and Releases of Easements; Lessor's Waivers.................................30
12.3. Additional Financings..............................................................31
ARTICLE XIII LESSOR ASSIGNMENTS..................................................................31
ARTICLE XIV GRANT OF LIEN.......................................................................31
14.1. Grant of Lien .....................................................................31
</TABLE>
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<TABLE>
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14.2. Retention of Title or Proceeds in the Case of Default .............................34
ARTICLE XV MISCELLANEOUS.........................................................................35
15.1. Applicable Law.....................................................................35
15.2. Notices............................................................................35
15.3. Counterparts ......................................................................35
15.4. Severability.......................................................................35
15.5. Additional Lessees.................................................................36
15.6. Successors and Assigns.............................................................36
15.7. Parties in Interest................................................................36
15.8. Limitation of Liability............................................................36
15.9. Captions; Table of Contents........................................................37
15.10. Schedules and Exhibits.............................................................37
15.11. No Merger..........................................................................37
15.12. Joint and Several..................................................................37
</TABLE>
EXHIBIT A - Form of Lease Supplement
APPENDIX 1 - Definitions
<PAGE> 6
Master Lease
MASTER LEASE AGREEMENT AND DEED OF TRUST
This MASTER LEASE AGREEMENT AND DEED OF TRUST (as amended,
supplemented, or otherwise modified from time to time, this " Master Lease"),
dated as of September 29, 1997, is between HANCOCK BANK, not in its individual
capacity, except as expressly stated herein, but solely as Trustee under the
Trust Agreement, as Lessor ("Lessor"), and BL RESORTS I, LLC, a Minnesota
limited liability company, GCG RESORTS I, LLC, a Minnesota limited liability
company, as Initial Lessees ("Initial Lessees") and each additional Lessee that
becomes a party hereto in the manner provided in Section 15.5 (collectively,
together with the Initial Lessees, the "Lessees").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:
ARTICLE II
DEFINITIONS; LESSEE LIABILITY
For all purposes hereof, the capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix 1 to
that certain Participation Agreement, dated as of September 29, 1997 (the
"Participation Agreement"), among Grand Casinos, Inc. a Minnesota corporation,
and certain of its subsidiaries, as Guarantors; the Lessees; Lessor; the
Lenders, Co-Agents and Lead Manager identified therein; and BA Leasing &
Capital Corporation, as Arranger and Administrative Agent. A true copy of such
Appendix 1 is attached hereto and incorporated herein. All obligations imposed
on each "Lessee" in this Master Lease, and any Lease Supplement to which such
Lessee is party, shall be the full recourse liability of such Lessee.
ARTICLE III
MASTER LEASE OF CERTAIN PROPERTY; LEASE TERM
SECTION III.1. Acceptance and Lease of Facility Sites, Facilities and
Facility F,F&E.
(a) For the consideration provided herein and under the Operative
Documents, Lessor agrees to lease and rent to the designated Lessee and the
designated Lessee agrees to lease from
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Master Lease
Lessor, that portion of the Leased Property as described in each Lease
Supplement now or hereafter executed by the designated Lessee and Lessor (each
a "Lease Supplement"), each of which Lease Supplements shall incorporate this
Master Lease by reference and be subject to the terms and conditions as set
forth in this Master Lease and the other Operative Documents. On or before the
Initial Construction Advance Date for any Facility for which the designated
Lessee has requested to execute a Lease Supplement, subject to the terms and
conditions of this Master Lease and the satisfaction or waiver of the
applicable conditions set forth in Article III of the Participation Agreement,
Lessor hereby agrees to accept pursuant to the terms of the Participation
Agreement delivery of a leasehold interest in the Facility Site pertaining to
such Facility, to be delivered by Lessee pursuant to a Ground Lease for such
Facility Site, and simultaneously to demise and sublease to the Lessee
designated for such Facility by the Lease Supplement entered into in connection
therewith, for the corresponding Facility Term, Lessor's interest in such
Facility Site, and Lessee hereby agrees, expressly for the direct benefit of
Lessor, to sublease from Lessor for the Lease Term Lessor's interest in such
Facility Site.
(b) On each Advance Date with respect to any Facility subject to a
Lease Supplement and on each Advance Date with respect to any Facility F,F&E
subject to a Lease Supplement, Lessor, subject to the satisfaction or waiver of
the applicable conditions set forth in Article III of the Participation
Agreement, shall accept under a Certificate of Acceptance such Facility (or
portion thereof) or Facility F,F&E, as the case may be, theretofore delivered,
and simultaneously lease to the Lessee party to the applicable Lease
Supplement, and such Lessee shall lease from Lessor hereunder and under such
applicable Lease Supplement, such Facility or Facility F,F&E, as the case may
be, for the Facility Term.
SECTION III.2. Acceptance Procedure. Each Lessee hereby agrees that
the execution and delivery by such Lessee of this Master Lease (which, if the
Lessee is not an Initial Lessee, may be completed by its execution of a Lease
Supplement) and a Certificate of Acceptance (whether or not simultaneously
delivered) pursuant to Section 3.4(e) or 3.5(b) of the Participation Agreement,
as the case may be (and in each case appropriately completed) shall, without
further act, irrevocably constitute acceptance by such Lessee on behalf of
itself and Lessor of the Facility Site, Facility and Facility F,F&E identified
in such Certificate of Acceptance and the Lease Supplement referred to therein
for all purposes of this Master Lease and such Lease Supplement (collectively,
the "Facility Lease" for such Facility) and the other Operative Documents.
SECTION III.3. Lease Term; Facility Term. The term of this Master
Lease (the "Lease Term") shall commence on the date of execution of this Master
Lease by Lessor and the initial Lessees, and shall expire on the Final Maturity
Date (unless earlier terminated pursuant to the terms hereof). The term of
each Facility Lease (its "Facility Term") shall commence on the date specified
therefor on the corresponding Lease Supplement and Certificate of Acceptance,
and
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Master Lease
shall expire on the Final Maturity Date (unless such Facility Lease, or the
Lease Term, is earlier terminated pursuant to the terms hereof).
SECTION III.4. Title. All Leased Property subject to a Facility
Lease is leased to a Lessee without any representation or warranty, express or
implied, by Lessor and subject to the rights of the parties in possession, the
existing state of title (including Permitted Liens other than Lessor Liens) and
all applicable Requirements of Law. The Lessees shall in no event have any
recourse against Lessor for any defect in or exception to title to any Facility
Site other than to the extent resulting from Lessor Liens.
ARTICLE IV
RENT; QUIET ENJOYMENT; NET LEASE
SECTION IV.1. Periodic Rent. During the Lease Term, on each Payment
Date, each Lessee shall pay to Lessor Periodic Rent for each Facility which it
from time to time leases hereunder in an amount equal to the product of the
Allocated Share for the Lease Supplement to which such Facility pertains and
the aggregate Periodic Rent then due for all Facilities then subject to this
Master Lease.
SECTION IV.2. Supplemental Rent. During the Lease Term, each Lessee
shall pay to Lessor, or to whomever shall be entitled to payment thereof as
expressly provided herein or in any other Operative Document (and Lessor hereby
directs each Lessee, on behalf of Lessor, so to pay any such other Person),
promptly as the same shall become due and payable, Supplemental Rent for each
Facility which it from time to time leases hereunder, in an amount equal to the
product of the Allocated Share for the Lease Supplement to which such Facility
pertains and the aggregate Supplemental Rent then due for all Facilities then
subject to this Master Lease; and, in the event of any failure on the part of
any Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers
and remedies provided for herein or by law or in equity or otherwise in the
case of nonpayment of Periodic Rent. Each Lessee hereby reaffirms its
obligation to pay as Supplemental Rent with respect to each Facility that it
leases hereunder (i) an amount equal to Additional Costs as the same become due
and payable, and (ii) all amounts determined to be due and payable pursuant to
Section 5.1 of the Trust Agreement in accordance with its terms, in each case
multiplied by the Allocated Share applicable to the Lease Supplement to which
such Facility pertains.
SECTION IV.3. Place and Manner of Payment. Subject to Section 3.2,
Rent and all other sums due to Lessor, the Administrative Agent or any Lender
hereunder shall be paid in accordance with Section 2.9 of the Participation
Agreement.
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<PAGE> 9
Master Lease
SECTION IV.4. Late Payment. If any Lessee shall fail to pay any
Periodic Rent when due hereunder, such Lessee shall pay to Lessor, or fail to
pay any Supplemental Rent payable to or on behalf of or for the account of
Lessor, Trustee, any Lender, the Administrative Agent or any other Indemnitee
when due hereunder, such Lessee shall pay to whomever shall be entitled
thereto, in each case as Supplemental Rent, interest at the Overdue Rate on
such overdue amount from and including the due date (not taking into account
any grace period) thereof to but excluding the Business Day of payment thereof.
SECTION IV.5. Quiet Enjoyment. Subject to the provisions of Section
6.1, the rights of Lessor contained in Article X and the other terms of the
Operative Documents to which such Lessee is a party, each Lessee shall
peaceably and quietly have, hold and enjoy each applicable Facility which it
leases hereunder, together with the related Facility Site and Facility F,F&E
for the Facility Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor (other than any Lessee) with respect to
any matters arising from and after the date such Facility Site, Facility and/or
Facility F,F&E become subject to this Master Lease. Such right of quiet
enjoyment is independent of, and shall not affect Lessor's rights otherwise to
initiate legal action to enforce the obligations of such Lessee or any other
Lessee under this Master Lease.
SECTION IV.6. Net Lease; No Setoff, Etc. THIS MASTER LEASE SHALL
CONSTITUTE A NET LEASE AND, NOTWITHSTANDING ANY OTHER PROVISION OF THIS MASTER
LEASE, IT IS INTENDED THAT PERIODIC RENT AND SUPPLEMENTAL RENT PAYABLE
HEREUNDER SHALL BE PAID WITHOUT COUNTERCLAIM, SETOFF, DEDUCTION OR DEFENSE OF
ANY KIND AND WITHOUT ABATEMENT, SUSPENSION, DEFERMENT, DIMINUTION OR REDUCTION
OF ANY KIND, AND EACH LESSEE'S OBLIGATION TO PAY ITS REQUIRED PORTION OF ALL
SUCH AMOUNTS AS PROVIDED HEREIN THROUGHOUT THE LEASE TERM IS ABSOLUTE AND
UNCONDITIONAL. The obligations and liabilities of each Lessee hereunder shall
in no way be released, discharged or otherwise affected for any reason,
including, without limitation, to the maximum extent permitted by law: (a) any
defect in the condition, merchantability, design, construction, quality or
fitness for use of any portion of any Facility Site, Facility or item of
Facility F,F&E, or any failure of any portion of any Facility Site, Facility
or item of Facility F,F&E to comply with all Applicable Laws, including any
inability to use any portion of any Facility Site, Facility or item of Facility
F,F&E by reason of such non-compliance; (b) any damage to, abandonment, loss,
destruction, requisition, taking or contamination of or Release from any
portion of any Facility Site, Facility or item of Facility F,F&E, including
eviction; (c) any restriction, prevention or curtailment of or interference
with any use of any portion of any Facility Site, Facility or item of Facility
F,F&E, including eviction; (d) any defect in title to or rights to any Facility
Site or any Lien on such title or rights or on any Facility Site; (e) the
attachment of any Lien of any third
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<PAGE> 10
Master Lease
party to any portion of any Facility Site, Facility or item of Facility F,F&E;
(f) any prohibition or restriction of or interference with such Lessee's use of
any or all of any Facility Site, Facility or Facility F,F&E by any Person; (g)
any change, waiver, extension, indulgence or other action or omission or breach
in respect of any obligation or liability of or by Lessor, the Administrative
Agent or any Lender; (h) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceedings
relating to such Lessee, any other Lessee, Lessor, the Administrative Agent,
any Lender or any other Person, or any action taken with respect to this Master
Lease by any trustee or receiver of such Lessee, any other Lessee, Lessor, the
Administrative Agent, any Lender or any other Person, or by any court, in any
such proceeding; (i) any claim that any Lessee has or might have against any
Person, including, without limitation, any other Lessee. Lessor, the
Administrative Agent or any Lender; (j) any failure on the part of Lessor to
perform or comply with any of the terms of this Master Lease, any other
Operative Document or of any other agreement whether or not related to the
transactions contemplated by the Operative Documents; (k) any invalidity or
unenforceability or disaffirmance against or by such Lessee or any other Lessee
of this Master Lease or any provision hereof or any of the other Operative
Documents or any provision of any thereof; (l) the impossibility of performance
by such Lessee, Lessor or both; (m) any action by any court, administrative
agency or other Governmental Authority; (n) any restriction, prevention or
curtailment of or any interference with the construction or any use of any
portion of any Facility Site, Facility, or item of Facility F,F&E; or (o) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Lessee shall have notice or knowledge of any of the foregoing.
Except as specifically set forth in Articles IV or X of this Master Lease, this
Master Lease shall be noncancellable by any Lessee for any reason whatsoever,
and each Lessee, to the extent permitted by Applicable Laws, waives all rights
now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Master Lease, or to any diminution, abatement or reduction of
Rent payable by such Lessee hereunder. If for any reason whatsoever this
Master Lease shall be terminated in whole or in part by operation of law or
otherwise, except as expressly provided in Articles IV or X of this Master
Lease, each Lessee shall, unless prohibited by Applicable Laws, nonetheless pay
to Lessor (or, in the case of Supplemental Rent, to whomever shall be entitled
thereto) an amount equal to each Rent payment at the time and in the manner
that such payment would have become due and payable from such Lessee under the
terms of this Master Lease if it had not been terminated in whole or in part,
and in such case, so long as such payments are made and no Lease Event of
Default shall have occurred and be continuing, Lessor will deem this Master
Lease to have remained in effect. Each payment of Rent made by each Lessee
hereunder shall be final and, absent manifest error in the determination of the
amount thereof, no Lessee shall seek or have any right to recover all or any
part of such payment from Lessor, the Administrative Agent or any party to any
agreements related thereto for any reason whatsoever. Each Lessee assumes the
sole responsibility for the condition, use, operation, maintenance and
management of each Facility which it leases hereunder, together with the
related Facility Site and each related item of Facility F,F&E, and
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Master Lease
Lessor shall have no responsibility in respect thereof and shall have no
liability for damage to the property of any Lessee or any subtenant of any
Lessee or any property leased hereunder or subleased to any subtenant of any
Lessee on any account or for any reason whatsoever other than by reason of
Lessor's willful misconduct or gross negligence or breach of any of its
obligations under any Operative Document.
SECTION IV.7. No Bar. Notwithstanding the foregoing, nothing set
forth herein shall bar, limit, preclude, prevent, stay or otherwise adversely
affect any Lessee's right or ability to bring and pursue any action for
monetary damages against Lessor or any other Person for any breach or alleged
breach of its obligations hereunder or under any other Operative Document.
SECTION 3.8. Intent of the Parties. Lessor and each Lessee further
intend and agree that this Master Lease is a conditional sales agreement and
that, for the purpose of securing such Lessee's obligations for the repayment of
the Loans from Lessor and the Lenders, (i) with respect to that portion of the
Leased Property constituting personal property and fixtures (as such terms are
defined in the UCC), this Master Lease and the Lease Supplements executed by
such Lessee, read together, shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the UCC; (ii) the
conveyance provided for hereby shall be deemed to be a grant by such Lessee to
Lessor, for the benefit of the Lenders, of a Lien and security interest in all
of such Lessee's present and future right, title and interest in and to such
portion of each applicable Facility Site, Facility and item of Facility F,F&E,
including but not limited to such Lessee's fee and/or leasehold estate therein
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether in the form of
cash, investments, securities or other property to secure such loans, effective
on the date hereof, to have and to hold such interests in each applicable
Facility Site, Facility and item of Facility F,F&E unto Lessor, for the benefit
of the Lenders and their respective successors and assigns, forever, provided
always that these presents are upon the express condition that, if all amounts
due under this Master Lease and the other Operative Documents shall have been
paid and satisfied in full, then this instrument and the estate hereby granted
shall cease and become void; (iii) the possession by Lessor of notes and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
UCC; and (iv) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of such Lessee shall be deemed to have been
given for the purpose of perfecting such security interest under Applicable
Law. Lessor and each Lessee shall, to the extent consistent with this Master
Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that the security interests and Liens created in each
Facility Site, each Facility and each item of Facility F,F&E in accordance
with this Master Lease will be perfected Liens and security interests with
priority
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Master Lease
over all Liens other than Permitted Liens, under Applicable Law and will be
maintained as such throughout the Lease Term applicable to such Facility Site,
Facility and related Facility F,F&E.
ARTICLE V
POSSESSION, ASSIGNMENTS AND SUBLEASING
SECTION V.1. Possession, Assignments and Subleases Generally. NO
LESSEE SHALL, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, SUBLEASE ALL OR ANY
PART OF ANY FACILITY SITE, FACILITY OR FACILITY F,F&E OR ASSIGN, TRANSFER OR
ENCUMBER ITS RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED
SUBLEASE, ASSIGNMENT, TRANSFER OR ENCUMBERING BY ANY LESSEE SHALL BE NULL AND
VOID, except as provided hereafter in this Article IV or pursuant to a
transaction permitted under Section 5.2 of the Participation Agreement. Any
Lessee may sublease or assign any Facility Site, Facility and related Facility
F,F&E which it leases hereunder, each as an integrated whole, to a wholly-owned
Subsidiary of such Lessee or Parent (each, an "Eligible Transferee"), with
Lessor's and the Required Lenders' prior written consent, which shall not be
unreasonably withheld or delayed, if such sublease or assignment permitted by
this Article IV (a "Sublease" or "Assignment", as the context may require) (a)
is expressly subject (and, in the case of a Sublease, subordinate) to all of the
provisions of this Master Lease and the rights and interests of Lessor and the
Lenders hereunder in respect of the Facility Site, Facility and related Facility
F,F&E covered by such Sublease or Assignment, as the case may be, (b) is made in
compliance with all applicable Gaming Laws and expressly provides that the
Eligible Transferee shall at all times maintain in full force and effect all
applicable Gaming Permits and Liquor Permits, (c) expressly requires the
Facility Site, Facility and related Facility F,F&E subject thereto to be
returned as directed by Lessor or the Required Lenders upon notice to such
Eligible Transferee that an Event of Default exists, (d) expressly prohibits any
further sublease or assignment of the Facility Site, Facility and related
Facility F,F&E subject thereto and (e) expressly provides for automatic
termination at the written request of Lessor or the Required Lenders at or prior
to the earlier of (i) the Final Maturity Date and (ii) the date the Lease Term
is earlier terminated in accordance with the provisions of this Master Lease or
the other Operative Documents unless such Lessee shall have purchased the
related Facility and Facility F,F&E pursuant to Article V. Each Lessee shall
remain directly and primarily liable for its obligations under this Master Lease
notwithstanding the existence of any sublease or any such assignment. All of
any such Lessee's right, title and interest in, to and under such Sublease or
Assignment shall be pledged by such Lessee to Lessor, as collateral for such
Lessee's obligations under this Master Lease, and each such Lessee shall, at its
expense, do any further act and execute, acknowledge, deliver, file, register
and record any further documents which Lessor or any Lender may reasonably
request in order to create, perfect,
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<PAGE> 13
Master Lease
preserve and protect Lessor's security interest in such Sublease or Assignment.
SECTION V.2. Additional Provisions regarding Subleases. In the case
of any Sublease proposed by a Lessee (whether to an Eligible Transferee pursuant
to Section 4.1 or in accordance with Section 4.3), not less than thirty days
prior to the consummation of such Sublease, such Lessee shall deliver to Lessor
each of the following: (i) the identity of the proposed subtenant, establishing
that the proposed subtenant and Sublease satisfy the applicable criteria set
forth in this Article IV, (ii) a copy of the proposed Sublease, and (iii) a
standard and customary non-disturbance and attornment agreement, in form and
substance satisfactory to the Required Lenders for execution and delivery by
Lessor (and which shall contain standard and customary provisions for the
benefit of the subtenant's lenders with respect to the rights of the subtenant
under the Sublease) and, if applicable, the Administrative Agent. Each Sublease
shall contain the following language:
"The Tenant hereunder agrees that this Lease is subject and
subordinate to the lease under which the Landlord hereunder occupies
[insert name of Facility] (the "Overlease", with the landlord under the
Overlease and its successors and assigns in interest to [insert name of
Facility] or this Lease being hereinafter referred to as the
"Overlandlord"), and that in the event of the termination of the
Overlease or in the event the Overlandlord terminates the Landlord's
right of possession under the Overlease (the date on which either such
termination becomes effective being referred to herein as the "Turnover
Date"), the Tenant hereunder (unless this Lease is terminated by the
Overlandlord or the Overlandlord terminates the Tenant's right of
possession under this Lease) shall attorn to the Overlandlord and pay
the Overlandlord all of the rents and other monies required to be paid
by the Tenant hereunder, and perform all of the terms, covenants,
conditions and obligations contained in this Lease [[Insert the
following if the Sublease is a "space" sublease:] , and the
Overlandlord shall recognize Tenant hereunder, and this Lease shall
continue as a direct lease between the Tenant hereunder and
Overlandlord upon all of the terms and conditions hereof]; provided
however, that (x) in no event shall Overlandlord be liable for any act
or omission of any prior landlord (including Landlord); (y) if
Overlandlord shall fail to complete (or elect not to complete) any
improvements, repair or maintenance required to be completed by
Landlord, within a reasonable time after the Turnover Date, Tenant
shall retain any right to terminate its tenancy which the Lease
provides in respect of such a failure; and (z) any liabilities of
Overlandlord hereunder arising after the Turnover Date shall be without
recourse to Overlandlord (other than the interest of the Overlandlord
in the property demised by this Lease.)"
At the request of any such Lessee, Lessor and the Administrative Agent shall
deliver to Lessee,
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Master Lease
for the benefit of the subtenant, within ten Business Days after such Lessee's
request therefor, a non-disturbance and attornment agreement on Lessor's
standard form, duly executed and acknowledged by Lessor and the Administrative
Agent, and such Lessee shall cause such subtenant to execute and acknowledge
such agreement and return fully executed and acknowledged counterparts thereof
to Lessor and the Administrative Agent.
SECTION V.3. Space Subleases of Certain Facilities. Subject to the
conditions set forth above: (a) In the case of the Tunica Hotel, Tunica
Convention Center and the Gulfport Hotel, the applicable Lessees thereof may
sublease space therein, with Lessor's and all of the Lenders' prior written
consent, which shall not be unreasonably withheld or delayed, provided
that the aggregate amount of such subleased space does not exceed 33% of the
aggregate space in any such Facility, and provided that (i) the proposed
subtenant shall be engaged in a business complementary to the business of such
Lessee, and propose to use the subleased space in a manner in keeping with the
standards set forth in this Master Lease, (ii) the character of the business to
be conducted or the proposed use of the subleased space by the proposed
subtenant shall not violate any provision or restriction herein relating to the
use or occupancy of the applicable Facility, (iii) the Sublease contains fair
market rental terms reflective of the then current market rates for comparable
space of similar size being maintained for such business in the applicable
leasing market in which the applicable Facility is located ("Fair Market Rental
Terms"), (iv) the Sublease does not provide for disproportionately skewed rental
payments throughout the term of the Sublease not reflective of Fair Market
Rental Terms and (v) such Lessee is not required to, and there exists no option
in favor of the proposed subtenant which could require Lessee to, perform any
tenant finish improvement work after the later of (x) the Turnover Date (as
defined above) and (y) the Lease Termination Date. (b) In the case of the Tunica
Restaurant, the applicable Lessee thereof may sublease the entirety of such
Facility Site, as an integrated whole, with Lessor's and all of the Lenders'
prior written consent, which shall not be unreasonably withheld or delayed,
provided that (i) each of the conditions set forth in clauses (i) through (v) of
subsection (a) of this Section 4.3 shall be satisfied with respect thereto, (ii)
such Sublease is made in compliance with all applicable Gaming Laws and requires
the subtenant to at all times maintain in full force and effect any applicable
Gaming Permits and Liquor Permits, and (iii) such Sublease expressly prohibits
any further sublease or assignment of the Facility Site, Facility and related
Facility F,F&E subject thereto. Each Lessee shall remain directly and primarily
liable for its obligations under this Master Lease notwithstanding the existence
of any sublease. Each Lessee's right, title and interest in, to and under such
Sublease shall be pledged by such Lessee to Lessor, as collateral for such
Lessee's obligations under this Master Lease, and each such Lessee shall, at its
expense, do any further act and execute, acknowledge, deliver, file, register
and record any further documents which Lessor or any Lender may reasonably
request in order to create, perfect, preserve and protect Lessor's security
interest in such Sublease.
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Master Lease
ARTICLE VI
EARLY PURCHASE OPTION; LEASE TERMINATION
SECTION VI.1. Early Purchase Option - Partial. Subject to the
conditions contained herein, each Lessee shall have the irrevocable option on
any Business Day to purchase any Facility which it then leases hereunder and
the related Facility F,F&E subject to this Master Lease, together with
Lessor's interest in the related Facility Site, as an integrated whole, at a
price equal to the sum of (i) the Lease Supplement Balance relating to such
Facility and related Facility F,F&E, and (ii) all other fees and expenses and
other amounts (including all Supplemental Rent) then due and payable pursuant
to this Master Lease and the other Operative Documents on the date of such
purchase. Such Lessee's exercise of its option pursuant to this Section 5.1
shall be subject to the following conditions:
(a) Such Lessee shall have delivered a written purchase notice
to Lessor and the Administrative Agent not less than thirty (30) days
prior to such purchase, specifying the date of such purchase and the
Facility subject thereto;
(b) No Lease Default or Lease Event of Default shall have
occurred and then be continuing; and
(c) If, after giving effect to such purchase, any Lease
Supplement Balance exceeds the then applicable Property Value of the
Leased Property remaining subject to the applicable Facility Lease (as
determined by new or "validated" Appraisals of all remaining Leased
Property obtained at such Lessee's expense), such Lessee shall prepay
the applicable Lease Supplement Balance in an amount equal to such
excess (any such prepayment being a "Collateral Shortfall Payment").
SECTION VI.2. Early Purchase Option - Entirety. Provided that
Lessees shall have delivered a written purchase notice to Lessor and the
Administrative Agent not less than thirty (30) days prior to their intended
purchase, Lessees shall have the irrevocable option on any Business Day to
purchase all (but not less than all) of the Facilities then leased by the
Lessees hereunder and the Facility F,F&E related thereto, at a price equal to
the sum of (i) accrued and unpaid Rent payable on or before such date; (ii) the
Lease Balance (after giving effect to any payments pursuant to clause (i)); and
(iii) all other fees and expenses and other amounts (including all Supplemental
Rent) then due and payable pursuant to this Master Lease and the other
Operative Documents.
SECTION VI.3. Lease Termination and Transfer. If a Lessee exercises
its option
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Master Lease
pursuant to Section 5.1 then, upon Lessor's and the Administrative Agent's
receipt of all amounts due in connection therewith, Lessor shall release the
purchased Facility and related Facility F,F&E to such Lessee on the date of
such purchase from the Lien created by this Master Lease and, in connection
therewith, transfer all of Lessor's right, title and interest thereto to such
Lessee ("AS IS" and without any representations or warranties and with the
disclaimer set forth in Section 6.1, except that such Facility and Facility
F,F&E is free and clear of Lessor Liens), all at such Lessee's sole cost and
expense. Upon payment in full in cash of all amounts then due and owing
hereunder on the Lease Termination Date (whether pursuant to Section 5.2 or
otherwise), Lessor shall release all of the Leased Property then subject to
this Master Lease on the Lease Termination Date from the Lien created by this
Master Lease and transfer all of Lessor's right, title and interest thereto to
the purchasing Lessee(s) ("AS IS" and without any representations or warranties
and with the disclaimers set forth in Section 6.1, except that such Leased
Property is free and clear of Lessor Liens), all at such Lessees' joint and
several sole cost and expense.
ARTICLE VII
DISCLAIMER AND ASSIGNMENT OF WARRANTIES
SECTION VII.1. Disclaimer of Warranties. EACH LESSEE ACKNOWLEDGES
AND AGREES THAT, ALTHOUGH LESSOR WILL OWN AND HOLD TITLE TO THE FACILITY SITES,
THE FACILITIES AND FACILITY F,F&E WHICH ARE THE SUBJECT OF LEASE SUPPLEMENTS,
SUCH LESSEE IS SOLELY RESPONSIBLE, UNDER THE TERMS OF EACH CONSTRUCTION AGENCY
AGREEMENT WHICH IT ENTERS INTO FOR SUCH FACILITIES, FOR THE DESIGN,
DEVELOPMENT, BUDGETING AND CONSTRUCTION OF EACH SUCH FACILITY AND FACILITY
F,F&E AND ANY ALTERATIONS THERETO. Each Facility Site, the Facilities and
Facility F,F&E are let by Lessor "AS IS" in their present or then condition, as
the case may be, subject to (a) any rights of any parties in possession
thereof, (b) the state of the title thereto existing at the time Lessor
acquired its interest in any Facility Site, Facility or Facility F,F&E, (c) any
state of facts which a physical inspection might show, (d) all Applicable Laws,
and (e) any violations of Applicable Laws which may exist at the commencement
of the term of the applicable Lease Supplement. Each Lessee has examined each
Facility Site which it has leased or proposes to lease hereunder (insofar as
Lessor is concerned) and has found the same to be satisfactory. NEITHER
LESSOR, THE ADMINISTRATIVE AGENT NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE TO ANY FACILITY SITE,
FACILITY OR FACILITY F,F&E OR TO THE VALUE, MERCHANTABILITY, HABITABILITY,
CONDITION, OR FITNESS FOR USE OF THE SAME, OR ANY PART THEREOF, OR ANY OTHER
REPRESENTATION OR
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Master Lease
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY FACILITY SITE,
FACILITY OR FACILITY F,F&E OR ANY PART THEREOF, AND NEITHER LESSOR, THE
ADMINISTRATIVE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR
PATENT DEFECT THEREIN OR THE FAILURE OF ANY FACILITY SITE, FACILITY OR FACILITY
F,F&E, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS, except that
Lessor hereby represents and warrants that each Facility Site, each Facility,
and the Facility F,F&E are and shall be free of Lessor Liens (such Lessor
representation and warranty being made by (x) Bank with respect to any Lessor
Liens attributable to Bank, and (y) Trustee with respect to any Lessor Liens
attributable to Trustee). Each Lessee has been afforded full opportunity to
inspect each Facility Site which it has leased or proposes to lease hereunder,
is satisfied with the results of its inspections and is entering into this
Master Lease solely on the basis of the results of its own inspections, and all
risks incident to the matters discussed in the preceding sentence, as between
Lessor, the Administrative Agent and the Lenders, on the one hand, and such
Lessee, on the other, are to be borne by such Lessee. The provisions of this
Article VI have been negotiated, and, except to the extent otherwise expressly
stated, the foregoing provisions are intended to be a complete exclusion and
negation of any representations or warranties by any of Lessor, the
Administrative Agent or the Lenders, express or implied, with respect to the
Facility Sites, Facilities and Facility F,F&E (or any interest therein), that
may arise pursuant to any law now or hereafter in effect, or otherwise.
SECTION VII.2. Assignment of Warranties. Lessor assigns to each
Lessee, to the extent assignable, all of its interest, if any, in any
warranties, covenants and representations of any manufacturer or vendor of any
item of Facility F,F&E relating to a Facility leased by such Lessee; provided
that such assignment shall be effective only when no Event of Default exists;
and provided, further, that any action taken by such Lessee by reason thereof
shall be at the expense of such Lessee and shall be consistent with such
Lessee's obligations pursuant to this Master Lease.
ARTICLE VIII
MAINTENANCE AND REPAIR;
ALTERATIONS ADDITIONS AND SUBSTITUTIONS
SECTION VIII.1. Maintenance and Repair; Compliance With Law. Without
limiting any Lessee's obligations under Section 5.11 of the Participation
Agreement or Section 3.7 of the Construction Agency Agreement, each Lessee, at
its own expense, shall at all times (a) maintain each of the Facilities which
it leases hereunder in a first class condition (ordinary wear and tear
excepted) and make all necessary repairs thereto, of every kind and nature
whatsoever, whether
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Master Lease
interior or external, ordinary or extraordinary, structural or non-structural
or foreseen or unforeseen, in each case as required by all Requirements of Law,
the standards imposed by insurance policies required to be maintained hereunder
with respect to any such Facility and on a basis consistent with the repair and
maintenance of properties comparable in type and location to such Facility, but
in any case each of such Facilities shall be maintained at least in conformity
with the maintenance and repair guidelines of such Lessee and its Affiliates
for similar property owned or leased by them, and (b) maintain the Facility
F,F&E relating to each such leased Facility in good and safe order, operating
condition and repair (ordinary wear and tear excepted), substantially in
conformance with the maintenance and repair standards and procedures as are set
forth in the manufacturer's manuals pertaining to any applicable Facility F,F&E
and as otherwise required to enforce claims against each vendor or manufacturer
of each item of Facility F,F&E and in compliance in all material respects with
Applicable Law and the standards imposed by insurance policies required to be
maintained hereunder with respect to all such Facility F,F&E, but in any event
such Leased Property shall be maintained at a standard that is no less than the
standard used by such Lessee or any of its Affiliates for similar hotels,
convention centers, restaurants and equipment owned or leased by them.
In addition, such Lessee, at its own expense, shall make all necessary
or appropriate repairs, replacements, substitutions and modifications in
respect of its Leased Property (or any component thereof) which may be required
to keep its Leased Property in the condition required by subsection (a) or (b)
above.
SECTION VIII.2. Alterations.
(a) If any item of Facility F,F&E relating to a Facility or
individual component thereof or, after the Completion Date therefor,
any Facility or individual component thereof, leased by a
Lessee hereunder, is required to be altered, added to, replaced,
improved or modified in order to comply with Applicable Law (a
"Required Alteration"), such Lessee shall notify Lessor and diligently
proceed to make such Required Alteration at its own expense.
(b) Each Lessee, at its own expense, may make any alteration,
addition, replacement, improvement or modification to any
Facility which it leases hereunder or any item of Facility F,F&E
related thereto (a "Permitted Alteration"), or remove any part that
becomes worn out, broken or obsolete, if such Lessee continues to be in
compliance with Section 7.1 and such action, when completed, will be of
such character as not to materially adversely affect (i) the current
fair market value of such Facility or item of Facility F,F&E, (ii) the
originally anticipated use or function thereof, as applicable, and
(iii) the originally anticipated residual value of such Facility or
item of Facility F,F&E. In addition, the Permitted Alteration shall
not cause such Facility or item of
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Master Lease
Facility F,F&E to become suitable for use only by such Lessee.
(c) All Alterations shall be completed in a commercially
reasonable manner and shall not, when completed, violate the
terms of any restriction, easement, condition, covenant or other matter
affecting the applicable Resort Property upon which the corresponding
Facility is located or the Leased Property.
(d) Neither Lessor nor the Administrative Agent need inquire
into or confirm that Alterations were made in conformity with these
requirements.
SECTION VIII.3. Replacement and Substitution.
(a) Facility F,F&E. Any Lessee may replace an item of Facility
F,F&E subject to this Master Lease and relating to a Facility which it leases
hereunder with a replacement item that meets the suitability standards set
forth in Section 9.1(d). Such Lessee may request the replacement of an item of
Facility F,F&E by delivery of a replacement notice to Lessor at least 20 days
prior to the date of the proposed substitution. Upon a permitted substitution
pursuant to this Section 7.3(a), Lessor shall execute and deliver to such
Lessee an assignment of purchase orders and a bill of sale (without
representations or warranties, except that the substituted item is free and
clear of all Lessor Liens) and such other documents as may be required to
release the substituted item from the terms of this Master Lease and all other
Operative Documents, all at such Lessee's expense. Leased items of Facility
F,F&E that have been substituted or replaced by a Lessee pursuant to this
Section 7.3(a) shall become the property of such Lessee, and title thereto
shall automatically vest in such Lessee upon such permitted substitution or
replacement.
(b) Facilities. Subject to the terms and conditions set forth
below, any Lessee shall have the right to substitute a commercial real estate
facility (each, a "Substitution Facility") for a Facility which it leases or
proposes to lease (as contemplated pursuant to the Participation Agreement)
hereunder and related Facility F,F&E (as an integrated whole) then subject to
this Master Lease. Such Lessee's substitution right pursuant to this
subsection (b) shall be subject to the following conditions:
(i) Such Lessee shall have delivered a written notice to
Lessor and the Administrative Agent specifying: (A) its desire
to substitute a Substitution Facility for the substituted Facility and
related Facility F,F&E, (B) a description of the intended Substitution
Facility and (C) the proposed closing date for such substitution (the
"Substitution Date");
(ii) Such Lessee shall have delivered to the Administrative
Agent and the Lenders not less than thirty (30) days prior to the
proposed Substitution Date any and all
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Master Lease
further information regarding the intended Substitution Facility as may
be reasonably required by the Administrative Agent or any Lender
for the purpose of evaluating the intended Substitution Facility and
whether it should be deemed acceptable substitution property for the
substituted Facility;
(iii) any such Substitution Facility shall (A) have the same or
greater Fair Market Sales Value and economic useful life, and
substantially similar utility, as the substituted Facility and (B)
relate, complement or otherwise be materially associated with the
business of Parent and the Obligor Subsidiaries; and
(iv) the Administrative Agent and the Required Lenders shall have
approved the Substitution Facility as qualifying Leased Property
and such Lessee shall have otherwise satisfied such terms and
conditions regarding the inclusion of such Substitution Facility as
Leased Property as may be reasonably required by the Administrative
Agent and the Required Lenders on or before the Substitution Date.
Without in any way limiting the foregoing, such additional terms and
conditions shall include terms and conditions substantially similar to
those set forth in Article III of the Participation Agreement regarding
the making of Construction Advances (including the Initial Construction
Advance) with respect to a Facility and, for such purpose, the
Substitution Facility will be treated as if it were designated as a
Facility under the original terms of the Operative Documents.
Upon a permitted substitution of a Facility pursuant to this Section 7.3(b),
Lessor shall execute such documents as may be required to release the
substituted Facility and Facility F,F&E from the terms of this Master Lease, at
such Lessee's expense. Upon such substitution pursuant to this Section 7.3(b),
the substituted Facility shall become the property of such Lessee, and title
thereto shall automatically vest in Lessee upon such permitted substitution or
replacement.
SECTION VIII.4. Removal. No Required Alteration may be removed or
severed from the applicable Facility or item of Facility F,F&E to which it is
attached (unless no longer required by Applicable Law so long as clauses (i)
and (ii) below are satisfied). A Permitted Alteration to a Facility (or
component thereof) may be removed by the Lessee which leases such Facility at
its expense if (i) it is readily removable without causing material damage to
the applicable Facility or item of Facility F,F&E to which it is attached, (ii)
the removal does not violate Applicable Law and (iii) no Default or Event of
Default is continuing.
SECTION VIII.5. Maintenance and Repair Reports. Each Lessee shall
keep maintenance and repair reports in sufficient detail, and as customary for
owners or operators of hotels or casinos, to indicate the nature and date of
major work done with respect to each Facility which it leases hereunder. Such
reports shall be kept on file by each such Lessee at its offices
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Master Lease
during the Lease Term, and shall be made available to Lessor upon reasonable
request. Each Lessee shall give notice to Lessor and the Administrative Agent
of any Condemnation or Casualty to any Facility which it leases hereunder, the
cost to repair which is reasonably expected by such Lessee to exceed $500,000,
promptly after such Lessee has knowledge thereof.
ARTICLE IX
USE; UTILITY CHARGES
SECTION IX.1. Use. Without limiting any Lessee's obligations under
Section 5.11 of the Participation Agreement or the corresponding Construction
Agent's obligations under Sections 3.6 or 3.7(a) of the Construction Agency
Agreement relating to a Facility leased by such Lessee, each Lessee shall use
and operate the Leased Property leased by it hereunder in compliance with any
and all Applicable Laws. Each Lessee shall procure and maintain in effect all
licenses, registrations, certificates, permits, approvals and consents required
by Applicable Law or any Governmental Authority in connection with the
ownership, delivery, installation, use and operation of the Leased Property
leased by it hereunder. The Leased Property leased by any Lessee hereunder
will at all times be and remain in the possession and control of such Lessee,
subject, however, to Articles IV and X. Each Facility shall be located on the
Facility Site applicable thereto as designated on the corresponding Lease
Supplement, and the Facility F,F&E shall in no event be located outside of (i)
the Resort or Resort Property to which it pertains without prior written notice
to Lessor, (ii) the State of Mississippi without prior written notice to Lessor
and the taking (before such relocation) of all actions necessary to maintain
the perfection of the security interest of Lessor and the Administrative Agent
therein, and (iii) the continental United States.
SECTION IX.2. Utility Charges. Each Lessee shall pay or cause to be
paid all charges for electricity, power, gas, oil, water, telephone, sanitary
sewer service and all other rents and utilities used in or on the Leased
Property which it leases hereunder during the Lease Term. Each such Lessee
shall be entitled to receive any credit or refund with respect to any utility
charge paid by such Lessee and the amount of any credit or refund received by
Lessor on account of any utility charges paid by such Lessee, net of the costs
and expenses reasonably incurred by Lessor in obtaining such credit or refund,
shall be promptly paid over to such Lessee.
ARTICLE X
CASUALTY; REPLACEMENT; INSURANCE
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Master Lease
SECTION X.1. Casualty.
(a) If at any time before the Completion Date for any Facility, such
Facility (each, an "Affected Facility") suffers a Casualty, the Lessees and
Lessor agree that the provisions of the Construction Agency Agreement shall
apply.
(b) If an Affected Facility suffers a Casualty on or after the
Completion Date therefor, the Lessee thereof shall give prompt written notice
of such Casualty (including the date of such occurrence) to Lessor and
pursuant to such notice or in a subsequent written notice will either (i) elect
to purchase the Affected Facility on the next Payment Date at least 60 days
after such Casualty (but in no event later than the Lease Termination Date),
for the related Lease Supplement Balance plus an amount equal to the
corresponding Supplemental Rent then outstanding with respect to all Facilities
then subject to this Master Lease multiplied by the Allocated Share for the
Lease Supplement to which the Affected Facility pertains or (ii) subject to the
conditions set forth below, elect to promptly repair or replace the portions of
the Affected Facility suffering the Casualty. In the event of such a purchase
pursuant to clause (i) above, all Casualty Recoveries held by Lessor shall be
applied on the next following Payment Date in reduction of such Lessee's
obligations to Lessor; and Lessor shall remit to such Lessee any such Casualty
Recoveries which it has received and which remain after reducing the Lease
Balance to zero. In the event of such an election to repair or replace
pursuant to clause (ii) above, such Lessee shall by giving such notice have
agreed and committed to promptly and diligently repair and restore the Affected
Facility in accordance with the Construction Documents and the Plans and
Specifications applicable thereto and in accordance with the terms and
conditions hereof (including those set forth in this Article IX) and of the
applicable Lease Supplement, and shall cause the Completion Date for the
Affected Facility to occur on or before the Construction Termination Date. If
the Lessee of such an Affected Facility does not notify Lessor within 45 days
of the Casualty that it elects to purchase the Facility, then it will be deemed
to have elected to repair or replace pursuant to clause (ii) above. If such
Lessee elects to purchase the Affected Facility, it must pay the purchase price
thereof to Lessor on the next Payment Date at least 60 days after the Casualty
(but in no event later than the Lease Termination Date). The purchase price
for such an Affected Facility shall be the amount of the then outstanding
applicable Lease Supplement Balance(s) relating thereto, plus an amount equal
to the accrued but unpaid interest on the Notes and all other Supplemental Rent
then due and payable under all of the Lease Supplements multiplied by the
Allocated Share for the Lease Supplement to which the Affected Facility
pertains. If such Lessee elects to repair or replace such an Affected
Facility, such Lessee shall be entitled to reimbursement for amounts expended
in connection therewith from the Casualty Recoveries, which proceeds shall be
paid to such Lessee (x) first in accordance with
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Master Lease
Section 9.1(f) and (y) after the proceeds received pursuant to clause (x) have
been used in accordance with this Section 9.1(b), by Lessor, which shall
promptly remit Casualty Recoveries held by it to such Lessee upon delivery by
such Lessee to Trustee of written request for such reimbursement; provided,
however, that (1) if such Lessee elects to purchase the Affected Facility, all
Casualty Recoveries received by Lessor shall be immediately applied by Lessor
in reduction of the purchase price payable hereunder upon written notice of
such election and (2) if not already received by Lessor and an Event of Default
has occurred and is continuing, Lessor may retain such proceeds as cash
collateral (without releasing such Lessee from its obligation under this
Section 9.1(b) to purchase, or to repair or replace, the Affected Facility).
Notwithstanding any other provision of this Section 9.1, a Lessee may elect to
repair or replace pursuant to clause (ii) above, and Lessor is obligated to
release funds therefor, only on the condition that such Lessee deliver to
Lessor documentation and other evidence addressing each of the matters
described in subsections (a) through (i) of Section 3.6 of the Participation
Agreement with respect to the conduct of the proposed repair and/or
replacement, in the forms and at the times contemplated by such Section 3.6,
including, without limitation, certification that the funds available from
Casualty Recovery will be adequate, when taken together with immediately
available funds supplied by such Lessee, to complete such construction, and
that such construction can occur on or prior to the Construction Termination
Date.
(c) If a Casualty occurs with respect to an item or items of Facility
F,F&E subject to this Lease, the Lessee thereof shall (i) give prompt written
notice of such occurrence and the date thereof to Lessor and (ii) either (A)
replace such item or items of Facility F,F&E with respect to which the Casualty
has occurred pursuant to the following provisions of Section 9.1(d) or (B)
purchase such item or items of Facility F,F&E from Lessor, no later than the
next Payment Date occurring at least 60 days after such Casualty (but in no
event later than the Lease Termination Date), at a purchase price equal to the
Casualty Item Amount. The Lease Supplement Balance of the Lease Supplement to
which the item or items of Facility F,F&E were subject shall be reduced, upon
payment by such Lessee, by an amount equal to the Casualty Item Amount.
(d) If any item of Facility F,F&E is to be replaced, no later than
the earlier of (i) 60 days after the occurrence of a Casualty or (ii) the Lease
Termination Date, the Lessee thereof will substitute property meeting the
suitability standards set forth in this Section 9.1(d) for the item of Facility
F,F&E suffering the Casualty. To be suitable as a replacement, such
replacement item of property must be of the same general type, year of
construction (or a later year of construction), function, utility, state of
repair and operating condition as the item of Facility F,F&E suffering the
Casualty, must have a fair market value of not less than the fair market value
(immediately preceding the Casualty
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Master Lease
assuming that such item of Facility F,F&E had been maintained in accordance
with Article VII) of the item of Facility F,F&E suffering the Casualty, and be
free and clear of any Liens other than Permitted Liens. Such Lessee shall
cause a Bill of Sale and a Certificate of Acceptance to be executed and
delivered to Lessor in order to subject such replacement item of Facility F,F&E
to this Master Lease, and upon such execution and delivery and the receipt by
Lessor, the Administrative Agent and the Lenders of (i) a certificate of
insurance in accordance with Section 9.4 evidencing such Lessee's compliance
with the insurance provisions of Section 9.3 with respect to such replacement
item of Facility F,F&E, and (ii) an opinion of counsel to Lessor in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders
to the effect that properly prepared financing statements have been filed and
recorded in all public offices where necessary to perfect the security interest
of Lessor in the replacement item of Facility F,F&E, that the description of
the replacement item of Facility F,F&E is adequate and that no other filing or
recording or giving of notice with or to any other Governmental Authority is
necessary to perfect Lessor's security interest in such replacement item of
Facility F,F&E. Such replacement item of Facility F,F&E shall be deemed an
item of Facility F,F&E for all purposes hereof.
(e) If no Event of Default exists and a Lessee elects to replace any
item of Facility F,F&E leased by it hereunder that has suffered a Casualty,
such Lessee shall be entitled to receive from Lessor the Casualty Recoveries
with respect thereto, to be used to reimburse such Lessee for the cost of
replacement of such item of Facility F,F&E after such Lessee fully applies the
Casualty Recoveries properly received by it in replacement of such item of
Facility F,F&E pursuant to Section 9.1(f). Lessor, subject to the rights of
any insurer insuring such item of Facility F,F&E as provided herein, shall
execute and deliver to any such Lessee, or to its assignee or nominee, a
quitclaim bill of sale (without representations or warranties except that such
item of Facility F,F&E is free and clear of Lessor Liens) for such item of
Facility F,F&E, and such other documents as may be required to release such
item of Facility F,F&E from the terms of this Master Lease, in such form as may
reasonably be requested by such Lessee, provided that all fees, costs and
expenses relating to a substitution as described herein shall be borne by such
Lessee.
(f) All Casualty Recoveries in excess of $2,000,000 in respect of a
Casualty to any Affected Facility or any item of Facility F,F&E shall be paid
directly to Lessor for deposit into the Account, or if paid to a Lessee, such
excess funds shall be immediately paid by such Lessee to Lessor for deposit
into the Account; provided, however, that all such excess funds received by
Lessor in respect of a Casualty to any Affected Facility or any item of
Facility F,F&E occurring before the Completion Date for such Affected Facility
shall be applied by Lessor in accordance with the corresponding Construction
Agency Agreement. Subject to the proviso of the preceding sentence, (i) if an
Event of
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Master Lease
Default exists, Lessor may retain all Casualty Recoveries as cash collateral,
and (ii) if no Event of Default exists, the corresponding Lessee shall be
entitled to apply all Casualty Recoveries in accordance with Section 9.1(b) or
(e), as applicable, and any balance remaining after compliance with Section
9.1(b) or (e), as the case may be, shall be retained by or returned to such
Lessee. Any such Lessee shall not be entitled to any Casualty Recoveries in
excess of $2,000,000 until it applies all amounts received in relation to such
Casualty Recovery equal to such amount in repair or replacement of the affected
item of Facility F,F&E or the Affected Facility, as the case may be.
SECTION X.2. Non-Casualty Losses.
(a) If at any time before the Completion Date for any Facility, such
Facility or an item of Facility F,F&E relating thereto suffers any
condemnation, loss, physical harm or damage not constituting a Casualty (a
"Non-Casualty Loss"), the Lessee thereof and Lessor agree that the provisions
of the corresponding Construction Agency Agreement shall apply.
(b) If any Facility or an item of Facility F,F&E relating thereto
suffers any Non-Casualty Loss on or after the Completion Date for such
Facility, the Lessee thereof shall repair or replace such Facility or Facility
F,F&E, as the case may be.
(c) All Non-Casualty Recoveries in excess of $2,000,000 in respect of
any Non-Casualty Loss to a Facility or an item of Facility F,F&E relating
thereto (including any component thereof) shall be paid directly to Lessor for
deposit into the Account, or if paid to any Lessee, such excess funds shall be
immediately paid by such Lessee to Lessor for deposit into the Account;
provided, however, that all such excess funds received by Lessor in respect of
a Non-Casualty Loss to any Facility or an applicable item of Facility F,F&E
occurring before the Completion Date for such Facility shall be applied by
Lessor in accordance with the corresponding Construction Agency Agreement.
Subject to the proviso of the preceding sentence, (i) if an Event of Default
exists, Lessor may retain all Non-Casualty Recoveries as cash collateral and
(ii) if no Event of Default exists, the Lessee thereof shall be entitled to
apply all Non-Casualty Recoveries in accordance with Lessee's obligations under
Section 9.2(b), and any balance remaining after compliance with Section 9.2(b)
shall be retained by such Lessee (without diminishing such Lessee's other
obligations hereunder). No Lessee shall be entitled to any Non-Casualty
Recoveries in excess of $2,000,000 until it applies all amounts received in
relation to such Casualty Recovery of less than or equal to such amount in
repair or replacement of the affected Facility or item of Facility F,F&E, as
the case may be.
SECTION X.3. Required Coverages. Each Lessee will keep all of the
Facilities leased
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Master Lease
by it and all of the Facility F,F&E related thereto insured by financially
sound and reputable insurers against loss or damage of the kinds and in the
amounts customarily insured against by similar companies engaged in similar
operations and carry such other insurance as is usually carried by such
companies, provided that in any event each such Lessee will maintain:
(a) Comprehensive General Liability Insurance. Combined single
limit insurance against claims for bodily injury, death or
third-party property damage occurring on, in or about each such
Facility and its related Facility F,F&E in an amount at least equal to
$25,000,000 per occurrence with such deductibles as are carried by
similarly situated companies involved in operating similar facilities
and equipment.
(b) Insurance Against "All Risk" of Loss or Damage.
Insurance against "all risk" of loss or damage covering each Facility
and its related Facility F,F&E or any portion thereof included in the
special causes of loss form, including flood and earthquake coverage
if available at commercially reasonable rates, in an amount and with
such deductibles as are carried by companies similar to Lessee and its
Affiliates owning or leasing equipment similar to any of the
Facilities and the related Facility F,F&E; provided, however, that at
no time shall the amount of such coverage be less than one hundred and
ten percent (110%) of the Lease Balance.
(c) Builder's Risk Insurance. During the construction,
procurement and installation (or, if applicable, repair,
replacement or reconstruction) of any Facility, all-risk builders'
insurance in respect of such Facility.
(d) Other Insurance. Such other insurance including workers
compensation and business interruption insurance, in each case
as generally carried by owners of similar facilities and equipment in
the State of Mississippi, in such amounts and against such risks as
are then customary for equipment and property similar in use.
Such insurance shall be written by reputable insurance companies that are
financially sound and solvent and otherwise reasonably appropriate considering
the amount and type of insurance being provided by such companies. In the case
of liability insurance maintained by any Lessee, each policy shall name
Trustee, the Administrative Agent, Lessor and all Lenders, as additional
insures. In the case of property insurance maintained by any Lessee, each
policy shall name Trustee and the Administrative Agent as mortgagee and as
additional loss payee. Each policy referred to in this Section 9.3 (other than
workers compensation insurance) shall provide that: (i) it will not be
canceled or its limits reduced, or allowed to lapse without renewal, except
after not less than 30 days' prior written notice to each additional insured;
(ii) such insurance is primary with respect to any other insurance carried by
or available to Trustee, the Administrative Agent, Lessor and all Lenders;
(iii) the insurer shall waive any right of subrogation, setoff, counterclaim,
or other deduction, whether by attachment or otherwise, against the
Administrative
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Agent or Lessor; and (iv) such policy shall contain a severability of interest
clause providing for coverage of Trustee, the Administrative Agent, Lessor and
each Lender as if separate policies had been issued to each of them. Each
Lessee will notify Trustee and the Administrative Agent promptly of any policy
cancellation, reduction in policy limits, modification or amendment.
SECTION X.4. Delivery of Insurance Certificates. Not less than 30
days prior to the expiration date of the expiring policies which are
required to be maintained pursuant to Section 9.3, and upon written request of
Lessor after a Lease Event of Default, the Lessees shall deliver to Trustee and
the Administrative Agent certificates of insurance satisfactory to the
Administrative Agent evidencing the existence of all insurance required to be
maintained hereunder and setting forth the respective coverages, limits of
liability, carrier, policy number and period of coverage.
ARTICLE XI
LEASE EVENTS OF DEFAULT
SECTION XI.1. Lease Events of Default. The occurrence of any one or
more of the following events, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body, shall constitute
a "Lease Event of Default":
(a) Any payment of Rent or any other payment payable by any
Lessee hereunder or under any other Operative Document shall
not be paid when due and such failure shall continue unremedied for a
period of 3 Business Days;
(b) Any representation or warranty on the part of any Lessee or
any Guarantor contained in any Operative Document or in any
certificate, letter or other writing or instrument furnished or
delivered to Lessor, the Administrative Agent or any Lender or
pursuant thereto, shall at any time prove to have been incorrect in
any material respect when made, deemed made or reaffirmed, as the case
may be;
(c) Parent shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be
performed or observed under Sections 5.2 or 5.16 of the Participation
Agreement or under the Guaranty;
(d) Parent or any other Guarantor shall default in the
performance or observance of any term, covenant, condition or
agreement on its part to be performed or observed
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under the Guaranty;
(e) Any Lessee shall default in any material respect in the
performance or observance of any term, covenant, condition or
agreement on its part to be performed or observed under Section 9.3;
(f) Any Lessee, Parent or any other Guarantor shall default in any
material respect in the performance or observance of any other
term, covenant, condition or agreement on their part to be performed
or observed hereunder or under any other Operative Document (and not
constituting an Event of Default under any other clause of this
Section 10.1), and such default shall continue unremedied for a period
of 30 days after: (i) written notice thereof by Lessor, the
Administrative Agent or any Lender to any Lessee, Parent or any
Guarantor; or (ii) any Lessee or Parent or any other Guarantor has
knowledge thereof;
(g) (i) Any Lessee, or any Guarantor or any Subsidiary that is a
sublessee, assignee or transferee of any Leased Property (each
a "Designated Affiliate"), shall generally fail to pay, or admit in
writing its inability to pay, its debts as they become due, or shall
voluntarily commence any case or proceeding or file any petition under
any bankruptcy, insolvency or similar law or seeking dissolution,
liquidation or reorganization or the appointment of a receiver,
trustee, custodian or liquidator for itself or a substantial portion
of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of any
involuntary petition filed against it in any bankruptcy, insolvency or
similar case or proceeding, or shall be adjudicated bankrupt, or shall
make a general assignment for the benefit of creditors, or shall
consent to, or acquiesce in the appointment of, a receiver, trustee,
custodian or liquidator for itself or a substantial portion of its
property, assets or business; or (ii) corporate action shall be taken
by any Lessee or Designated Affiliate, for the purpose of effectuating
any of the foregoing;
(h) Involuntary proceedings or an involuntary petition shall be
commenced or filed against any Lessee or Designated Affiliate
under any bankruptcy, insolvency or similar law or seeking the
dissolution, liquidation or reorganization of any Lessee or Designated
Affiliate or the appointment of a receiver, trustee, custodian or
liquidator for any Lessee or Designated Affiliate or of a substantial
part of the property, assets or business of any Lessee or Designated
Affiliate, or any writ, judgment, warrant of attachment, execution or
similar process shall be issued or levied against a substantial part
of the property, assets or business of any Lessee or Designated
Affiliate, and such proceedings or petition shall not be dismissed or
stayed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded,
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within 60 days after commencement, filing or levy, as the case may be;
(i) A Plan shall fail to maintain the minimum funding standard
required by Section 412(d) of the Code for any plan year or a
waiver of such standard is sought or granted under Section 412(d), or
a Plan is or shall have been terminated or the subject of termination
proceedings under ERISA, or any Lessee or an ERISA Affiliate has
incurred a liability to or on account of a Plan under Section 4062,
4063, 4064, 4201 or 4204 of ERISA, and there shall result from any
such event or events a Material Adverse Effect;
(j) Any Operative Document or any Lien granted under any
Operative Document shall (except in accordance with its
terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of any
Lessee, or any Guarantor, as the case may be; or any Lessee, any
Guarantor, or any Affiliate of any of them shall, directly or
indirectly, contest in any manner the effectiveness, validity, binding
nature or enforceability thereof; or the Liens securing any Lessee's
or Trustee's obligations under the Operative Documents shall, in whole
or in part, cease to be a perfected first priority Lien, subject only
to Permitted Liens;
(k) Any default (subject to any applicable grace period) occurs
under any other agreement for borrowing money or receiving
credit, in each case individually or in the aggregate equal to or
greater than $10,000,000, under which Parent, any Lessee or any
Guarantor may be obligated as borrower or guarantor;
(l) A final judgment or final judgments for the payment of
money are entered by a court or courts of competent
jurisdiction against Parent, any Lessee or any Guarantor and such
judgment or judgments (to the extent not covered by insurance provided
by a recognized insurance carrier) remain undischarged for a period
(during which execution shall not be effectively stayed) of 30 days,
provided that the aggregate of all such judgments exceeds $10,000,000;
(m) There has occurred any revocation, suspension or loss of any
Gaming Permit of any Lessee or any Affiliate of Lessee (after
the same shall have been obtained) which results in the cessation of
business at either of the Casinos or any other gaming location of any
Lessee or any Affiliate of Lessee for a period of more than 5
consecutive days;
(n) Any Event of Default under and as defined in the Indenture
(or under any documentation evidencing a refinancing or
replacement of the indebtedness created thereunder) has occurred and
is continuing;
(o) Any Construction Agency Event of Default has occurred and is
continuing;
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(p) There shall have occurred a Change of Control;
(q) Parent has materially breached its obligations under the
Standby Equity Commitment Agreement; or
(r) Any "Event of Default" under and as defined in the Levee
Board Lease has occurred and is continuing.
SECTION XI.2. Remedies. If any Lease Event of Default exists and is
continuing, Lessor shall have the rights, options and remedies of a beneficiary
of a deed of trust and secured party at law or in equity and, without limiting
the foregoing, Lessor may, so long as such Lease Event of Default is
continuing, do one or more of the following as Lessor in its sole discretion
shall determine, without limiting any other right or remedy Lessor may have on
account of such Lease Event of Default:
(a) Lessor may, by notice to each Lessee, rescind or terminate
this Master Lease as of the date specified in such notice;
however, (i) no reletting, reentry or taking of possession of the
Leased Property (or any portion thereof) by Lessor will be construed
as an election on Lessor's part to terminate this Master Lease unless
a written notice of such intention is given to the Lessees, (ii)
notwithstanding any reletting, reentry or taking of possession, Lessor
may at any time thereafter elect to terminate this Master Lease for a
continuing Lease Event of Default and (iii) no act or thing done by
Lessor or any of its agents, representatives or employees and no
agreement accepting a surrender of any of the Leased Property shall be
valid unless the same be made in writing and executed by Lessor;
(b) Lessor may (i) demand that the Lessees, and the Lessees shall
upon the written demand of Lessor, return the Facilities then
subject to this Master Lease promptly to Lessor in the manner and
condition required by, and otherwise in accordance with all of the
provisions of, Article VII, and Lessor shall not be liable for the
reimbursement of any Lessee for any costs and expenses incurred by
such Lessee in connection therewith and (ii) without prejudice to any
other remedy which Lessor may have for possession of such Facilities,
and to the extent and in the manner permitted by Applicable Law, enter
upon such Facilities and take immediate possession of (to the
exclusion of Lessees) such Facilities or any part thereof and expel or
remove all Lessees and any other Person who may be occupying such
Facilities, by summary proceedings or otherwise, all without liability
to any Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such
taking or otherwise and, in addition to Lessor's other damages, the
Lessees shall be responsible for all costs and expenses
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incurred by Lessor, the Administrative Agent or the Lenders in
connection with any reletting, including reasonable brokers' fees and
all costs of any alterations or repairs made by Lessor;
(c) Lessor may demand that the Lessees marshall and return the
Facility F,F&E not then incorporated into and made such a part
of any Facility as to become "real property" (as determined in
accordance with Applicable Laws) to a location chosen by Lessor in the
State of Mississippi and Lessees shall, upon written demand of Lessor,
promptly undertake to marshall and return such Facility F,F&E no later
than 30 days from the date of the written demand, or in the
alternative, Lessor may, upon notice to the Lessees, enter upon the
Resort Properties to the extent necessary for the purpose of taking
possession and removing such Facility F,F&E from the Resort
Properties, and Lessor shall not be liable for any cost and expenses,
or direct or consequential damages incurred by any Lessee in
connection therewith;
(d) (i) Lessor may demand, by written notice to the Lessees
specifying a Payment Date (the "Final Rent Payment Date") not
earlier than ten days after the date of such notice, that each Lessee
pay to Lessor, and each Lessee shall pay to Lessor, on the Final Rent
Payment Date (in lieu of Periodic Rent due after the Final Rent
Payment Date), an amount equal to the sum of (A) the aggregate Lease
Supplement Balance for each of its Facility Leases, computed as of the
Final Rent Payment Date, plus (B) an amount equal to all accrued and
unpaid Rent due and payable to and including the Final Rent Payment
Date for all Lease Supplements multipled by the Allocated Share
applicable to the Lease Supplements to which such Lessee is a party,
and upon payment of such amount, and the amount of all other sums due
and payable by Lessees under this Master Lease and the other Operative
Documents (and interest at the Overdue Rate on the amounts payable
under this clause (A) from the Final Rent Payment Date to the date of
actual payment), Lessor shall comply with the transfer provisions of
Section 5.2; or Lessor may sell all or any part of the Leased Property
at public or private sale free and clear of any rights of any Lessee
and without any duty to account to any Lessee with respect to such
action or inaction or any proceeds with respect thereto (except to the
extent required by clause (ii) below if Lessor shall elect to exercise
its rights thereunder), in which event the obligation of the Lessee
thereof to pay its required share of Periodic Rent hereunder with
respect thereto for periods commencing after the date of such sale
shall be terminated or proportionately reduced, as the case may be;
and (ii) the Lessee of such sold Leased Property shall pay to Lessor,
on the date of such sale (in lieu of Periodic Rent due for periods
commencing on or after the Payment Date coinciding with such date of
sale (or, if the sale date is not a Payment Date, the Payment Date
next preceding the date of such sale)), an amount equal to (A) the
excess, if any, of (1) the aggregate Lease Supplement Balance for each
of its Facility Leases, computed as of such Payment Date (including
all
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Rent due and unpaid to and including such Payment Date), over (2) the
net proceeds of such sale (that is, after deducting all costs and
expenses incurred by Lessor, the Administrative Agent and the Lenders
incident to such conveyance, including repossession costs, brokerage
commissions, prorations, transfer taxes, fees and expenses for
counsel, title insurance fees, survey costs, recording fees, and any
repair costs); plus (B) interest at the Overdue Rate on the
foregoing amount from such Payment Date until the date of payment;
(e) Lessor may, at its option, elect not to terminate this Master
Lease and continue to collect all Periodic Rent, Supplemental
Rent, and all other amounts due Lessor (together with all costs of
collection) and enforce each Lessee's obligations under this Master
Lease as and when the same become due, or are to be performed, and at
the option of Lessor, upon any abandonment of any Leased Property by
the Lessee thereof or re-entry of same by Lessor, Lessor may, in its
sole and absolute discretion, elect not to terminate this Master Lease
and may make the necessary repairs in order to relet the Leased
Property, and relet the Leased Property or any part thereof for such
term or terms (which may be for a term extending beyond the Lease
Term) and at such rental or rentals and upon such other terms and
conditions as Lessor in its reasonable discretion may deem advisable;
and upon each such reletting all rentals actually received by Lessor
from such reletting shall be applied to Lessee's obligations hereunder
and the other Operative Documents in such order, proportion and
priority as Lessor may elect in Lessor's sole and absolute discretion.
If such rentals received from such reletting of any Facility during
any period are less than the Rent with respect to the Leased Property
to be paid during that period by the Lessee thereof hereunder, such
Lessee shall pay any deficiency, as calculated by Lessor, to Lessor on
the next Payment Date, it being understood that upon payment in full
of the Lease Balance and all other amounts due and payable under the
Operative Documents, Lessor will transfer possession of the Leased
Property to the respective Lessees thereof in accordance with Section
5.3, but subject to any existing leases entered into pursuant to this
paragraph (e);
(f) Unless the Leased Property has been sold in its entirety,
Lessor may, whether or not Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under subsection
(b), (c) or (d) of this Section 10.2 with respect to the Leased
Property or portions thereof, demand, by written notice to the Lessees
thereof specifying a date (a "Termination Date") not earlier than 10
days after the date of such notice, that the Lessees thereof purchase,
on such Termination Date, the Leased Property (or the remaining
portion thereof) in accordance with the provisions of Section 5.2;
(g) Without prejudice to or effect upon any other Facility Lease
hereunder, or the enforceability of the terms of this Master
Lease, Lessor may, by notice to the Lessee
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thereof, exercise any of the remedies provided in paragraphs
(a) through (f), (j) and (m) (including without limitation
termination, repossession, re-entry, declaration of a Final Rent
Payment Date with respect to the Lease Supplement Balance thereof,
mitigation, required purchase, receivership or foreclosure) with
respect solely to any one or more of the Facility Leases designated by
Lessor, if an Event of Default has occurred by reason of an event or
omission relating particularly to one or more of the Facilities
subject to such designated Facility Leases;
(h) Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate
court action, either at law or in equity, to enforce the terms hereof
or to recover damages for the breach hereof. Separate suits may be
brought to collect any such damages for any period(s), and such suits
shall not in any manner prejudice Lessor's right to collect any such
damages for any subsequent period(s), or Lessor may defer any such
suit until after the expiration of the Lease Term, in which event such
suit shall be deemed not to have accrued until the expiration of the
Lease Term;
(i) Lessor may retain and apply against Lessor's damages
all sums which Lessor would, absent such Lease Event of Default, be
required to pay to, or turn over to, any Lessee pursuant to the terms
of this Master Lease;
(j) If a Lease Event of Default shall have occurred and be
continuing, Lessor, as a matter of right and without notice to
any Lessee, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers of the Leased
Property, or any of it, and each Lessee hereby irrevocably consents to
any such appointment. Any such receiver(s) shall have all of the
usual powers and duties of receivers in like or similar cases and all
of the powers and duties of Lessor in case of entry, and shall
continue as such and exercise such powers until the date of
confirmation of the sale of such Leased Property unless such
receivership is sooner terminated;
(k) To the maximum extent permitted by law, each Lessee hereby
waives the benefit of any appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale of the Leased
Property or any interest therein;
(l) Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby
and to exercise all rights and powers under this instrument or under
any of the other Operative Documents or other agreement or any laws
now or hereafter in force, notwithstanding some or all of the
obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, security agreement, pledge, lien, assignment or
otherwise. Neither the acceptance of this
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Master Lease
instrument nor its enforcement, shall prejudice or in any
manner affect Lessor's right to realize upon or enforce any other
security now or hereafter held by Lessor, it being agreed that Lessor
shall be entitled to enforce this instrument and any other security
now or hereafter held by Lessor in such order and manner as Lessor may
determine in its absolute discretion. No remedy herein conferred upon
or reserved to Lessor is intended to be exclusive of any other remedy
herein or by law provided or permitted, but each shall be cumulative
and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every power
or remedy given by any of the Operative Documents to Lessor or to
which it may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed
expedient by Lessor. In no event shall Lessor, in the exercise of the
remedies provided in this instrument (including in connection with the
assignment of rents to Lessor, or the appointment of a receiver and
the entry of such receiver on to all or any part of either Resort
Property), be deemed a "mortgagee in possession," and Lessor shall not
in any way be made liable for any act, either of commission or
omission, in connection with the exercise of such remedies; or
(m) An action of deed of trust foreclosure as now provided by
Section 89-1-55 of the Mississippi Code of 1972, as amended or
other appropriate proceedings now or hereafter prescribed by law, may
forthwith be commenced and prosecuted to judgment, execution and sale
with respect to all or any portion of the Leased Property, for the
collection of the whole amount of the Lease Balance, together with all
fees, costs and expenses of such proceedings, including reasonable
attorney's fees and expenses. And all errors in such proceedings,
together with any stays of or exemptions from execution, or extensions
of time of payment, which may be given by any Applicable Laws now in
force, or which may be enacted hereafter, are hereby forever waived
and released.
Amounts received by Lessor from the Account will be applied against the
liabilities of Lessees hereunder, in any order of application that Lessor may
in its sole discretion elect. If, pursuant to the exercise by Lessor of its
remedies pursuant to this Section 10.2, the Lease Balance and all other amounts
due and owing from the Lessees under this Master Lease and the other Operative
Documents have been paid in full, then Lessor shall remit to the Lessees any
excess amounts received by Lessor.
SECTION XI.3. Waiver of Certain Rights. If this Master Lease, or any
Facility Lease, shall be terminated pursuant to Section 10.2, each Lessee
waives, to the fullest extent permitted by law, (a) any notice of re-entry or
the institution of legal proceedings to obtain re-entry or possession; (b) any
right of redemption, re-entry or repossession; (c) the benefit of any laws now
or hereafter in force exempting property from liability for rent or for debt or
limiting Lessor with respect to the election of remedies; and (d) any other
rights which might otherwise limit or
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modify any of Lessor's rights or remedies under this Article X.
SECTION XI.4. Power of Attorney. Each Lessee unconditionally and
irrevocably appoints Lessor as its true and lawful attorney-in-fact, with full
power of substitution, to the extent permitted by Applicable Laws, in its name
and stead and on its behalf, for the purpose of effectuating any sale,
assignment, transfer or delivery hereunder, if a Lease Event of Default occurs,
whether pursuant to foreclosure or power of sale or otherwise, and in
connection therewith to execute and deliver all such deeds, bills of sale,
assignments, releases (including releases of this Master Lease on the records
of any Governmental Authority) and other proper instruments as Lessor may
reasonably consider necessary or appropriate. Each Lessee ratifies and
confirms all that such attorney or any substitute shall lawfully do by virtue
hereof. If requested by Lessor or any purchaser, each Lessee shall ratify and
confirm any such lawful sale, assignment, transfer or delivery by executing and
delivering to Lessor or such purchaser, all deeds, bills of sale, assignments,
releases and other proper instruments to effect such ratification and
confirmation as may be designated in any such request.
SECTION XI.5. Remedies Cumulative; No Waiver; Consents. To the
extent permitted by, and subject to the mandatory requirements of, Applicable
Laws, each and every right, power and remedy herein specifically given to
Lessor or otherwise in this Lease shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any right, power or remedy. No delay or
omission by Lessor in the exercise of any right, power or remedy or in the
pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of any Lessee or be an
acquiescence therein. Lessor's consent to any request made by any Lessee shall
not be deemed to constitute or preclude the necessity for obtaining Lessor's
consent, in the future, to all similar requests. No express or implied waiver
by Lessor of any Lease Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Lease Event of Default. To the extent
permitted by Applicable Laws, each Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise that may require Lessor to sell,
lease or otherwise use any Facility Site, Facility or Facility F,F&E in
mitigation of Lessor's damages upon the occurrence of a Lease Event of Default
or that may otherwise limit or modify any of Lessor's rights or remedies under
this Article X.
ARTICLE XII
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LESSOR'S RIGHT TO CURE
SECTION XII.1. Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, upon two (2) Business Days prior notice (except that in any
circumstance in which there is a risk of imminent harm to any Person or
property or any possibility of criminal liability to any Lender, no notice
shall be required), without waiving or releasing any obligation or Lease Event
of Default, may (but shall be under no obligation to) remedy any Lease Default
or Lease Event of Default for the account and at the sole cost and expense of
the Lessees, including the failure by any Lessee to maintain the insurance
required by Article IX, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of any Lessee, enter upon
the Leased Property for such purpose and take all such action thereon as may be
necessary or appropriate therefor. No such entry shall be deemed an eviction
of any Lessee. All reasonable out-of-pocket costs and expenses so incurred
(including fees and expenses of counsel including allocated time charges of
internal counsel) together with interest thereon at the Overdue Rate from the
date on which such sums or expenses are paid by Lessor, shall be paid by the
Lessees to Lessor on demand.
ARTICLE
WARRANT OF TITLE; EASEMENTS; ADDITIONAL FINANCINGS
SECTION XIII.1. Warrant of Title. Nothing contained in this Master
Lease shall be construed as constituting the consent or request of Lessor,
expressed or implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to any Facility Site or any part thereof. NOTICE IS HEREBY
GIVEN THAT NEITHER LESSOR, THE ADMINISTRATIVE AGENT, BANK NOR ANY LENDER IS OR
SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO ANY LESSEE, OR TO ANYONE HOLDING THE LEASED PROPERTY OR ANY PART
THEREOF THROUGH OR UNDER ANY LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR
ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
LESSOR OR ANY LENDER IN AND TO THE LEASED PROPERTY.
SECTION XIII.2. Grants and Releases of Easements; Lessor's Waivers.
Provided that no Lease Event of Default shall have occurred and be continuing
and subject to the provisions of Articles VII, IX and X, Lessor hereby consents
in each instance to the following actions by any Lessee, in the name and stead
of Lessor, but at such Lessee's sole cost and expense (and, if necessary to
effectuate any such action, Lessor will execute and deliver such consents,
releases,
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waivers, subordinations and other documents reasonably requested by such Lessee
in connection therewith): (a) the granting of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the use, repair, or maintenance of any of
the Leased Property leased by such Lessee as herein provided or that do not
materially impair the value, utility or remaining useful life of such Leased
Property; (b) the release of existing easements or other rights in the nature
of easements which are for the benefit of any of the Leased Property; (c) if
required by applicable Governmental Authority in connection with the
construction, the dedication or transfer of unimproved portions of any of the
Leased Property for road, highway or other public purposes; and (d) the
execution of amendments to any covenants and restrictions affecting any of the
Leased Property; provided, however, that in each case (i) such grant, release,
dedication, transfer or amendment does not impair the value, utility or
remaining useful life of such Leased Property, (ii) such grant, release,
dedication, transfer, annexation or amendment is reasonably necessary in
connection with the use, maintenance, alteration or improvement of such Leased
Property, (iii) such grant, release, dedication, transfer, annexation or
amendment will not cause such Leased Property or any portion thereof to fail to
comply in any respect with the provisions of this Master Lease or any other
Operative Documents and all Requirements of Law (including, without limitation,
all applicable zoning, planning, building and subdivision ordinances, all
applicable restrictive covenants and all applicable architectural approval
requirements); (iv) all governmental consents or approvals required prior to
such grant, release, dedication, transfer, annexation or amendment have been
obtained, and all filings required prior to such action have been made; (v)
such grant, release, dedication, transfer, annexation or amendment will not
result in any down-zoning of such Leased Property or any portion thereof or a
material reduction in the maximum density or development rights available to
the applicable Resort Property under all Requirements of Law; (vi) each Lessee
shall remain obligated under this Master Lease and under any instrument
executed by any Lessee consenting to the assignment of Lessor's interest in
this Master Lease as security for indebtedness, in each such case in accordance
with their terms, as though such grant, release, dedication, transfer,
annexation or amendment had not been effected and (vii) such Lessee shall pay
and perform any obligations of Lessor under such grant, release, dedication,
transfer, annexation or amendment.
SECTION XIII.3. Additional Financings. Without limiting the
obligations of each Lessee set forth in Article VII, Lessor acknowledges the
rights of the Lessees thereof to acquire, finance and secure under the UCC and
other Applicable Laws, inventory, furnishings, furniture, equipment, machinery,
leasehold, and improvements located at the Facilities and Facility Sites.
ARTICLE XIV
LESSOR ASSIGNMENTS
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Master Lease
All or any of the right, title or interest and obligations of Lessor
in and to this Master Lease and the rights, benefits, advantages and
obligations of Lessor hereunder, including the rights to receive payment of
rental or any other payment hereunder, and the rights, titles and interests in
and to the Facility Sites, Facilities and Facility F,F&E, may be assigned or
transferred by Lessor only in accordance with the provisions set forth in the
Trust Agreement.
ARTICLE XV
GRANT OF LIEN
SECTION XV.1. Grant of Lien. Title to the Facility Sites, Facilities
and Facility F,F&E is (or shall be, as the case may be) held by Lessor
as collateral security for the obligations of the Lessees hereunder and under
the Operative Documents to which any Lessee is a party until such time as all
of the Lessees have fulfilled all of their obligations hereunder and under such
Operative Documents. Each Lessee hereby assigns, grants and pledges to Lessor
and the Lenders a security interest and Lien in all of its right, title and
interest, whether now or hereafter existing or acquired, in, to and under (a)
each Facility Site, (b) each Facility, (c) all Facility F,F&E, in each case, to
the extent the same become subject to this Master Lease, (d) each of the items,
accounts and agreements listed in Section 2.1 of the Security Agreements, and
(e) the proceeds of the foregoing (collectively, the "Lessee Collateral"), to
secure the payment of all sums due hereunder and under the Operative Documents
to which any Lessee or any Guarantor is a party and the performance of all
obligations hereunder and the other Operative Documents to which any Lessee or
any Guarantor is a party.
As additional security for the Rent, the Lease Balance and all other
sums owed to Lessor by any Lessee hereunder and under the other Operative
Documents to which it is a party, each Lessee does hereby grant, bargain, sell,
transfer and convey unto James McIlwain, trustee (together with his successors
and assigns, the "Local Trustee"), whose address is One Hancock Plaza,
Gulfport, Harrison County, Mississippi, his successors in trust and assigns,
for the benefit of the Lessor, the Lenders and the Administrative Agent, all of
such Lessee's right, title and interest in and to each Facility Site, each
Facility and all Facility F,F&E, in each case, to the extent the same become
subject to this Master Lease, including, without limitation, all buildings,
structures and other improvements to the extent any of the foregoing constitute
interests in real property, and all fixtures and other property now or
hereafter attached to or affixed to any such buildings, structures or other
improvements to the extent any of the foregoing constitute interests in real
property, and any additions and alterations thereto or replacements thereof,
now or hereafter built, constructed or located upon any Facility Site to the
extent any of the foregoing constitute interests in real property, all rents,
additional rents, issues, income, revenues,
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Master Lease
distributions, royalties and profits now or in the future payable in respect of
any applicable Facility and related Facility F,F&E, together with all of the
right, power and authority of such Lessee to alter, modify or change the terms,
conditions and provisions of this Master Lease, and any other real property
lease pertaining to any applicable Facility Site or any Facility, to consent to
any request made by a tenant or landlord pursuant thereto, or to surrender,
cancel or terminate the same or to accept any surrender, cancellation or
termination of the same, together with all of the options, rights, powers and
privileges of such Lessee under any real property lease pertaining to any
applicable Facility Site or any Facility, whether heretofore or hereafter
existing, including, without limitation, and all present and future right,
title and interest of Lessee in and to (i) all refunds, tax abatement
agreements, rebates, reserves, deferred payments, deposits, cost savings,
awards and payments of any kind due from or payable by (a) any Governmental
Authority, or (b) any insurance or utility company, in each case under clause
(a) or (b) above in respect of any of the Leased Property, and (ii) all
refunds, rebates and payments of any kind due from or payable by any
Governmental Authority for any taxes, assessments, or governmental or
quasi-governmental charges or levies imposed upon such Lessee in respect of any
Facility Site, Facility or Facility F,F&E, all proceeds (including claims and
demands therefor) of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims, including without limitation the
proceeds of insurance and condemnation awards in respect thereof (or any
portion thereof), all additional estates, rights and interests hereafter
acquired by such Lessee in any Facility Site, Facility or Facility F,F&E, or
any portion thereof, to the extent any of the foregoing constitutes an interest
in real property, including, without limitation, a fee simple interest in any
Facility Site, Facility or Facility F,F&E, or any portion thereof; and each
Lessee further grants to Lessor, pursuant to the UCC, a security interest in
all of the foregoing to the extent any of the foregoing is personal property
together with all proceeds of the conversion, whether voluntary or involuntary,
of any of the Facilities or Facility F,F&E into cash or other liquid claims,
including without limitation, all awards, payments or proceeds, including
interest thereon, and the right to receive the same, which may be made as a
result of any Casualty, any exercise of the right of eminent domain or deed in
lieu thereof, any injury to any Facility Site, Facility or Facility F,F&E and
any defect in title in any Facility Site, Facility or Facility F,F&E or other
matter insured under any policy of title insurance, together with attorneys'
fees, costs and disbursements incurred by Lessor or any Lender (including
allocated time charges of internal counsel) in connection with the collection
of such awards, payments and proceeds.
To have and to hold the same whether now owned or held or hereafter
acquired unto Local Trustee, his successor-in-trust forever, in trust, however,
to secure to Lessor the payment of the Rent, the Lease Balance and all other
sums owing to Lessor under this Master Lease and under the other Operative
Documents and the performance and observation of the terms, covenants,
warranties, conditions, agreements and obligations under this Master Lease and
under the other Operative Documents. If all of the Lessees shall pay all sums
due hereunder and under the other Operative Documents when due according to the
terms hereof and thereof and shall
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Master Lease
otherwise fully and properly perform and comply with all of the Obligations,
then this conveyance shall be come null and void. If a Lease Event of Default
has occurred and is continuing and at the request of Lessor, Local Trustee or
his successor is hereby authorized and empowered, upon giving notice of the
sale or sales by advertisement for three consecutive weeks preceding the sale
in a newspaper published in the county where the applicable site(s) is (are)
located and posting one notice at the courthouse of each said county for such
time, describing the time, place and terms of sale, and such other additional
advertising, if any, as Local Trustee, in his sole discretion, shall deem
advisable, to sell the applicable Facility and related Facility F,F&E at public
outcry at the courthouse door in said county to the highest bidder for cash, in
bar of all rights and equities of redemption, homestead, spouse's elective
share and all other rights or exemptions of every kind, including, without
limitation, the statutory right of redemption, all of which are hereby
expressly waived. Local Trustee may sell any Facility and its related Facility
F,F&E as a whole or in such parcels or parts as he in his judgment may deem
advisable. Lessor may bid at any sale and may purchase any Facility and its
related Facility F,F&E, or any part thereof, if it is the highest bidder
therefor. Lessor shall be entitled to apply all or any part of the
indebtedness secured hereby as a credit to the purchase price. Upon such sale,
Local Trustee, or his successors-in-trust, is authorized to execute and deliver
a deed or deeds to the applicable Facility and related Facility F,F&E to the
purchaser and place the purchaser in quiet and peaceful possession thereof.
Each Lessee agrees that in the event Local Trustee has not entered and taken
possession of any applicable Facility and related Facility F,F&E prior to the
sale thereof, that the purchaser shall be entitled to immediate possession
thereof upon the delivery to him by Local Trustee of the deed for such Facility
and related Facility F,F&E. In the event of the sale of any Facility and its
related Facility F,F&E under and by virtue of this provision, any Lessee
thereof and all Persons holding under it, shall be and become tenants at will
of the purchaser of the same, from and after the execution and delivery of a
deed to such purchaser.
Either prior to or at the time of the sale if Local Trustee shall deem
it proper for any reason to postpone or continue said sale, he may do so from
time to time, in which event notice of the date to which the sale is continued
may be published before such sale is held or the sale may be adjourned from
time to time by Local Trustee or his agent or successor and reset at a later
date without additional publication; provided that an announcement to that
effect is made at the scheduled place of sale at the time and on the date the
sale was originally set. One or more exercises of the powers herein granted
shall not extinguish nor exhaust such powers until all Facilities and related
Facility F,F&E are sold or until the entire indebtedness secured hereby is paid
in full. Local Trustee may require the successful bidder at any sale to
deposit immediately with Local Trustee cash or a certified check in the amount
not to exceed five percent (5) of his bid, provided notice of such requirement
is contained in the advertisement of the sale. Out of the proceeds of such
sale, Local Trustee shall first pay all expenses in connection with the
execution of this Trust, including reasonable attorneys' fees and auctioneers'
fees and the remainder of the proceeds shall be paid to and applied as to
provided in the Loan Agreement.
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Master Lease
If Lessor, in its sole and absolute discretion, shall desire for any
reason whatsoever to have a substitute trustee appointed, then Lessor is hereby
authorized and empowered to appoint, at any time and from time to time, by an
instrument duly executed and acknowledged and filed for recordation wherever
this instrument is recorded, a substitute trustee, in the place and stead of
the Local Trustee initially named herein or subsequently appointed by Lessor,
which substitute trustee shall have the rights, powers and authority and be
charged with all the duties and responsibilities that are conferred or charged
upon Local Trustee initially named herein.
The necessity of Local Trustee or any successor trustee making oath,
filing inventory or giving bond for the security of this trust, as may be
required by the laws of Mississippi, is hereby expressly waived.
SECTION XV.2. Retention of Title or Proceeds in the Case of Default.
If Lessee would be entitled to any amount (including any Casualty Recoveries or
Non-Casualty Recoveries) or title to any Facility or Facility F,F&E hereunder
but for the existence of any Event of Default or event which with the giving of
notice and/or passage of time could become an Event of Default, Lessor shall
hold such amount or portion of such Facility or Facility F,F&E as part of the
Lessee Collateral and shall be entitled to apply such amounts against any
amounts due hereunder or under the other Operative Documents; provided that
Lessor shall distribute such amount or transfer such Facility or Facility F,F&E
in accordance with the other terms of this Master Lease if and when no Event of
Default or event which with the giving of notice and/or passage of time could
become an Event of Default exists.
ARTICLE XVI
MISCELLANEOUS
SECTION XVI.1. Applicable Law. THIS MASTER LEASE HAS BEEN DELIVERED
IN NEW YORK AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS MASTER
LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF LAWS AND CONFLICTS RULES OF
SUCH STATE, EXCEPT AS TO MATTERS RELATING TO PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST AND LIENS CREATED
HEREUNDER OR REMEDIES PROVIDED WITH RESPECT TO THE FACILITY SITES AND THE OTHER
LEASED PROPERTY, WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE
PROPERTY IS LOCATED AND TO THE EXTENT THAT THE
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<PAGE> 42
Master Lease
EXERCISE OF CERTAIN RIGHTS OR REMEDIES HEREUNDER OR UNDER THE OTHER OPERATIVE
DOCUMENTS MAY REQUIRE COMPLIANCE WITH GAMING LAWS.
SECTION XVI.2. Notices. Unless otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing and shall be delivered and shall be deemed
to have been given in accordance with Section 9.3 of the Participation
Agreement.
SECTION XVI.3. Counterparts. This Master Lease has been executed in
several counterparts. One counterpart has been prominently marked "Lessor's
Copy" and the other counterparts have been prominently marked "Lessees' Copy"
or "Copy." Only the counterpart marked "Lessor's Copy" shall evidence a
monetary obligation of any Lessee or shall be deemed to be an original or to be
chattel paper for purposes of the UCC, and such copy shall be held by Lessor.
SECTION XVI.4. Severability. Whenever possible, each provision of
this Master Lease shall be interpreted in such manner as to be effective and
valid under Applicable Law; but if any provision of this Master Lease shall be
prohibited by or invalid under Applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Master Lease.
SECTION XVI.5. Additional Lessees. The Initial Lessees hereunder
shall be those Lessees as are signatories hereto. From time to time following
the initial execution of this Agreement, additional wholly-owned Subsidiaries
of Parent approved by the Required Lenders who execute a Certificate of
Acceptance with respect to a Lease Supplement, accompanied by such
documentation as Lessor may require in connection therewith, shall thereby
become additional Lessees hereunder and parties hereto. Upon acceptance of
such Certificate of Acceptance by Lessor, notice of which acceptance is hereby
waived by Lessees, each such additional Lessee shall be as fully a party hereto
as if an original signatory hereof. Each Lessee expressly agrees that its
obligations, its Facility Leases and the liens upon its property granted herein
shall not be affected or diminished by the addition or release of additional
Lessee hereunder. This Agreement shall be fully effective as to any Lessee who
is or becomes a party hereto regardless of whether any other Person becomes or
fails to become or ceases to be a Lessee hereunder.
SECTION XVI.6. Successors and Assigns. This Master Lease shall be
binding upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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Master Lease
SECTION XVI.7. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Master Lease is intended for the benefit
of any Person except the parties hereto, their successors and permitted
assigns; provided that Lessor and each Lessee agrees that the Lenders shall
benefit from all of the provisions of this Master Lease applicable to them.
SECTION XVI.8. Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Master Lease is executed and
delivered by Bank, not individually or personally but solely as Trustee of the
Trust, as Lessor, in the exercise of the power and authority conferred and
vested in it under the Trust Agreement; (b) each of the representations,
undertakings and agreements herein made on the part of Lessor is made and
intended not as personal representations, undertakings and agreements by Bank
but is made and intended for the purpose of binding only Trustee in its trust
capacity and as Lessor; (c) nothing herein contained shall be construed as
creating any liability on Bank, individually or personally to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto and by any other Person
claiming by, through or under this Master Lease; and (d) under no circumstances
shall Bank be personally liable for the payment of any indebtedness or expenses
of Lessor or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Lessor under this
Master Lease or any of the other Operative Documents; provided that Bank shall
be liable in its individual capacity for its own willful misconduct or gross
negligence (or negligence in the handling of funds) or for any Taxes based in
or measured by any fees, commission or compensation received by it for acting
as Trustee.
SECTION XVI.9. Captions; Table of Contents. Section captions and the
table of contents used in this Master Lease (including the Schedules, Exhibits
and Annexes hereto) are for convenience of reference only and shall not affect
the construction of this Master Lease.
SECTION XVI.10. Schedules and Exhibits. The Schedules and Exhibits
hereto, along with all attachments referenced in any of such items, are
incorporated herein by reference and made a part hereof.
SECTION XVI.11. No Merger. If the fee simple interest in any of the
Leased Property and the leasehold interest therein shall be held by the same
party, the interest in such Leased Property granted to Trustee pursuant to a
Ground Lease and the interest of each Lessee in this Master Lease shall not
terminate or be merged and such Ground Lease and this Master Lease shall remain
in full force and effect.
SECTION XVI.12. Joint and Several. Each of the Lessees shall be
obligated for all of the obligations hereunder on a joint and several basis,
notwithstanding which of the Lessees may have directly received the proceeds of
any particular Advance. Each of the Lessees
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Master Lease
acknowledges and agrees that, for purposes of the Operative Documents, Parent,
Lessees and the other Obligor Subsidiaries constitute a single integrated
financial enterprise and that each receives a benefit from the availability of
credit under the Operative Documents to all Lessees. Each of the Lessees
waives all suretyship defenses arising under Applicable Laws in connection with
its joint and several obligations under this Agreement. Without limiting the
generality of the foregoing waiver, each of the Lessees agrees that the
consents, waivers and agreements regarding suretyship matters set forth in
Sections 2, 3 and 5 of the Guaranty are incorporated herein, mutatis mutandis,
and shall be fully applicable to such Lessee in connection with its joint and
several obligations hereunder.
[Signature pages to follow]
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<PAGE> 45
Master Lease
IN WITNESS WHEREOF, the parties hereto have executed this Master
Lease as of the day and year first above written.
HANCOCK BANK,
not in its individual capacity, except
as expressly stated herein, but solely
as Trustee, as Lessor
By:
-----------------------------------
Name Printed: Arnold Wethey
Title: Vice President & Trust Officer
Address: P.O. Box 4019
Gulfport, MS 39502
Telephone No.: (601) 868-4579
Telecopier No.: (601) 868-4098
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<PAGE> 46
Master Lease
BL RESORTS I, LLC,
as Initial Lessee
By
------------------------------------
Name Printed: Timothy J. Cope
Title: Chief Financial Officer
Address: 130 Cheshire Lane
Minnetonka, MN 55305
Telephone No.: (612) 449-7030
Telecopier No.:(612) 449-7064
GCG RESORTS I, LLC,
as Initial Lessee
By
------------------------------------
Name Printed: Timothy J. Cope
Title: Chief Financial Officer
Address: 130 Cheshire Lane
Minnetonka, MN 55305
Telephone No.: (612) 449-7030
Telecopier No.:(612) 449-7064
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<PAGE> 47
Master Lease
CORPORATE ACKNOWLEDGMENT
(LESSOR-TRUSTEE)
STATE OF ________________)
) ss:
COUNTY OF _______________)
Personally appeared before me, the undersigned authority in
and for the said county and state, on this ____ day of ________, 1997, within
my jurisdiction, the within named ________________________________, duly
identified before me, who acknowledged that __he is
__________________________________ of Hancock Bank, a state banking
corporation, and that for and on behalf of said bank, and as its act and deed
in the representative capacity herein stated, __he executed the above and
foregoing instrument, after first having been duly authorized by said bank so
to do.
______________________________
NOTARY PUBLIC
My Commission Expires:
_________________________
(Affix official seal)
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<PAGE> 48
Master Lease
CORPORATE ACKNOWLEDGMENT
(INITIAL LESSEE)
STATE OF ________________)
) ss:
COUNTY OF _______________)
Personally appeared before me, the undersigned authority in and for
the said county and state, on this ____ day of _______, 1997, within my
jurisdiction, the within named Timothy J. Cope, duly identified before me, who
acknowledged that he is the Chief Financial Officer of BL RESORTS I, LLC, a
Minnesota limited liability company, and that for and on behalf of said
company, and as its act and deed, he executed the above and foregoing
instrument, after first having been duly authorized by said company so to do.
______________________________
NOTARY PUBLIC
My Commission Expires:
_________________________
(Affix official seal)
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<PAGE> 49
Master Lease
CORPORATE ACKNOWLEDGMENT
(INITIAL LESSEE)
STATE OF ________________)
) ss:
COUNTY OF _______________)
Personally appeared before me, the undersigned authority in and for
the said county and state, on this ____ day of _______, 1997, within my
jurisdiction, the within named Timothy J. Cope, duly identified before me, who
acknowledged that he is the Chief Financial Officer of GCG RESORTS I, INC., a
Minnesota limited liability company, and that for and on behalf of said
company, and as its act and deed, he executed the above and foregoing
instrument, after first having been duly authorized by said company so to do.
______________________________
NOTARY PUBLIC
My Commission Expires:
_________________________
(Affix official seal)
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<PAGE> 1
EXHIBIT 10.3
[EXECUTION COPY]
REDUCING REVOLVING LOAN AGREEMENT
dated as of September 29, 1997
among
HANCOCK BANK,
not in its individual capacity, except
as expressly provided herein, but
solely as Trustee, as Borrower,
BA LEASING & CAPITAL CORPORATION,
as Administrative Agent
SOCIETE GENERALE,
THE SUMITOMO BANK, LIMITED, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Agents
THE MITSUBISHI TRUST AND BANKING CORPORATION,
as Lead Manager
and
THE PERSONS NAMED ON SCHEDULE I,
as Lenders
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1.1. Defined Terms.............................................1
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS; REPAYMENT AND
PREPAYMENT OF LOANS
2.1. Commitment; Term..........................................2
2.2. Notes.....................................................2
2.3. Procedure for Borrowing...................................3
2.4. Prepayments; Lease Termination Payments and Premium.......3
2.5. Interest Rates............................................3
2.6. Determination of Interest Rate............................4
2.7. Pro Rata Treatment among Loans............................4
2.8. Payment from Trust Estate Only............................4
2.9. Taxes.....................................................5
2.10. Illegality................................................6
2.11. Increased Costs and Reduction of Return...................6
2.12. Funding Losses............................................7
2.13. Inability to Determine Rates..............................8
2.14. Survival..................................................8
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
THE TRUST ESTATE
3.1. Rent Distribution.........................................8
3.2. Distribution of Mandatory Prepayments.....................9
3.3. Distribution of Payments After Loan Event of Default......9
3.4. Other Payments...........................................10
3.5. Distribution of Excluded Amounts and Additional Costs....11
3.6. Guaranty Payments........................................11
ARTICLE IV CONDITIONS PRECEDENT
ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER
5.1. Performance by the Borrower..............................11
5.2. Waiver by the Borrower...................................11
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<PAGE> 3
ARTICLE VI LOAN EVENTS OF DEFAULT; REMEDIES
6.1. Loan Events of Default...................................12
6.2. Remedies.................................................13
ARTICLE VII ADMINISTRATIVE AGENT
7.1. Appointment and Authorization............................15
7.2. Delegation of Duties.....................................15
7.3. Liability of the Administrative Agent....................15
7.4. Reliance by the Administrative Agent.....................16
7.5. Notice of Default........................................16
7.6. Credit Decision..........................................16
7.7. Indemnification of the Administrative Agent..............17
7.8. The Administrative Agent in Individual Capacity..........17
7.9. Successor Administrative Agent...........................18
7.10. Withholding Tax..........................................18
7.11. Acceptance of Agency.....................................20
7.12. Distribution and Receipt of Payments by Bank.............21
7.13. Lead Manager.............................................21
ARTICLE VIII MISCELLANEOUS
8.1. Amendments and Waivers...................................22
8.2. Notices..................................................22
8.3. Successors and Assigns; Transfers and Participations.....22
8.4. Counterparts.............................................22
8.5. Governing Law............................................22
8.6. Survival and Termination of Agreement....................23
8.7. Entire Agreement.........................................23
8.8. Severability.............................................23
SCHEDULE I - Lenders
EXHIBIT A - Form of Note
-ii-
<PAGE> 4
REDUCING REVOLVING LOAN AGREEMENT
THIS REDUCING REVOLVING LOAN AGREEMENT (as amended and supplemented
from time to time, this "Loan Agreement"), dated as of September 29, 1997, is
entered into by and among HANCOCK BANK, not in its individual capacity, except
as specifically provided herein, but solely as Trustee under the Trust Agreement
of even date herewith (the "Borrower"); BA LEASING & CAPITAL CORPORATION, a
California corporation, as the Administrative Agent; Societe Generale, The
Sumitomo Bank, Limited, and Wells Fargo Bank, National Association
(collectively, the "Co-Agents"); The Mitsubishi Trust and Banking Corporation,
as Lead Manager, and the Persons named on Schedule I hereto, as Lenders.
W I T N E S E T H:
WHEREAS, the Borrower desires to pay costs associated with the
acquisition and construction of the Facilities, all as more particularly
described in the Participation Agreement of even date herewith and in each of
the other Operative Documents; and
WHEREAS, the Borrower desires to borrow from the Lenders a portion of
the costs associated with the acquisition and construction of the Facilities;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE II
DEFINITIONS
SECTION II.1. Defined Terms. The capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in Appendix 1 to the
Participation Agreement dated as of the date hereof among BL Resorts I, LLC and
GCG Resorts I, LLC, as the Initial Lessees and Construction Agents; Grand
Casinos, Inc. and certain of its Subsidiaries, as Guarantors; the Borrower; the
Trustee; the Arranger and the Administrative Agent; the Co-Agents; the Lead
Manager and the Lenders identified therein (the "Participation Agreement") for
all purposes hereof.
ARTICLE III
AMOUNT AND TERMS OF COMMITMENTS;
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<PAGE> 5
Loan Agreement
REPAYMENT AND PREPAYMENT OF LOANS
SECTION III.1. Commitment; Term. Subject to the terms and conditions
hereof and of the Participation Agreement, each Lender severally, but not
jointly, agrees to make loans to the Borrower ("Loans") from time to time
through the Commitment Termination Date for the purpose of enabling the Trustee
to pay the Building Costs and the Facility F,F&E Costs for the Facilities and,
upon completion of one or more Facilities, to make Revolving Advances to Lessees
in accordance with the Participation Agreement, in an aggregate principal amount
at any one time outstanding not to exceed the amount of such Lender's
Commitment; provided, however, that in no event shall the principal amount of
Advances relating to any Facility exceed the lesser of (a) the Fair Market Sales
Value of such Facility (including the value attributable to the related Facility
F,F&E as determined by the applicable Appraisal delivered pursuant to Section
3.3(i) of the Participation Agreement) and (b) the amount specified in Section
2.2(b) of the Participation Agreement relating to that Facility. Certain amounts
prepaid may be readvanced in accordance with the terms and conditions of the
Participation Agreement, including without limitation the provisions of Sections
2.2(c), 3.1 and 3.8 thereof.
SECTION III.2. Notes.
(a) The Loans made by each Lender shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit A (as amended,
modified, supplemented, extended or renewed from time to time, a "Note"), with
appropriate insertions as to payee and principal amount, duly executed by the
Borrower and payable to the order of such Lender and in a maximum principal
amount equal to such Lender's Commitment. Each Note shall be dated the Closing
Date and delivered to the related Lender in accordance with Section 2.3 of the
Participation Agreement. Each Note shall (i) be stated to mature on the Final
Maturity Date and (ii) bear interest on the unpaid principal amount thereof from
time to time outstanding at the applicable interest rate per annum determined as
provided in, and payable as specified in, Section 2.6.
(b) Upon the consummation of each Advance, each Lender shall, and is
hereby authorized by the Borrower and each of the Lessees to, record in its
records the amount of the Loan advanced by such Lender on such Advance Date, the
date and amount of each continuation or conversion of such Loan, the length of
each Interest Period with respect thereto and the date and amount of each
payment of principal and/or interest relating thereto; provided, that the
failure to make any such recordation shall not affect the obligation of the
Trustee under the Notes or the corresponding obligation of any applicable Lessee
to pay Rent. In all events, prior to any transfer of its Note, a Lender shall
indicate in writing to its transferee the date, amount and maturity of each Loan
made by it which is still outstanding and the amounts of accrued but unpaid
interest thereon.
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Loan Agreement
SECTION III.3. Procedure for Borrowing.
(a) Subject to the terms and conditions of the Participation Agreement
and this Loan Agreement, the Borrower shall borrow under the Commitments on each
Advance Date upon receipt by the Trustee, the Administrative Agent and the
applicable Lenders from a Lessee of an Advance Request in accordance with
Section 2.4(a) of the Participation Agreement.
(b) Any Advance Request shall be delivered to the Trustee, the
Administrative Agent and the Lenders in accordance with Section 2.4(a) of the
Participation Agreement. Each Lender will fund its pro rata share of the Advance
in accordance with Section 2.2 of the Participation Agreement.
SECTION III.4. Prepayments; Lease Termination Payments and Premium.
(a) Borrower shall repay in full the unpaid principal amount of each
Loan (including any Additional Costs) upon the Final Maturity Date.
(b) On each Scheduled Payment Date on or after the Initial Reduction
Date, the Borrower shall pay to the Lenders that portion of the outstanding
principal amount of each Note, if any, which results in the aggregate principal
amount of the Loans outstanding under the Notes as of such date being not in
excess of the Commitment Amount (as reduced on that Scheduled Payment Date
pursuant to the terms of the Participation Agreement).
(c) No other principal amortization of the Loans will be required prior
to the Final Maturity Date, except that upon the occurrence of (i) a Casualty or
Non-Casualty Loss that results in a purchase by any Lessee of the Leased
Property suffering the Casualty or Non-Casualty Loss, (ii) any Lessee exercising
the early termination option pursuant to Section 5.1 or 5.2 of the Master Lease
to purchase all or a portion of the Leased Property then leased by such Lessee
or (iii) a Lease Event of Default that results in Lessor exercising its right to
have Lessees purchase all of the Leased Property, the Borrower shall prepay the
aggregate outstanding principal amount of the Loans equal to the amount of
principal that Lessees are required to pay as a result of any of the foregoing
pursuant to the applicable terms of the Master Lease, together with interest
accrued to the date of such prepayment on the principal amount so prepaid, plus,
Additional Costs, if any.
SECTION 2.5. Interest Rates. The Loans shall accrue interest at the
applicable Interest Rate from time to time in effect. The Interest Period for
which a LIBO Rate applies shall be one month unless the duration is shortened as
required by the definition of "Interest Period". Interest accrued on each Loan
shall be payable in arrears on each applicable Payment Date.
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Loan Agreement
If all or a portion of the principal amount of or interest on the Notes
shall not be paid when due (whether at the Final Maturity Date thereof, by
acceleration or otherwise), such overdue amount shall, without limiting the
rights of any Lender under Section 6.2, bear interest at the Overdue Rate, in
each case from the date first due until paid in full (as well after as before
judgment) payable on demand.
SECTION III.6. Determination of Interest Rate.
(a) During such time as a LIBO Rate applies to any of the Notes,
interest in respect of such Notes shall be calculated on the basis of a 360 day
year and the actual days elapsed. During such time as the Alternate Base Rate
applies to any of the Notes, interest in respect of such Notes shall be
calculated on the basis of a 365 (or 366, as applicable) day year and the actual
number of days elapsed. The Administrative Agent shall, as soon as practicable,
but in no event later than 1:00 p.m., Gulfport, Mississippi time, two Business
Days prior to the first day of each Interest Period, notify the Borrower, who
shall notify Lessees and the Lenders, of the LIBO Rate. Any change in the
Interest Rate on the Loans resulting from a change in the Alternate Base Rate
shall become effective as of the opening of business on the day on which such
Alternate Base Rate changes as provided herein.
(b) Except as provided in Section 2.10 or Section 2.13, all Loans shall
be LIBO Rate Loans. LIBO Rate Loans shall be made by each Lender at its LIBOR
Office. At the end of each Interest Period, all LIBO Rate Loans shall
automatically be continued.
SECTION III.7. Pro Rata Treatment among Loans. Except as otherwise
expressly set forth in Article III, each payment (including each prepayment) by
the Borrower on account of principal of and interest on the Loans shall be made
pro rata among the Loans. The Administrative Agent shall apply any prepayments
in reduction of Loans so that the Borrower's funding losses under Section 2.12
are minimized. All payments (including prepayments) to be made by the Borrower
hereunder and under the Notes shall be made without set-off or counterclaim and
shall be made to the Administrative Agent (or Bank as agent for the
Administrative Agent), for the account of the Lenders, at the Administrative
Agent's office referred to in Schedule III of the Participation Agreement (or
Bank's office), in lawful money of the United States of America and in
immediately available funds. The Administrative Agent or Bank shall distribute
such payments to each Lender at its LIBOR Office, promptly upon receipt in like
funds as received.
SECTION III.8. Payment from Trust Estate Only. All payments and
expenses to be made by or paid by the Borrower in respect of the Loans, this
Loan Agreement and the Security Documents shall be made only from the income
and the proceeds from the Trust Estate and only
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Loan Agreement
to the extent that the Borrower shall have received sufficient income or
proceeds from the Trust Estate to make such payments in accordance with the
terms of Article III. Each Lender agrees that it will look solely to the income
and proceeds from the Trust Estate for distribution to such Lender as herein
provided and that neither the Borrower nor the Administrative Agent is or shall
be personally liable to any Lender for any amount or expense payable hereunder
or under any Note or Security Document except as specifically provided for in
the Trust Agreement, the Participation Agreement or any other Operative
Document. The provisions of this Section 2.8 shall apply whether or not a Loan
Event of Default shall have occurred and be continuing.
SECTION III.9. Taxes.
(a) Subject to subsection (c) of this Section 2.9, any and all payments
by the Borrower to each Lender or the Administrative Agent under this Loan
Agreement and any other Operative Document shall be made free and clear of, and
without deduction or withholding for any Taxes. In addition, the Borrower shall
pay all Other Taxes.
(b) Borrower agrees to indemnify and hold harmless each Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by each Lender or the Administrative Agent and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date any Lender or the Administrative Agent makes written demand
therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or the Administrative Agent, as the case may
be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in
accordance with Applicable Law; and
(iv) the Borrower shall also pay to the Administrative
Agent for the account
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Loan Agreement
of each Lender, at the time interest is paid, all additional amounts
which the respective Lender specifies as necessary to preserve the
after-tax yield the Lender would have received if such Taxes or Other
Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to any Lender
or the Administrative Agent pursuant to subsection (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
SECTION III.10. Illegality.
(a) If any Lender determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make LIBO Rate Loans, then,
on notice thereof by the Lender to the Borrower through the Administrative
Agent, any obligation of that Lender to make LIBO Rate Loans shall be suspended
until the Lender notifies the Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBO
Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Administrative Agent), prepay in
full such LIBO Rate Loans of that Lender then outstanding, together with
interest accrued thereon, either on the last day of the Interest Period thereof,
if the Lender may lawfully continue to maintain such LIBO Rate Loans to such
day, or immediately, if the Lender may not lawfully continue to maintain such
LIBO Rate Loans. If the Borrower is required to so prepay any LIBO Rate Loan,
then concurrently with such prepayment, the Borrower shall borrow from the
affected Lender, in the amount of such repayment, an Alternate Base Rate Loan.
SECTION III.11. Increased Costs and Reduction of Return.
(a) If any Lender determines that, due to either (i) the introduction
of or any change in or
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Loan Agreement
in the interpretation of any law or regulation or (ii) the compliance by that
Lender with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost of such Lender of agreeing to make or making, funding or maintaining
any LIBO Rate Loans, then the Borrower shall be liable for, and shall from time
to time, upon demand (with a copy of such demand to be sent to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender (or its Lending Office) or any corporation controlling such Lender
with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, Loans, credits or obligations
under this Loan Agreement, then, upon demand of such Lender to the Borrower
through the Administrative Agent, the Borrower shall pay to such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.
SECTION III.12. Funding Losses. The Borrower shall reimburse each
Lender and hold each Lender harmless from any loss or expense which such Lender
may sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any LIBO Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) an Advance Request;
(c) the failure of the Borrower to timely make any mandatory
prepayment;
(d) the prepayment or other payment (including after acceleration
thereof) of a LIBO Rate Loan on a day that is not the last day of the relevant
Interest Period; or
(e) the automatic conversion of any LIBO Rate Loan to an Alternate Base
Rate Loan on a day that is not the last day of the relevant Interest Period;
including any such loss or expense incurred by reason of the liquidation or
reemployment of
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Loan Agreement
deposits or other funds obtained by it to make, continue or maintain its LIBO
Rate Loans or from fees payable to terminate the deposits from which such funds
were obtained; provided, that such Lender shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION III.13. Inability to Determine Rates. If the Administrative
Agent determines that for any reason adequate and reasonable means do not exist
for determining the LIBO Rate for any requested Interest Period with respect to
a proposed LIBO Rate Loan, or that the LIBO Rate applicable for any requested
Interest Period with respect to a proposed LIBO Rate Loan does not adequately
and fairly reflect the cost to the Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain LIBO Rate Loans
hereunder shall be suspended until the Administrative Agent revokes such notice
in writing. Upon receipt of such notice, the Borrower may revoke any Advance
Request then submitted by it. If the Borrower does not revoke such Advance
Request, the Lenders shall make, convert or continue the Loans, as proposed by
the Borrower, in the amount specified in the applicable Advance Request
submitted by the Borrower, but such Loans shall be made, converted or continued
as Alternate Base Rate Loans instead of LIBO Rate Loans.
SECTION III.14. Survival. The agreements and obligations of the
Borrower in this Article II shall survive the payment of all other obligations
of the Borrower.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE
SECTION IV.1. Rent Distribution. Except as otherwise provided in
Section 3.3 and subject to Section 3.5, each payment of Rent (including, without
limitation, any prepaid Rent) as well as any payment of interest on overdue
installments of Rent under the Master Lease and related Lease Supplements, and
any other monies paid over by any Lessee or the Borrower to the Administrative
Agent for such purpose, shall be distributed as promptly as possible (it being
understood that any payments of Rent received by or on behalf of the
Administrative Agent under the Master Lease and related Lease Supplements on a
timely basis and in accordance with the provisions of the Master Lease shall be
distributed on the date received in the funds so received) in the following
order of priority:
first, an amount equal to the aggregate amount of the
payment of interest (as well as any interest on (to the extent
permitted by Applicable Laws) overdue interest)
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Loan Agreement
then due and payable on the Notes shall be distributed and paid to the
Lenders; and
second, to the payment of outstanding principal under
the Notes.
SECTION IV.2. Distribution of Mandatory Prepayments.
(a) Except as otherwise provided in Section 3.2(b) and Section 3.3, the
amount of any prepayment received pursuant to Section 2.4 shall in each case be
distributed and paid in the following order of priority:
first, an amount equal to the aggregate amount of
accrued interest (as well as any interest on (to the extent permitted
by Applicable Laws) overdue interest) then due and payable on the Notes
shall be distributed and paid to the Lenders; and
second, an amount equal to the aggregate amount of the
payment of principal on the Notes then due and payable shall be
distributed and paid to the Lenders.
(b) Any Casualty Recovery or Non-Casualty Recovery that is not required
to be paid to a Lessee pursuant to the Master Lease, solely because a Lease
Default or Lease Event of Default exists shall be held by the Trustee as
security for the obligations of Lessees under the Master Lease and the other
Operative Documents and invested in Cash Equivalents and at such time as there
shall not be continuing any such Lease Default or Lease Event of Default, such
portion shall be paid to the applicable Lessee, unless the Administrative Agent
(as assignee of the Borrower) shall have theretofore declared the Master Lease
and related Lease Supplements to be terminated pursuant to Section 5.3 thereof,
in which event such portion shall be distributed forthwith upon such declaration
in accordance with the provisions of Section 3.3 hereof.
SECTION IV.3. Distribution of Payments After Loan Event of Default.
(a) Except as otherwise provided in Section 3.4(b), all payments
received and amounts (other than Excluded Amounts) realized by the
Administrative Agent after a Loan Event of Default shall have occurred and be
continuing, as well as all payments or amounts then held or thereafter received
by the Administrative Agent as part of the Trust Estate while such Loan Event of
Default shall be continuing, shall be distributed forthwith by the
Administrative Agent in the following order of priority:
first, so much of such payments or amounts as shall be
required to reimburse the Administrative Agent or Trustee for any tax,
expense or other loss incurred by the Administrative Agent or Trustee
(to the extent not previously reimbursed and to the extent incurred in
connection with its duties as the Administrative Agent or Trustee,
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Loan Agreement
respectively) and any unpaid ongoing fees of the Administrative Agent
or Trustee shall be distributed to the Administrative Agent or Trustee
as the case may be;
second, so much of such payments or amounts as shall be
required to reimburse the then existing or prior Lenders (so long as
the Loan Events of Default that have occurred and are continuing arise
solely from a Lease Event of Default) for payments made by them to the
Administrative Agent or Trustee pursuant to Section 7.7 (to the extent
not previously reimbursed), and to pay such then existing or prior
Lenders (so long as the Loan Events of Default that have occurred and
are continuing arise solely from a Lease Event of Default) the amounts
payable to them pursuant to any expense reimbursement or
indemnification provisions of the Participation Agreement, the Master
Lease or this Loan Agreement, shall be distributed to each such Person,
without priority of one over the other, in accordance with the amount
of such payment or payments payable to each such Person;
third, so much of such amount as shall be required to
pay in full the aggregate unpaid principal amount of the Notes,
together with any Additional Costs and the accrued but unpaid interest
on the Notes to the date of distribution shall be distributed to the
Lenders holding Notes, and in the case the amount so to be distributed
shall be insufficient to pay in full as aforesaid, then, pro rata among
such Lenders, without priority of one such Lender over the other, in
the proportion that the unpaid principal amount of the Notes held by
each Lender bears to the aggregate unpaid principal amount of the
Notes;
fourth, the balance, if any, of such payments or
amounts remaining thereafter shall be promptly distributed to, or as
directed by, the Borrower.
(b) During the occurrence and continuance of any Loan Event of Default,
all amounts (other than Excluded Amounts) received or realized by the
Administrative Agent and otherwise distributable pursuant to Section 3.1 or 3.2
shall be distributed as provided in Section 3.3(a).
SECTION IV.4. Other Payments.
(a) Any payments received by the Administrative Agent for which no
provision as to the application thereof is made in the Operative Documents or
elsewhere in this Article III shall be distributed forthwith by the
Administrative Agent in the order of priority set forth in Section 3.1.
(b) All payments received and amounts realized by the Administrative
Agent under any of the Master Lease and Lease Supplements or otherwise with
respect to the Leased Property to the extent received or realized at any time
after payment in full of the principal of and interest on
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Loan Agreement
all Loans, as well as any other amounts remaining as part of the Trust Estate
after payment in full of the principal of and interest on (and any Additional
Costs in respect of) all Loans issued hereunder, shall be distributed forthwith
by the Administrative Agent in the order of priority set forth in Section 3.3(a)
omitting clause "third" of such Section 3.3(a).
(c) Except after a Loan Event of Default has occurred and is
continuing, any payment received by the Administrative Agent for which provision
as to the application thereof is made in an Operative Document but not elsewhere
in this Article III shall be distributed forthwith by the Administrative Agent
to the Person for the purpose for which such payment was made in accordance with
the terms of such Operative Document.
SECTION IV.5. Distribution of Excluded Amounts and Additional Costs.
All amounts constituting Excluded Amounts and Additional Costs received by the
Administrative Agent shall be distributed to the Person or Persons entitled
thereto.
SECTION IV.6. Guaranty Payments. Any payment received by the
Administrative Agent from a Guarantor pursuant to the Guaranty shall be
distributed forthwith or retained by the Trustee in the same manner and subject
to the same conditions as provided in this Article III with respect to payments
received by the Trustee in respect of the Borrower's obligation as to which such
payment relates, all as if such payment had been made by the Borrower out of
Rent received under the Master Lease and one or more Lease Supplements.
ARTICLE V
CONDITIONS PRECEDENT
The agreement of each Lender to make the Loan requested to be made by
it on any Advance Date is subject to the satisfaction on the Advance Date of the
applicable conditions precedent set forth in Article III of the Participation
Agreement.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
SECTION VI.1. Performance by the Borrower. Subject to Section 2.8, so
long as any Note remains outstanding and unpaid or any other amount is owing to
any Lender hereunder, the Borrower will promptly pay all amounts payable by it
under this Loan Agreement and the Notes in accordance with the terms hereof and
thereof and shall duly perform each of its obligations under this Loan Agreement
and the Notes.
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Loan Agreement
SECTION VI.2. Waiver by the Borrower.
(a) To the extent permitted by Applicable Laws, the Borrower is hereby
deemed to have irrevocably waived:
(i) the protection of any stay (automatic or otherwise)
arising out of or in connection with any proceedings for the
reorganization or liquidation of the Borrower under the Bankruptcy Code
or otherwise of the exercise by the Lenders or the Administrative Agent
of rights and remedies under the Operative Documents; and
(ii) any right that the Borrower might otherwise have
to enjoin, limit or restrict the good faith exercise of such rights and
remedies.
(b) To the extent permitted by Applicable Laws, the Lenders and the
Administrative Agent are hereby expressly relieved from any obligation to comply
with any such stay which might otherwise affect their exercise at any time of
such rights and remedies.
ARTICLE VII
LOAN EVENTS OF DEFAULT; REMEDIES
SECTION VII.1. Loan Events of Default. Each of the following events
shall constitute a "Loan Event of Default" (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any governmental authority) and each such Loan
Event of Default shall continue so long as, but only as long as, it shall not
have been remedied:
(a) the Borrower shall fail to pay any principal of or interest on any
Note when due and such failure shall continue unremedied for a period of 3
Business Days; or
(b) the failure by the Borrower in any material respect to timely
perform any other covenant or condition herein or in any other Operative
Document to which the Borrower is a party and such failure shall continue for a
period of 30 days after written notice thereof to Borrower and the applicable
Lessee(s) from the Administrative Agent; or
(c) any representation or warranty by the Borrower in any Operative
Document or in any certificate or document delivered thereunder shall have been
incorrect in a material respect when made and shall remain material when
discovered and if curable shall continue for a period of 30
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Loan Agreement
days after written notice thereof to the Borrower and the Lenders from the
Administrative Agent; or
(d) the filing by the Borrower of any petition for dissolution or
liquidation of the Borrower; or the commencement by the Borrower of a voluntary
case under any applicable bankruptcy, insolvency or other similar law for the
relief of debtors, foreign or domestic, now or hereafter in effect; or the
Borrower shall have consented to the entry of an order for relief in an
involuntary case under any such law; or the failure of the Borrower generally to
pay, or the admission by the Borrower in writing that it is unable to pay, its
debts as such debts become due (within the meaning of the Bankruptcy Code); or
the failure by the Borrower promptly to satisfy or discharge any execution,
garnishment or attachment of such consequence as will impair its ability to
carry out its obligations under the Operative Documents; or the appointment of
or taking possession by a receiver, custodian or trustee (or other similar
official) for the Borrower or any substantial part of its property; or a general
assignment by the Borrower for the benefit of creditors; or the entry by the
Borrower into an agreement of composition with its creditors; or the Borrower
shall have taken any corporate action in furtherance of any of the foregoing; or
the filing against the Borrower of an involuntary petition in bankruptcy which
results in an order for relief being entered or, notwithstanding that an order
for relief has not been entered, the petition is not dismissed within 60 days of
the date of the filing of the petition; or the filing under any law relating to
bankruptcy, insolvency or relief of debtors of any petition against the Borrower
which either (i) results in a finding or adjudication of insolvency of the
Borrower or (ii) is not dismissed within 60 days of the date of the filing of
such petition; or
(e) a Lease Event of Default shall occur and be continuing.
SECTION VII.2. Remedies.
(a) Upon the occurrence of a Loan Event of Default hereunder, (i) if
such event is a Loan Event of Default specified in subsection (d) of Section 6.1
or subsections (f) or (g) of Section 10.1 of the Master Lease, the Commitment
(if not theretofore terminated) shall automatically terminate and the
outstanding principal amount of the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Loan Agreement and the Notes
shall automatically be and become immediately due and payable, and (ii) if such
event is any other Loan Event of Default, upon the written instructions of the
Required Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Loan Agreement and the Notes to be due and
payable forthwith, whereupon the same shall immediately become due and payable;
provided that the sole remedies of the Administrative Agent upon the occurrence
of a Loan Event of Default specified in subsection (b), (c) (but only to the
extent the representation was made in the Borrower's individual capacity) or (d)
of Section 6.1 that does not also constitute a Lease
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Loan Agreement
Event of Default shall be to cause the Lenders to remove and replace the
Borrower as the Trustee and to bring suit against Borrower for damages. Except
as expressly provided above in this Article VI, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
(b) Upon the occurrence of any Loan Event of Default and at any time
thereafter so long as any Loan Event of Default shall be continuing, the
Administrative Agent may, and upon the written instructions of the Required
Lenders shall, exercise any or all of the rights and powers and pursue any and
all of the remedies available to it hereunder and (subject to the terms thereof)
under the other Operative Documents, the Master Lease, the Lease Supplements,
the Guaranty and the other Operative Documents and shall have and may exercise
any and all rights and remedies available under the Uniform Commercial Code or
any provision of law.
(c) Upon the occurrence of any Loan Event of Default and at any time
thereafter so long as any Loan Event of Default shall be continuing, the
Administrative Agent may proceed to protect and enforce this Loan Agreement, the
Notes, the other Operative Documents, the Master Lease, the Lease Supplements
and the Guaranty by suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for any portion of the specific performance of any
covenant or agreement herein contained or in execution or aid of any power
herein granted, or for foreclosure hereunder, or for the appointment of a
receiver or receivers for any portion of the Leased Property or any other
property subject to any Deed of Trust, or for the recovery of judgment for the
indebtedness secured thereby or for the enforcement of any other proper, legal
or equitable remedy available under Applicable Laws.
(d) The Borrower shall be liable for any and all accrued and unpaid
amounts due hereunder before, after or during the exercise of any of the
foregoing remedies, including all reasonable legal fees and other reasonable
costs and expenses incurred by the Administrative Agent or any Lender by reason
of the occurrence of any Loan Event of Default or the exercise of remedies with
respect thereto.
(e) Except as expressly provided above, no remedy under this Section
6.2 is intended to be exclusive, but each shall be cumulative and in addition to
any other remedy provided under this Section 6.2 or under the other Operative
Documents or otherwise available at law or in equity. The exercise by the
Administrative Agent or any Lender of any one or more of such remedies shall not
preclude the simultaneous or later exercise of any other remedy or remedies. No
express or implied waiver by the Administrative Agent or any Lender of any Loan
Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Loan Event of Default. The failure or delay of the
Administrative Agent or any Lender in exercising any rights granted it hereunder
upon any occurrence of any of the contingencies set forth herein shall not
constitute a waiver of any such right upon the continuation or recurrence of any
such contingencies or similar contingencies and any single or partial exercise
of any particular right by
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<PAGE> 18
Loan Agreement
the Administrative Agent or any Lender shall not exhaust the same or constitute
a waiver of any other right provided herein.
(f) No failure to exercise and no delay in exercising, on the part of
the Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
ARTICLE VIII
ADMINISTRATIVE AGENT
SECTION VIII.1. Appointment and Authorization. Each Lender hereby
irrevocably (subject to Section 7.9) appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Loan Agreement and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this Loan
Agreement and the other Operative Documents, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Loan Agreement or in any other Operative Document,
the Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in any other Operative Document, nor shall
the Administrative Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Loan Agreement or any other
Operative Document or otherwise exist against the Administrative Agent.
SECTION VIII.2. Delegation of Duties. The Administrative Agent may
execute any of its duties under this Loan Agreement or any other Operative
Document by or through agents (including the Bank), employees or
attorneys-in-fact- and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
SECTION VIII.3. Liability of the Administrative Agent. None of the
Administrative Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Loan
Agreement or any other Operative Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct or as
otherwise provided in the Security Agreement), or (ii) be responsible in any
manner to any of the Lenders for any recital, statement, representation or
warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or
any officer thereof, contained in this Loan Agreement
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<PAGE> 19
Loan Agreement
or in any other Operative Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Loan Agreement or any other Operative
Document, or for the value of or title to any Collateral, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Loan Agreement
or any other Operative Document, or for any failure of the Borrower or any other
party to any Operative Document to perform its obligations hereunder or
thereunder. No Administrative Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Loan Agreement or any
other Operative Document, or to inspect the properties, books or records of the
Borrower or any of the Borrower's Subsidiaries or Affiliates.
SECTION VIII.4. Reliance by the Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Loan Agreement or any other
Operative Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Loan
Agreement or any other Operative Document in accordance with a request and any
action taken or consent of the Required Lenders and such request and any action
taken upon failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) Each Lender that has executed this Loan Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender.
SECTION VIII.5. Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Loan Default or
Loan Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
directly for the account of the Lenders, unless the Administrative Agent shall
have received written notice from a Lender or a Lessee referring to this Loan
-16-
<PAGE> 20
Loan Agreement
Agreement, describing such Loan Default or Loan Event of Default and stating
that such notice is a "notice of default". The Administrative Agent will notify
the Lenders of its receipt of any such notice. The Administrative Agent shall
take such action with respect to such Loan Default or Loan Event of Default as
may be requested by the Required Lenders; provided, however, that unless and
until the Administrative Agent has received any such request, the Administrative
Agent may (but shall not be obligated to) take such action regarding such Loan
Default or Loan Event of Default as it shall deem advisable or in the best
interest of the Lenders.
SECTION VIII.6. Credit Decision. Each Lender acknowledges that none of
the Administrative Agent-Related Persons has made any representation or warranty
to it, and that no act by the Administrative Agent hereinafter taken, including
any review of the affairs of Parent, Lessees and their Subsidiaries, shall be
deemed to constitute any representation or warranty by any Administrative
Agent-Related Person to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of any investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Parent, Lessees and their Subsidiaries, the value of and
title to any Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Loan Agreement and to extend credit to the Borrower and Lessees hereunder. Each
Lender also represents that it will independently and without reliance upon any
Administrative Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Loan Agreement and the other Operative Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Lessees and Parent. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Lessees and Parent which may come into the
possession of any of the Administrative Agent-Related Persons.
SECTION VIII.7. Indemnification of the Administrative Agent. Whether or
not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand any Administrative Agent-Related Person (to the extent not
reimbursed by or on behalf of Lessees and without limiting the obligation of
Lessees to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Administrative Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable
-17-
<PAGE> 21
Loan Agreement
share of any costs or out-of-pocket expenses (including attorney costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Loan Agreement, any other
Operative Document, or any document contemplated by or referred to herein, to
the extent that the Administrative Agent is not reimbursed for such expenses by
or on behalf of the Borrower. The undertaking in this Section shall survive the
payment of all obligations hereunder and the resignation or replacement of the
Administrative Agent.
SECTION VIII.8. The Administrative Agent in Individual Capacity. BA
Leasing & Capital Corporation and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Parent and its Subsidiaries and
Affiliates as though BA Leasing & Capital Corporation were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, BA Leasing & Capital
Corporation or its Affiliates may receive information regarding Parent or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of Parent or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, BA Leasing & Capital Corporation shall have the
same rights and powers under this Loan Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" include BA Leasing & Capital Corporation in its
individual capacity.
SECTION VIII.9. Successor Administrative Agent. The Administrative
Agent may, and at the request of the Required Lenders shall, resign as the
Administrative Agent upon 30 days' notice to the Lenders. If the Administrative
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor agent from among the Lenders. Upon the acceptance
of its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor agent and
the retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement. If no
successor agent has accepted appointment as the Administrative Agent by the date
which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the
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<PAGE> 22
Loan Agreement
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint an successor agent as
provided for above. If required by Applicable Law, the Mississippi Gaming
Commission shall have made a determination of suitability with respect to a
successor agent.
SECTION VIII.10. Withholding Tax.
(a) If any Lender is a "foreign corporation" or "foreign partnership"
or "foreign trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Administrative
Agent, to deliver to the Administrative Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Loan Agreement;
(ii) if such Lender claims that interest paid under
this Loan Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this Loan Agreement; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the obligations of the Borrower to such Lender, such Lender agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Administrative Agent will treat such Lender's IRS
Form 1001 as no longer valid.
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<PAGE> 23
Loan Agreement
(c) If any Lender claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Administrative Agent,
then the Administrative Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable withholding tax.
(e) If the Internal Revenue Service or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that the
Administrative Agent (or its designee or agent) did not properly withhold tax
from amounts paid to or for the account of any Lender (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify the Administrative Agent of a change in circumstances which rendered
the exemption from, or deduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Administrative Agent (or its
designee or agent, as the case may be) fully for all amounts paid, directly or
indirectly, by the Administrative Agent (or its designee or agent) and including
any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent (or its designee or agent) under this Section, together
with all costs and expenses (including attorney costs and the allocated cost of
internal counsel services and all disbursements of internal counsel). The
obligation of the Lenders under this subsection shall survive the payment of all
obligations and the resignation or replacement of the Administrative Agent.
SECTION VIII.11. Acceptance of Agency.
(a) The Administrative Agent accepts the agency hereby created
applicable to it and agrees to cause Bank (or its successor) to receive all
payments and proceeds pursuant to the Operative Documents and disburse such
payments or proceeds in accordance with the Operative Documents.
(b) Upon discharge of the indebtedness secured by the Security
Documents or security interest or Lien provided therein, the Administrative
Agent shall execute and deliver, at Lessees' cost and expense, such
satisfactions and terminations of said Liens as may be required. Upon
satisfaction of the Lien or security interest provided for in any such
instrument, such instrument shall be deemed withdrawn from the Collateral.
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<PAGE> 24
Loan Agreement
(c) In the event that the Required Lenders shall notify the
Administrative Agent that an event of default under a security instrument has
occurred, the Administrative Agent shall take such action with respect thereto
as the Required Lenders may require by written instructions, but the
Administrative Agent shall not be required to take any action not expressly set
forth in such written instructions.
(d) The Administrative Agent shall not have any duty or obligation to
manage, operate, control, use, sell, dispose of or otherwise deal with the
Leased Property or any other part of the Collateral or to otherwise take or
refrain from taking any action under, or in connection with, the security
instruments, except as expressly provided by the terms of this Loan Agreement or
as expressly provided in written instructions from the Required Lenders received
pursuant to the terms of Section 7.11(c) hereof.
(e) Except in accordance with written instruction furnished pursuant to
Section 7.11(c) hereof, and without limiting the generality of Section 7.11(d)
hereof, the Administrative Agent shall have no duty (i) to see to any recording,
filing or depositing of any security instrument or amendment thereof, (ii) to
see to any insurance on the Leased Property or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Collateral, (iv) to
confirm or verify any notices or reports of any of the Lessees other than to
furnish (to the extent not otherwise furnished) the Lenders with a copy of each
notice or report furnished to the Administrative Agent by such Lessees pursuant
to a security instrument or (v) to inspect the Leased Property at any time or
ascertain or inquire as to the performance or observance of Lessee's covenants
under any security instrument.
(f) In accepting the agency hereby created, the Administrative Agent
acts solely as agent hereunder and not in its individual capacity, and all
persons, other than the Lenders, having any claim against the Administrative
Agent by reason of the transactions contemplated hereby shall look only to the
Collateral for payment or satisfaction thereof.
(g) The agency created hereby shall be terminated by notice given by
the Administrative Agent to the Lenders at any time upon the final disposition
of all Collateral and the final distribution by the Administrative Agent of all
monies or other property or proceeds received pursuant to the Operative
Documents in accordance with their terms.
SECTION VIII.12. Distribution and Receipt of Payments by Bank. The
Administrative Agent, for the benefit of Lenders, hereby appoints Bank as the
agent of the Lenders for purposes of receiving proceeds of Advances, payments
under the Master Lease and the Lease Supplements and making distributions to the
Lenders, Lessees and other Persons under this Loan Agreement.
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<PAGE> 25
Loan Agreement
The Administrative Agent may at any time by notice in writing terminate Bank's
appointment hereby as agent of collection and payment of the payments under the
Master Lease and the Lease Supplements, in which event Lessees, upon receipt of
copy of such notice, shall pay any and all payments payable to the
Administrative Agent hereunder and under the other Operative Documents directly
to the Administrative Agent at the account set forth in Schedule III of the
Participation Agreement.
SECTION VIII.13. Lead Manager. The "lead manager" shall not have any
right, power, obligation, liability, responsibility or duty under this Loan
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, none of the Lenders so identified as "co- agent" or "lead
manager" shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder. Without limiting the foregoing, to the
extent the Co-Agents make determinations pursuant to the terms of any Operative
Document, the Co-Agents shall have the same rights afforded to the
Administrative Agent under this Article VII.
ARTICLE IX
MISCELLANEOUS
SECTION IX.1. Amendments and Waivers. Neither this Loan Agreement, any
Note nor any terms hereof or thereof may be amended, supplemented or modified
except in accordance with the provisions of the Participation Agreement.
SECTION IX.2. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be delivered in accordance with, and shall be deemed to have been
given as provided in, Section 9.3 of the Participation Agreement; provided, that
any notice, request, demand or other communication to or upon the Administrative
Agent or the Lenders pursuant to Section 2.3 shall not be effective until
received.
SECTION IX.3. Successors and Assigns; Transfers and Participations.
(a) This Loan Agreement shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Administrative Agent, all future holders of
the Notes and their respective successors and assigns.
(b) Any transfer by a Lender of its Note or any sale by a Lender of any
participating
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<PAGE> 26
Loan Agreement
interest in the Loans evidenced by its Note shall comply with Sections 6.2, 6.3
and 6.4 of the Participation Agreement. Any Lender transferring its Note shall
pay, or cause the transferee to pay, the costs and expenses (including
reasonable counsel fees) incurred by the Administrative Agent in connection with
such transfer.
SECTION IX.4. Counterparts. This Loan Agreement may be executed by
one or more of the parties to this Loan Agreement on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Loan
Agreement signed by all the parties hereto shall be lodged with the Borrower and
the Administrative Agent.
SECTION IX.5. GOVERNING LAW. THIS LOAN AGREEMENT AND THE NOTES HAVE
BEEN DELIVERED IN, AND THIS LOAN AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS LOAN AGREEMENT AND THE NOTES SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
BUT EXCLUDING ALL OTHER CHOICE OF LAWS AND CONFLICTS OF LAWS RULES OF SUCH
STATE, EXCEPT AS TO MATTERS RELATING TO PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREUNDER, WHICH SHALL BE
GOVERNED BY THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, AND TO THE
EXTENT THAT THE EXERCISE OF CERTAIN RIGHTS OR REMEDIES HEREUNDER OR UNDER THE
OTHER OPERATIVE DOCUMENTS MAY REQUIRE COMPLIANCE WITH GAMING LAWS.
SECTION IX.6. Survival and Termination of Agreement. All covenants,
agreements, representations and warranties made herein and in any certificate,
document or statement delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Loan Agreement and the Notes and
shall continue in full force and effect so long as any Note or any amount
payable to any Lender under or in connection with this Loan Agreement or the
Notes is unpaid, at which time this Loan Agreement shall terminate, it being
expressly understood that the obligations of the Borrower, as the case may be,
to the Administrative Agent and each Lender under Article II and the obligations
of the Lenders to the Administrative Agent under Section 7.7 shall survive the
payment in full of the Notes.
SECTION IX.7. Entire Agreement. This Loan Agreement sets forth the
entire agreement of the parties hereto with respect to its subject matter, and
supersedes all previous understandings, written or oral, with respect thereto.
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<PAGE> 27
Loan Agreement
SECTION IX.8. Severability. Any provision of this Loan Agreement or of
the Notes which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating the
remaining provisions hereof or thereof or affecting the validity, enforceability
or legality of any such provision in any other jurisdiction.
[Signature pages follow]
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<PAGE> 28
Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
HANCOCK BANK, not in its individual capacity,
except as specifically provided herein, but
solely as Trustee and as Borrower
By: _______________________________________
Name: Arnold Wethey
Title: Vice President & Trust Officer
<PAGE> 29
Loan Agreement
BA LEASING & CAPITAL
CORPORATION, not in its
individual capacity except as
specifically provided herein
but solely as Administrative
Agent
By: _______________________________________
Name: Sonia T. Delen
Title: Assistant Vice President
<PAGE> 30
Loan Agreement
SOCIETE GENERALE, as a Lender
By: _______________________________________
Name: Donald L. Schubert
Title: Vice President
<PAGE> 31
Loan Agreement
THE SUMITOMO BANK, LIMITED, as a Lender
By: _______________________________________
Name: Hiroyuki Iwami
Title: Joint General Manager
<PAGE> 32
Loan Agreement
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By: _______________________________________
Name: David J. Kramer
Title: Vice President
<PAGE> 33
Loan Agreement
THE MITSUBISHI TRUST AND BANKING
CORPORATION, as a Lender
By: _______________________________________
Name: Yasushi Satomi
Title: Senior Vice President
<PAGE> 34
Loan Agreement
BANK OF SCOTLAND, as a Lender
By: _______________________________________
Name: Annie Chin Tat
Title: Vice President
<PAGE> 35
Loan Agreement
HANCOCK BANK, as a Lender
By: _______________________________________
Name: Keith A. Williams
Title: Vice President
<PAGE> 36
Loan Agreement
MITSUI LEASING (U.S.A.), INC., as a Lender
By: _______________________________________
Name: Masato Utsumi
Title: President
<PAGE> 37
Loan Agreement
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as a Lender
By: _______________________________________
Name: David P. Williams
Title: Vice President
<PAGE> 38
Loan Agreement
THE PEOPLES BANK, as a Lender
By: _______________________________________
Name: Robert M. Tucei
Title: Senior Vice President
<PAGE> 39
Loan Agreement
SCHEDULE I
TO
REDUCING REVOLVING LOAN AGREEMENT
LENDERS
<TABLE>
<CAPTION>
Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
BA Leasing & Capital Corporation $16,500,000 16.500000
Societe Generale 15,000,000 15.000000
The Sumitomo Bank, Limited 15,000,000 15.000000
Wells Fargo Bank, National Association 15,000,000 15.000000
The Mitsubishi Trust and Banking Corporation 15,000,000 15.000000
Bank of Scotland 10,000,000 10.000000
Hancock Bank 5,000,000 5.000000
Mitsui Leasing (U.S.A.), Inc. 3,500,000 3.500000
First Security Bank, National Association 2,500,000 2.500000
The Peoples Bank 2,500,000 2.500000
------------ ---------
TOTAL (Lenders) $100,000,000 100.00%
</TABLE>
<PAGE> 40
Loan Agreement
EXHIBIT A
TO REDUCING REVOLVING LOAN AGREEMENT
FORM OF NOTE
NOTE NO. __
U.S. $________________ ________________, 1997
FOR VALUE RECEIVED, the undersigned, HANCOCK BANK, not in its
individual capacity but solely as Trustee under the Trust Agreement for the
Lenders named therein (the "Borrower"), promises to pay to the order of [NAME OF
LENDER] (the "Lender"), the principal sum of $_________ United States Dollars
or, if less, the aggregate unpaid principal amount of all Loans made by the
Lender to, or for the benefit of, the Borrower, or purchased by the Lender, as
recorded either on the grid attached to this Note or in the records of the
Lender; provided, however, that the failure to make any such recordation or any
error in such recordation shall not in any way affect the Borrower's obligation
to repay this Note. The principal amount of each Loan evidenced hereby shall be
payable on or prior to the Final Maturity Date as provided in that certain
Reducing Revolving Loan Agreement, dated as of September 29, 1997, among the
Borrower, BA Leasing & Capital Corporation, a California corporation, as
administrative agent (the "Administrative Agent"), and the various lenders named
therein (the "Loan Agreement").
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding at the rates per annum, on the dates
specified in, and in accordance with the terms of the Loan Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Lender pursuant to the Loan Agreement.
This Note is one of the Notes referred to in, and evidences
indebtedness incurred under, the Loan Agreement, to which reference is made for
a statement of the terms and conditions on which the Borrower is required to
make prepayments and repayments of principal of the indebtedness evidenced by
this Note and on which such indebtedness may be declared to be immediately due
and payable. Capitalized terms used herein without definition shall have the
meanings provided in the Loan Agreement. This Note is secured pursuant to the
Security Documents made by the Borrower in favor of the Administrative Agent
referred to in the Loan Agreement and reference is hereby made to the Loan
Agreement and such Security Documents
A-1
<PAGE> 41
Loan Agreement
for a statement of the terms and provisions of such security.
Anything to the contrary herein notwithstanding, the Borrower's
liability for any sums due hereunder shall be limited in accordance with Section
2.8 of the Loan Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest, and notice of
dishonor, notice of the existence, creation or nonpayment of all or any of the
Loans and all other notices whatsoever.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF LAWS AND CONFLICTS OF LAWS
RULES OF SUCH STATE.
IN WITNESS WHEREOF, the Trustee has caused this Note to be executed in
its corporate name by its duly authorized officer as of the date hereof.
HANCOCK BANK, not in its individual capacity but
solely as Trustee, as Borrower
By: _______________________________
Name:
Title:
A-2
<PAGE> 42
Loan Agreement
GRID ATTACHED TO NOTE
DATED AS OF ____________, 1997 OF
HANCOCK BANK
AS TRUSTEE
PAYABLE TO THE ORDER OF [INSERT LENDER'S NAME]
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<S><C>
========================================================================================================================
Principal Notation Made
========================================================================================================================
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- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
</TABLE>
A-3
<PAGE> 1
EXHIBIT 10.4
Prepared by and when recorded mail to:
[EXECUTION COPY]
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Mark A. Spitzer, Esq.
(213) 620-1780
TRUST AGREEMENT
dated as of September 29, 1997
between
BL RESORTS I, LLC and GCG RESORTS I, LLC
as Initial Grantors,
and
HANCOCK BANK
as Trustee
This instrument secures a line of credit to be used primarily for business,
commercial or agricultural purposes and is entitled to the lien protection
provisions in Section 89-1-49 of the Mississippi Code of 1972, as amended.
INDEXING INSTRUCTIONS:
This instrument is to be filed and indexed in the Indefinite Index of the
Chancery Clerk's Office in Tunica County, Mississippi and in the Indefinite
Index of the First Judicial District of the Harrison County Chancery Clerk's
Office, Gulfport, Mississippi.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I THE TRUST ESTATE
1.1. Appointment, Authorization and Direction to Trustee................................................1
1.2. Declaration and Purpose............................................................................1
ARTICLE II COLLECTIONS AND DISTRIBUTIONS
2.1. Collections and Remittances by the Trustee.........................................................2
2.2. Distribution of Payments...........................................................................3
2.3. Effect of Sales by the Trustee.....................................................................3
ARTICLE III CERTAIN PROVISIONS RESPECTING TRUSTEE
3.1. Acceptance of Trusts and Duties....................................................................4
3.2. Limitation of Power................................................................................4
3.3. Notice of Event of Default.........................................................................4
3.4. Action Upon Instructions...........................................................................4
3.5. Certain Duties and Responsibilities of the Trustee.................................................5
3.6. Certain Rights of Trustee..........................................................................6
3.7. No Representations or Warranties as to Any Applicable Leased
Property or Documents...........................................................................8
3.8. Status of Moneys Received..........................................................................8
3.9. Permitted Activities...............................................................................9
3.10. Resignation or Removal of Trustee..................................................................9
3.11. Estate and Rights of Successor Trustee............................................................9
3.12. Merger or Consolidation of Trustee...............................................................10
3.13. Co-Trustees......................................................................................10
3.14. Books and Records................................................................................10
ARTICLE IV TERMINATION OF AND AMENDMENTS TO TRUST
4.1. Termination.......................................................................................10
4.2. Distribution of Trust Estate Upon Termination.....................................................11
4.3. Distribution from of Trust Estate Upon Permitted Termination of a Facility Lease..................11
4.4. Amendments........................................................................................11
ARTICLE V MISCELLANEOUS
5.1. Compensation and Indemnification..................................................................12
5.2. Notices...........................................................................................13
5.3. Governing Law.....................................................................................13
5.4. Tax Reports; Information Reporting................................................................13
5.5. Headings..........................................................................................13
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.6. Successors and Assigns............................................................................13
5.7. Severability......................................................................................13
5.8. Only Written Waivers..............................................................................14
5.9. Counterparts......................................................................................14
5.10. Rights in Trust Agreement........................................................................14
5.11. Payment of Trustee Fees, Costs and Expenses......................................................14
5.12. Additional Grantors..............................................................................14
5.13. Identification of Trust..........................................................................15
</TABLE>
-ii-
<PAGE> 4
TRUST AGREEMENT
THIS TRUST AGREEMENT (as amended and supplemented from time to time,
this "Trust Agreement") dated as of September 29, 1997, is entered into by and
between HANCOCK BANK, a Mississippi banking corporation (in its individual
capacity, the "Bank"; the Bank, not in its individual capacity but solely as
trustee, and any institution that shall act as a successor trustee in accordance
with the terms of Section 3.10, being the "Trustee"); and BL RESORTS I, LLC, a
Minnesota limited liability company, and GCG RESORTS I, LLC, a Minnesota limited
liability company, as Grantors (each an "Initial Grantor", and together with
each additional Grantor which becomes party hereto pursuant to Section 5.12
hereof, the "Grantors"). For purposes hereof, capitalized terms used in this
Trust Agreement without specific definition herein shall have the meanings
assigned thereto in Appendix 1 to the Participation Agreement, dated as of
September 29, 1997, among the Trustee; the Lenders; the Co-Agents; the Lead
Manager; the Initial Grantors and the other Lessees described therein, as
Lessees; Grand Casinos, Inc. and certain of its Subsidiaries, as Guarantors; and
BA Leasing & Capital Corporation, as Arranger and Administrative Agent.
ARTICLE II
THE TRUST ESTATE
SECTION II.1. Appointment, Authorization and Direction to Trustee. Each
Grantor hereby requests that the Bank act as Trustee of the trust created
hereunder (the "Trust"), and Bank hereby accepts its appointment as trustee of
such Trust, effective as of the date hereof. The Lenders and the Grantors
authorize and direct the Trustee, subject to the Lenders' satisfaction or waiver
of all appropriate conditions set forth in the Participation Agreement, to enter
into, execute and deliver:
(a) from time to time (including on each applicable Advance
Date), the Operative Documents to which the Trust or the Trustee is to
become a party on each such date;
(b) from time to time, the Notes in the manner and subject to
the terms and conditions provided in the Participation Agreement and
the Loan Agreement; and
(c) all other documents, and to do all such things and take
all such actions, as may be necessary or convenient to consummate the
transactions contemplated by the Operative Documents and to perform the
terms and conditions of this Trust Agreement, all as contemplated
herein or in the Operative Documents.
<PAGE> 5
SECTION PAGE
SECTION II.2. Declaration and Purpose.
(a) Trustee hereby declares, undertakes and agrees that it
will and does receive, take and hold all estate, right, title and
interest of the Trustee in and to the "Trust Estate" (as defined below)
for the Trust, in trust for the use and benefit of the Grantors,
subject to the terms hereof and of the Operative Documents.
(b) The purpose of the Trust is to acquire and hold title to
certain Leased Property identified in Bills of Sale and Improvement
Deeds made by Grantors in favor of Trustor as donations into the Trust
Estate, including leasehold interests in one or more Facility Sites and
Facility F,F&E to be located on such Facility Sites, as and when the
same become subject to the Master Lease and one or more Lease
Supplements relating thereto (such documents being collectively,
herein, the "Facility Lease" with respect to a particular Facility), as
collateral security for the obligations of the Trustee under the Loan
Agreement, to discharge such obligations in accordance with the
provisions of the Loan Agreement and the other Operative Documents and
to engage in activities ancillary and incidental thereto as set forth
in the Operative Documents. Except in connection with the foregoing,
the Trustee in its capacity as trustee shall not (i) engage in any
business or activity, (ii) have any property, rights or interest,
whether real or personal, tangible or intangible, (iii) incur any legal
liability or obligation, whether fixed or contingent, matured or
unmatured, other than in the normal course of the administration of the
Trust or (iv) subject any part of the corresponding Trust Estate to any
mortgage, lien, security interest or other claim or encumbrance, other
than in favor of the Administrative Agent and the Lenders pursuant to
the provisions of the Operative Documents. THE TRUST IS NOT A BUSINESS
TRUST. THE SOLE PURPOSE OF THE TRUST IS TO ACQUIRE AND HOLD TITLE TO
THE LEASED PROPERTY SUBJECT TO A FACILITY LEASE AND TO COLLECT AND
CONSERVE THE VALUE THEREOF AND OF THE TRUST ESTATE, SUBJECT TO THE
RIGHTS OF THE ADMINISTRATIVE AGENT AND THE GRANTOR THEREOF, FOR THE
BENEFIT OF THE LENDERS. THE TRUSTEE MAY NOT TRANSACT BUSINESS OF ANY
KIND WITH RESPECT TO THE TRUST ESTATE NOR SHALL THIS TRUST AGREEMENT BE
DEEMED TO BE, OR CREATE OR EVIDENCE THE EXISTENCE OF A CORPORATION DE
FACTO OR DE JURE, OR A MASSACHUSETTS TRUST, OR ANY OTHER TYPE OF
BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE BETWEEN THE TRUSTEE, THE
ADMINISTRATIVE AGENT AND THE LENDERS.
ARTICLE III
COLLECTIONS AND DISTRIBUTIONS
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<PAGE> 6
SECTION PAGE
SECTION III.1. Collections and Remittances by the Trustee. Trustee
agrees that, subject to the provisions of this Trust Agreement, it will, during
the term of the Trust, administer that portion of the Trust Estate related to
each Facility (referred to herein as the corresponding "Trust Estate") and, at
the direction of the Agents, or if all obligations under the Loan Agreement and
the Notes have been fully discharged, the Grantor thereof (the appropriate
Person permitted to give instructions being hereafter called the "Instructing
Party") take steps to collect all sums payable to the Trustee by the Grantor or
any other Person under the corresponding Facility Lease and the other Operative
Documents. The Trustee agrees to distribute all proceeds received from the Trust
Estate in accordance with the Loan Agreement and Sections 2.2 and 2.3 hereof.
The Trustee shall make such distribution promptly upon receipt of such proceeds
(if such proceeds are available for distribution) by the Trustee, it being
understood and agreed that the Trustee shall not be obligated to make such
distribution until the funds for such distribution have been received by the
Trustee in cash or its equivalent reasonably acceptable to the Trustee. All
distributions to a Lender shall be made by the Trustee to the order of such
Lender at its address referred to in Section 9.3 of the Participation Agreement.
SECTION II.2. Distribution of Payments.
(a) Payments to the Trustee for the benefit of the Lenders and
Administrative Agent. Until the Loan Agreement shall have been fully
discharged pursuant to its terms, all Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate
(other than Excluded Amounts) payable to and received by the Trustee
shall be held by Trustee for the benefit of the Lenders and the
Administrative Agent for distribution in accordance with the provisions
of Article III of the Loan Agreement; provided, however, that any
payments received by the Trustee from a Grantor with respect to the
Trustee's fees and disbursements, or pursuant to Section 5.1 hereof,
shall be retained by the Trustee and applied toward the purpose for
which such payments were made.
(b) Excluded Amounts. Any Excluded Amounts received by the
Trustee at any time shall be promptly paid by the Trustee to the Person
to whom such Excluded Amounts are payable under the provisions of the
Participation Agreement or any other Operative Document.
SECTION III.3. Effect of Sales by the Trustee. Any sale of all or any
part of the Trust Estate by the Trustee permitted hereunder shall bind the
Lenders and shall be effective for the benefit of the purchasers thereof and
their respective successors and assigns to divest and transfer all right, title
and interest vested in the Trustee or the Lenders hereunder in the property so
sold, and no purchaser shall be required to inquire as to compliance by the
Trustee with any of the terms hereof or to see to the application of any
consideration paid for such property.
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<PAGE> 7
SECTION PAGE
ARTICLE IV
CERTAIN PROVISIONS RESPECTING TRUSTEE
SECTION IV.1. Acceptance of Trusts and Duties. Bank accepts the trust
hereby created and agrees to perform the same as herein expressed and agrees to
receive and disburse all moneys constituting part of the Trust Estate in
accordance with the terms hereof.
SECTION IV.2. Limitation of Power. Trustee shall have no power, right,
duty or authority to manage, control, possess, use, sell, lease, dispose of or
otherwise deal with any Leased Property subject to any Facility Lease or any
other property at any time constituting a part of the Trust Estate, or otherwise
to take or refrain from taking any action under or in connection with the
Operative Documents, except (a) to execute and deliver the Operative Documents
to which the Trustee is to be a party, (b) to exercise and carry out or cause to
be exercised and carried out the rights, duties and obligations of the Trustee
hereunder, (c) to exercise and carry out or cause to be exercised and carried
out the rights, duties and obligations of the Trustee under the Operative
Documents, (d) to receive, collect and distribute and deal with the sums due
under each Facility Lease and with the Leased Property subject thereto and the
proceeds thereof as provided in each such Facility Lease, the Loan Agreement and
in this Trust Agreement, and (e) as expressly provided in written instructions
from the Instructing Party given pursuant to Section 3.3 or 3.4. Other than as
expressly provided in this Trust Agreement, the Trustee shall not have the
authority to make management decisions relating to the Trust Estate and may take
only ministerial actions without consent of the Agents. For purposes of this
Trust Agreement neither any Grantor nor, if applicable, the Parent, shall have
the right to direct the Trustee to exercise and carry out or cause to be
exercised and carried out the rights, duties and obligations of the Trustee
hereunder and under the Operative Documents until the Loan Agreement and Notes
have been paid and discharged in full.
SECTION IV.3. Notice of Event of Default. If a Responsible Officer of
the Trustee has actual knowledge of a Lease Event of Default or Loan Event of
Default, the Trustee shall give prompt written notice of such event to the
Lenders, the Grantors and the Administrative Agent in the manner specified in
Section 5.2. Subject to Section 3.4, the Trustee shall take such action, and
only such action, with respect to any such event as shall be specified in
written instructions from the Instructing Party. For all purposes of the
Operative Documents, in the absence of such actual knowledge, the Trustee shall
not be deemed to have knowledge of a Lease Event of Default or a Loan Event of
Default unless any of its Responsible Officers is notified in writing by a
Lender or the Administrative Agent. Trustee shall have no obligation and shall
not take any action in the event it receives no direction from the applicable
Instructing Party.
SECTION IV.4. Action Upon Instructions. Subject to Sections 3.5, 3.6
and 5.1 and the Loan Agreement, upon the written instructions at any time and
from time to time of the Instructing Party, the Trustee shall take such of the
following actions, and only such actions, as may be specified in such
instructions:
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<PAGE> 8
SECTION PAGE
(a) give such notice or direction or exercise such right or
power under any Facility Lease or any other Operative Document as shall
be specified in such instructions;
(b) approve as satisfactory to it all matters required by the
terms of any Operative Document to be satisfactory to the Trustee;
(c) upon expiration of the Lease Term and discharge in full of
the Loan Agreement and the Notes pursuant to its terms, convey all of
Trustee's right, title and interest in and to the Trust Estate
(including the related Leased Property) to the Grantor; and
(d) any other action as specified by the Instructing Party.
SECTION IV.5. Certain Duties and Responsibilities of the Trustee.
(a) (i) The Trustee undertakes to perform such duties and only
such duties as are specifically set forth herein and in the
other Operative Documents, and no implied covenants or
obligations shall be read into this Trust Agreement against
the Trustee, and the Trustee agrees that it shall not, nor
shall it have a duty to, manage, control, use, sell, maintain,
insure, register, lease, operate, modify, dispose of or
otherwise deal with any Leased Property or any other part of
the Trust Estate in any manner whatsoever, except as required
by the Operative Documents and as otherwise provided herein.
(ii) In the absence of bad faith or gross negligence
on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Trust
Agreement.
(b) No provision of this Trust Agreement or any other
Operative Document, including, without limitation, Articles VII and
VIII of the Participation Agreement, shall be construed to relieve the
Bank or the Trustee of liability for its gross negligence or willful
misconduct or its negligence in the handling of funds, it being
understood that, without limiting the foregoing:
(i) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
grossly negligent;
(ii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the
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<PAGE> 9
SECTION PAGE
Instructing Party pursuant to the express provisions hereof;
it being understood that the Trustee shall be liable if it
takes any action pursuant to instructions from any Grantor
prior to receiving notice from Administrative Agent that the
Loan Agreement has been discharged in full pursuant to its
terms;
(iii) no provision hereof shall require the Bank or
Trustee to expend or risk its own funds in the performance of
any of its duties hereunder or under any of the other
Operative Documents, or in the exercise of any of its rights
or powers; and
(iv) the Bank shall be liable for (A) any taxes on,
with respect to or measured by any amounts paid to it as
compensation for services as the Trustee hereunder or
otherwise under the Operative Documents, (B) acts or omissions
not related to the transactions contemplated by the Operative
Documents, (C) the inaccuracy of representations and
warranties made by the Bank in the Participation Agreement or
any certificate or document delivered pursuant thereto, and
(D) its negligence in the handling of funds.
(c) Trustee shall not be required to take any action hereunder
or under the other Operative Documents, nor shall any other provision
of this Trust Agreement or any other Operative Document be deemed to
impose a duty on the Trustee to take any action, if the Trustee
determines, or is advised by counsel, that such action is likely to
result in personal liability or is contrary to Applicable Law or the
Operative Documents.
(d) Whether or not therein expressly so provided, except where
expressly provided otherwise, every provision of this Trust Agreement
relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this
Section 3.5.
SECTION IV.6. Certain Rights of Trustee. Except as otherwise provided
in Section 3.5:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any signature, resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction or authorization by any party
hereto or to any other Operative Document shall be sufficiently
evidenced by a request, direction or authorization in writing,
delivered to the Trustee and signed in the name of such party by the
president, any vice president, the treasurer or the secretary of such
party, as the case may be, and any resolution of the board of directors
or committee thereof of such party shall be sufficiently evidenced by a
copy of such resolution certified by the secretary or
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<PAGE> 10
SECTION PAGE
an assistant secretary of such party, as the case may be, to have been
duly adopted and to be in full force and effect on the date of such
certification, and delivered to the Trustee;
(c) whenever in the administration of this Trust Agreement the
Trustee deems it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Trustee
may in good faith rely upon a certificate in writing, delivered to the
Trustee and signed by the president, any vice president, any assistant
vice president, the treasurer, any assistant treasurer, the secretary
or any assistant secretary of a Lender;
(d) the Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it may appoint,
and it shall not be liable for the conduct or misconduct of such
attorneys, agents and servants, provided, that the Trustee shall use
due care in the appointment of such attorneys, agents and servants; and
it shall be entitled to the advice of counsel and shall be protected by
the advice of such counsel in anything done or omitted to be done in
accordance with such advice if such advice pertains to such matters as
the Trustee may reasonably presume to be within the scope of such
counsel's area of expertise;
(e) Trustee shall not be under any obligation to exercise any
of the rights or powers vested in it by this Trust Agreement or any
other Operative Document at the request or direction of the Instructing
Party, unless the Instructing Party offers to the Trustee reasonable
security or indemnity against the costs, expenses (including reasonable
fees and expenses of its legal counsel) and liabilities which may be
incurred by it in compliance with such request or direction; and
(f) provided that Responsible Officer has actual knowledge of
the inaccuracy thereof, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee determines to
make such further inquiry or investigation, it shall be entitled to
examine the books and records of any Grantor related to the Leased
Property under lease by such Grantor subject to a particular Facility
Lease to reasonably determine whether the Grantor thereof is in
compliance with the terms and conditions of such Facility Lease and to
examine such Leased Property, by agent or attorney, all upon the terms
and conditions contained in the Facility Lease.
Notwithstanding Section 3.5, the Trustee shall not have any duty (i) to
see to any recording or filing of the Operative Documents or any Uniform
Commercial Code financing statements or to see to the maintenance of any such
recording or filing, (ii) to see to any insurance on the Leased Property subject
to any Facility Lease or to effect or maintain any such
-7-
<PAGE> 11
SECTION PAGE
insurance, whether or not the Grantor thereof is in default with respect
thereto, other than to forward promptly to the Lenders copies of all
certificates, reports and other written information it receives from such
Grantor pursuant to such Facility Lease (unless the Lenders are to receive such
certificates, reports and other written information directly from such Grantor),
(iii) to see to the payment or discharge of any tax, assessment or other
government charge or any Lien owing with respect to, assessed or levied against
any part of the Trust Estate for any Designated Trust, other than Lessor Liens
attributable to it, (iv) to confirm or verify any financial statements of any
Grantor or any other Person, or (v) to inspect the Leased Property subject to
any Facility Lease at any time or ascertain or inquire as to the performance or
observance of any of a Grantor's or any other Person's (other than its or the
Bank's) covenants under the Operative Documents with respect to such Leased
Property.
SECTION IV.7. NO REPRESENTATIONS OR WARRANTIES AS TO ANY APPLICABLE
LEASED PROPERTY OR DOCUMENTS. THE BANK IS NOT A BUILDER, DEVELOPER OR
MANUFACTURER OF THE LEASED PROPERTY SUBJECT TO ANY FACILITY LEASE OR A DEALER IN
OR VENDOR OF SIMILAR LEASED PROPERTY AND HAS NOT INSPECTED AND WILL NOT INSPECT
SUCH LEASED PROPERTY BEFORE DELIVERY TO AND ACCEPTANCE BY A GRANTOR. THE BANK
HAS NOT MADE NOR DOES IT MAKE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY ENVIRONMENTAL MATTER OR CONDITION, VALUE, DESIGN, OPERATION,
CONDITION, QUALITY, DURABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR USE
OR FITNESS FOR A PARTICULAR PURPOSE, ABSENCE OF LATENT OR OTHER DEFECTS WHETHER
OR NOT DISCOVERABLE, ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, OR ANY OTHER WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
ANY OF SUCH LEASED PROPERTY, OR AS TO TITLE THERETO, OR (B) ANY REPRESENTATION
OR WARRANTY AS TO THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THE OPERATIVE
DOCUMENTS (OTHER THAN AS TO THIS TRUST AGREEMENT AGAINST THE BANK), OR AS TO THE
CORRECTNESS OF ANY STATEMENT CONTAINED IN ANY THEREOF, EXCEPT AS SET FORTH IN
SECTION 4.3 OF THE PARTICIPATION AGREEMENT.
SECTION IV.8. Status of Moneys Received. All moneys received by the
Trustee or the Bank under or pursuant to this Trust Agreement or any other
Operative Document (other than Excluded Amounts to be paid to the Bank) shall
constitute trust funds for the purpose for which they were paid or are held, but
need not be segregated in any manner from any other moneys and may be deposited
by the Trustee under such conditions as may be prescribed or permitted by
Applicable Law for trust funds, or, at the direction of the Agents, may be
invested in Cash Equivalents.
SECTION IV.9. Permitted Activities. The Trustee or any corporation in
or with which the Trustee may be interested or affiliated or any officer or
director of any such corporation may
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<PAGE> 12
SECTION PAGE
have commercial relations and otherwise deal with any Grantor or any other
Person or with any other corporation having relations with such Grantor to the
full extent permitted by Applicable Law.
SECTION IV.10. Resignation or Removal of Trustee. Bank or any successor
thereto as Trustee may resign as Trustee at any time without cause by giving at
least 60 days' prior written notice to each Lender, the Administrative Agent and
each Grantor, and the Required Lenders (or Grantors, if there exists no Event of
Default and then at the expense of Grantors) may at any time remove the Trustee
without cause by an instrument in writing delivered to the Trustee, the
Administrative Agent and each Grantor, such resignation or removal to be
effective on the later of the date specified in such notice or written
instrument or the date on which a successor trustee is appointed hereunder. With
the written consent of the Administrative Agent (and, so long as a Lease Event
of Default shall not have occurred and be continuing, each Grantor), the
Required Lenders may, at any time upon 30 days' prior written notice to the
Administrative Agent and each Grantor by an instrument in writing, appoint a
successor trustee; provided, however, so long as a Lease Event of Default shall
not have occurred and be continuing and with the written consent of the Required
Lenders and at the expense of Grantors, the Grantors may, after 30 days from the
date of such consent by an instrument in writing, appoint a successor trustee;
provided, further, that any successor trustee shall be a bank or trust company
organized under the laws of the United States of America or any state thereof
that has a combined capital and surplus of at least $100,000,000; and provided,
further, that, if required by Applicable Law, the Mississippi Gaming Commission
shall have made a determination of suitability with respect to such successor
trustee. If the Required Lenders do not appoint a successor trustee within 30
days after the giving of notice of such resignation or removal, the
Administrative Agent or the Trustee may apply to any court of competent
jurisdiction to appoint a successor trustee to act until a successor or
successors is appointed by the Required Lenders as above provided. Any successor
trustee so appointed by such court shall immediately and without further act be
superseded by a successor trustee appointed by the Required Lenders within one
year from the date of the appointment by such court.
SECTION IV.11. Estate and Rights of Successor Trustee. Any successor
Trustee, whether appointed by the Required Lenders or a court, shall execute and
deliver to the predecessor Trustee an instrument accepting such appointment, and
thereupon each successor trustee, without further act, shall become vested with
all the estates, properties, rights, powers, duties and trust of the predecessor
Trustee in the trust hereunder with like effect as if originally named Trustee
herein, but nevertheless upon the written request of such successor trustee,
such predecessor Trustee shall execute and deliver an instrument transferring to
such successor Trustee, upon the trust herein expressed, all the estates,
properties, rights, powers and trusts of such predecessor Trustee, and such
predecessor Trustee shall duly assign, transfer, deliver and pay over to such
successor trustee any property or moneys then held by such predecessor Trustee
upon the trusts herein expressed.
-9-
<PAGE> 13
SECTION PAGE
SECTION IV.12. Merger or Consolidation of Trustee. Any corporation into
which the Bank serving as Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Bank serving as Trustee is a party, or any corporation to which
substantially all of the business of the Trustee may be transferred, shall be a
successor trustee under this Trust Agreement without further act.
SECTION IV.13. Co-Trustees. At any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Trust Estate may
at the time be located, the Instructing Party and the Trustee jointly shall have
the power, and shall execute and deliver all instruments, to appoint one or more
Persons approved by the Required Lenders and the Trustee, to act as co-trustee,
or co-trustees, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of such Trust Estate, and to vest in such Person or
Persons, in such capacity, such title to such Trust Estate or any part thereof,
and such rights, powers, duties, trusts or obligations as the Required Lenders
and the Trustee may consider necessary or desirable. If the Instructing Party
has not joined in such appointment within 15 days after the receipt by it of a
request to do so, the Trustee alone shall have power to make such appointment.
The Trustee shall not be liable for any act or omission of any co-trustee or
separate trustee appointed under this Section 3.13.
SECTION IV.14. Books and Records. Trustee shall be responsible for
keeping the customary books and records relating to the receipt and disbursement
of all moneys actually received and disbursed by it.
ARTICLE V
TERMINATION OF AND AMENDMENTS TO TRUST
SECTION V.1. Termination. The Trust created and provided for hereby
shall cease and be terminated in any one of the following events, whichever
shall first occur:
(a) If the Required Lenders shall by notice in writing to the
Trustee, the Lenders, the Administrative Agent and the Grantor revoke
and terminate the Trust on and as of a date stated in such notice,
which date shall not be less than ten nor more than thirty days from
the date of mailing such notice, then on the date specified in such
notice, such trust created and provided for hereby shall cease and
terminate, provided, however, that the Trust shall not be subject to
revocation or termination by the Lenders prior to the payment in full
and discharge of the Loans and all other indebtedness secured by the
Operative Documents and the termination of the Operative Documents and
the release of the Liens granted thereby; or
(b) the sale or other final disposition by the Trustee of all
property constituting the Trust Estate and the final disposition by the
Trustee of all moneys or other property or
-10-
<PAGE> 14
SECTION PAGE
proceeds constituting part of Trust Estate in accordance with the terms
hereof; provided, however, that Trust Estate shall be subject to sale
or other final disposition by the Trustee prior to the payment in full
and discharge of the Loans and all other indebtedness secured by the
Operative Documents and the release of the Operative Documents and the
Liens granted thereby and the payment in full of the Commitment
Amounts; or
(c) 110 years after the date hereof.
SECTION V.2. Distribution of Trust Estate Upon Termination. Upon any
termination of the Trust pursuant to Section 4.1, the Trustee shall convey the
Trust Estate to such purchaser or purchasers thereof or other Persons entitled
thereto and for such amount and on such terms as are specified in written
instructions from the Required Lenders delivered to the Trustee before the date
of termination; provided that (a) if at the time of any termination the
corresponding Facility Lease remains in force and effect, then such Trust Estate
shall be conveyed as a unit subject to such Facility Lease and not in parcels,
and (b) if such written instructions are not delivered to the Trustee on or
before the date of termination, the Trustee shall transfer title to such Trust
Estate to the Lenders. Upon making such transfer or sale the Trustee shall be
entitled to immediate receipt of any sums due and owing to the Trustee,
including, without limitation, any expenses (including reasonable attorneys'
fees and expenses) incurred pursuant hereto or as compensation for services
rendered hereunder and not theretofore paid and the Trustee shall be discharged
and free of any further liability hereunder subject to Section 3.5(b).
SECTION V.3. Distribution from Trust Estate Upon Permitted Termination
of a Facility Lease. Upon any termination of any Facility Lease pursuant to
Article V of the Master Lease, the Trustee shall convey the portion of the Trust
Estate under such Facility Lease to such purchaser or purchasers thereof (or
other Persons entitled thereto) and for such amount and on such terms as are
specified in written instructions from the Required Lenders delivered to the
Trustee before the date of termination; provided that if such written
instructions are not delivered to the Trustee on or before the date of
termination, the Trustee shall transfer title to such portion of the Trust
Estate to the Lenders or their designee. Upon making such transfer or sale the
Trustee shall be discharged and free of any further liability with respect to
such released portion of the Trust Estate, subject to Section 3.5(b).
SECTION V.4. Amendments. Subject to Section 6.1(b) and Section 9.5 of
the Participation Agreement, at any time and from time to time, upon the written
request of the Instructing Party, (i) the Trustee shall execute a supplement
hereto for the purpose of adding provisions to, or changing or eliminating
provisions of, this Trust Agreement as specified in such request, and (ii) the
Trustee shall enter into or consent to such written amendment of or supplement
to the other Operative Documents as the Grantors or the Administrative Agent, as
may be required by such document(s), may agree to and as may be specified in
such request, or execute and deliver such written waiver or modification of the
terms of the Operative Documents as may be specified in such request; provided,
however, if in the reasonable opinion of the
-11-
<PAGE> 15
SECTION PAGE
Trustee, any document required to be executed by it pursuant to this Section 4.4
affects any right or duty of, or immunity or indemnity in favor of, the Trustee
under this Trust Agreement or the other Operative Documents, the Trustee may in
its reasonable discretion decline to execute such document.
ARTICLE VI
MISCELLANEOUS
SECTION VI.1. Compensation and Indemnification. Trustee shall receive
reasonable compensation for its services hereunder from the Grantors and shall
be reimbursed by the Grantors for the Trustee's reasonable fees and expenses
(including the reasonable disbursements and fees of counsel). If a Lease Event
of Default or a Loan Event of Default shall have occurred and be continuing and
the Trustee is required pursuant to this Trust Agreement to take any action in
connection therewith, it shall be reimbursed by the Grantors for any expenses it
may incur in relation to taking any such action. Subject to any limitations and
rights agreed to by Trustee in the Participation Agreement, including, without
limitation, the terms and provisions set forth in Articles VII and VIII of the
Participation Agreement, whether or not the transactions contemplated by the
Operative Documents are consummated, Grantors shall reimburse and indemnify and
save the Trustee harmless from and against any and all losses, damages,
liabilities, claims, actions, suits, obligations, penalties, demands,
disbursements and expenses, including taxes, counsel fees, and including tort
claims for which the Trustee is strictly liable, which may be asserted against
or incurred by reason of the Bank's being the Trustee or acting as the Trustee
hereunder or under the other Operative Documents or the performance or
enforcement of any of the terms hereof, or arising out of or relating to this
Trust Agreement or the other Operative Documents or the Trust, the Trust Estate
or any Leased Property, or any Rent or other sums payable therefor, or the
building, manufacture, purchase, installation, acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of any applicable Leased Property or in any way relating to or
arising out of the Trust Estate or the action or the inaction of the Trustee
hereunder or by reason of any occurrence while so acting. In no event shall the
Grantors be so obligated in respect of any such losses, damages, liabilities,
claims, actions, suits, obligations, penalties, demands, disbursements and
expenses, including taxes and counsel fees pursuant to this Section 5.1, arising
from or as a result of (a) the willful misconduct or gross negligence of the
Bank or the negligence of the Bank in the handling of funds, (b) any taxes on,
with respect to or measured by any amounts paid to the Bank as compensation for
services as Trustee hereunder or otherwise under the Operative Documents, or (c)
the inaccuracy of representations and warranties made by the Bank in the
Participation Agreement or in any certificate or documents delivered pursuant
thereto. The provisions of this Section 5.1 and Articles VII and VIII of the
Participation Agreement (other than the requirements for compensation of the
Trustee after its resignation, which shall terminate upon the resignation or
removal of the Trustee) shall continue in force and effect notwithstanding the
termination of the Trust, the resignation or removal of the Trustee or the
obligation of any other party to any
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<PAGE> 16
SECTION PAGE
other Operative Document to make any payment to the Trustee which the Grantors
are required to make pursuant to this Section 5.1.
SECTION VI.2. Notices. All notices and communications provided for
herein shall be in writing and shall be deemed to have been given in accordance
with Section 9.3 of the Participation Agreement. Trustee shall deliver to each
Lender promptly after receipt copies of all notices, certificates and reports
delivered to it pursuant to any Operative Document.
SECTION VI.3. GOVERNING LAW. THE TRUST IS CREATED PURSUANT HERETO, IN
THE STATE OF NEW YORK AND THE VALIDITY, CONSTRUCTION AND ALL RIGHTS UNDER THE
TRUST SHALL BE GOVERNED BY THE LAWS OF THAT STATE, INCLUDING SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER WITHOUT REGARD TO
THE CHOICE OF LAWS AND CONFLICTS OF LAWS RULES OF SUCH STATE; PROVIDED, HOWEVER,
THAT THE EXERCISE OF CERTAIN RIGHTS OR REMEDIES HEREUNDER AND UNDER THE
OPERATIVE DOCUMENTS MAY REQUIRE COMPLIANCE WITH GAMING LAWS. IF ANY PROVISION OF
THIS TRUST AGREEMENT SHALL BE INVALID OR UNENFORCEABLE, THE REMAINING PROVISIONS
HEREOF SHALL CONTINUE TO BE FULLY EFFECTIVE, PROVIDED THAT SUCH REMAINING
PROVISIONS DO NOT INCREASE THE OBLIGATIONS OR LIABILITIES OF THE TRUSTEE.
SECTION VI.4. Tax Reports; Information Reporting. The Trustee agrees to
promptly forward to each Lender any communications with respect to taxes
pertaining to the Trust Estate received by the Trustee from tax authorities or
from the Grantors.
SECTION VI.5. Headings. The headings of the various Sections herein are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
SECTION VI.6. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. Grantor may not assign,
transfer or otherwise dispose of its interest in any Designated Trust, except as
expressly contemplated in the Operative Documents.
SECTION VI.7. Severability. Any provision of this Trust Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition on
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provisions in any other jurisdiction.
SECTION VI.8. Only Written Waivers. No term or provision of this Trust
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing
-13-
<PAGE> 17
SECTION PAGE
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
SECTION VI.9. Counterparts. This instrument may be simultaneously
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, and such counterparts together shall constitute and be
one and the same instrument.
SECTION VI.10. Rights in Trust Agreement. Except as expressly provided
to the contrary in the Operative Documents, nothing in this Trust Agreement,
whether express or implied, shall be construed to give any Person other than the
Trustee and each Lender and their respective successors and assigns, any legal
or equitable right, remedy or claim under or in respect of this Trust Agreement.
SECTION VI.11. Payment of Trustee Fees, Costs and Expenses. Grantors
shall pay to the Trustee for its services hereunder such fees and expenses as
heretofore have been agreed upon by Trustee and Grantors, and shall also pay to
Trustee such fees and expenses as may be reasonably incurred by the Trustee as a
result of taking any direction of any Instructing Party. Trustee agrees that it
shall have no right against the Lenders or Administrative Agent for any fee as
compensation for its services hereunder, except as hereafter expressly agreed
upon by the Lenders, the Administrative Agent and the Trustee.
SECTION VI.12. Additional Grantors. From time to time following the
initial execution of this Trust Agreement, additional wholly-owned Subsidiaries
of Parent approved by the Required Lenders who execute and deliver to Trustee a
Certificate of Joinder, in the form attached as Exhibit A hereto, shall thereby
become additional Grantors hereunder and parties hereto. Upon acceptance thereof
by the Trustee, notice of which acceptance is hereby waived by Grantors, each
such additional Grantor shall be as fully a party hereto as if an original
signatory hereof. Each Grantor expressly agrees that its obligations hereunder
and under any other Operative Documents to which it is party, and the liens upon
its property granted in connection therewith, shall not be affected or
diminished by the addition or release of additional Grantors hereunder. This
Trust Agreement shall be fully effective as to any Grantor who is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Grantor hereunder.
SECTION VI.13. Identification of Trust. The name of the trust created
hereby is the GCI Trust 1997-1.
[signature pages follow]
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<PAGE> 18
SECTION PAGE
IN WITNESS WHEREOF, the Bank and each Initial Grantor have caused this
Trust Agreement to be duly executed all as of the day and year first above
written with actual execution on the dates set forth in the respective
acknowledgments below.
HANCOCK BANK,
as Bank and as Trustee
By:
------------------------------------
Name: Arnold Wethey
Title: Vice President & Trust Officer
Address: 2510 14th Street
One Hancock Plaza
Gulfport, MS 39501
Attn: Arnold Wethey
Telephone No.: (601) 868-4579
Telecopier No.: (601) 868-4098
<PAGE> 19
SECTION PAGE
BL RESORTS I, LLC,
as Grantor
By:
---------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, LLC,
as Grantor
By:
---------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
Address for both Initial Grantors:
130 Cheshire Lane
Minnetonka, MN 55305
Telephone No.: (612) 449-7030
Telecopier No.: (612) 449-7064
<PAGE> 20
SECTION PAGE
CORPORATE-ACKNOWLEDGMENT
(BANK-TRUSTEE)
STATE OF ___________ )
) ss:
COUNTY OF __________ )
Personally appeared before me, the undersigned authority in
and for the said county and state, on this ________ day of __________, _____,
within my jurisdiction, the within named ______________________ who acknowledged
that he is ____________________________ of Hancock Bank, a state banking
association, and that for and on behalf of the said bank, and as its act and
deed in the representative capacity therein stated, he executed the above and
foregoing instrument, after first having been duly authorized by said bank to do
so.
----------------------------------
NOTARY PUBLIC
My Commission expires:
- --------------------------------
(Affix official seal, if applicable)
<PAGE> 21
SECTION PAGE
CORPORATE-ACKNOWLEDGMENT
(GRANTOR)
STATE OF ____________ )
) ss:
COUNTY OF ___________ )
Personally appeared before me, the undersigned authority in
and for the said county and state, on this ________ day of _________, _____,
within my jurisdiction, the within named Timothy J. Cope who acknowledged that
he is the Chief Financial Officer of BL RESORTS I, LLC, a Minnesota limited
liability company, and that for and on behalf of the said company, and as its
act and deed he executed the above and foregoing instrument, after first having
been duly authorized by said company to do so.
----------------------------------
NOTARY PUBLIC
My Commission expires:
- ---------------------------------------
(Affix official seal, if applicable)
<PAGE> 22
SECTION PAGE
CORPORATE-ACKNOWLEDGMENT
(GRANTOR)
STATE OF ____________ )
) ss:
COUNTY OF ___________ )
Personally appeared before me, the undersigned authority in
and for the said county and state, on this ________ day of _________, _____,
within my jurisdiction, the within named Timothy J. Cope who acknowledged that
he is the Chief Financial Officer of GCG RESORTS I, LLC, a Minnesota limited
liability company, and that for and on behalf of the said company, and as its
act and deed he executed the above and foregoing instrument, after first having
been duly authorized by said company to do so.
----------------------------------
NOTARY PUBLIC
My Commission expires:
- ------------------------------------
(Affix official seal, if applicable)
<PAGE> 23
SECTION PAGE
Prepared by and when recorded mail to:
EXHIBIT A TO
Sheppard, Mullin, Richter & Hampton LLP TRUST AGREEMENT
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Mark A. Spitzer, Esq.
(213) 620-1780
CERTIFICATE OF JOINDER TO TRUST AGREEMENT
This Certificate of Joinder is entered into by the person signing below
(the "Joining Party"), with reference to the Trust Agreement dated as of
September 29, 1997 as filed in Book _____, Page ______ in the Office of the
Chancery Clerk of Tunica County, Mississippi and Book _____, Page ______ in the
First Judicial District in the Chancery Clerk's Office of Harrison County,
Gulfport, Mississippi (the "Trust Agreement") by and between Hancock Bank, a
Mississippi banking corporation, in its capacity as trustee ("Trustee"), and BL
Resorts I, LLC, a Minnesota limited liability company, and GCG Resorts I, LLC, a
Minnesota limited liability company, as Initial Grantors (and together with each
person who also becomes party thereto pursuant to the terms thereof, the
"Grantors").
AGREEMENT
1. Terms used but not defined in this Certificate of Joinder shall have
the meanings defined for those terms in the Participation Agreement
dated as of September 29, 1997 ("Participation Agreement") among the
Trustee; the Lenders; the Co-Agents; the Lead Manager; the Lessees;
Grand Casinos, Inc. and certain of its Subsidiaries, as Guarantors; and
BA Leasing & Capital Corporation, as Arranger and Administrative Agent.
This instrument secures a line of credit to be used primarily for business,
commercial or agricultural purposes and is entitled to the lien protection
provisions in Section 89-1-49 of the Mississippi Code of 1972, as amended.
INDEXING INSTRUCTIONS:
[Lessee to provide]
<PAGE> 24
SECTION PAGE
2. By this Certificate of Joinder, the Joining Party executing the same
becomes a "Grantor" under and pursuant to Section 5.12 of the Trust
Agreement. The Joining Party agrees that, upon its execution hereof, it
will be bound by all terms, conditions, and duties applicable to a
Grantor under the Trust Agreement. Substantially contemporaneously
herewith, the Joining Party is granting certain property to Trustee,
pursuant to one or more Improvement Deeds and/or one or more Bills of
Sale, to hold as part of the Trust Estate.
3. The effective date of this Joinder is _________, 19___.
"Joining Party"
----------------------
By:
----------------------------
Title:
--------------------------
ACKNOWLEDGED:
BA LEASING & CAPITAL CORPORATION,
as Administrative Agent
By:
----------------------------
Title:
--------------------------
<PAGE> 1
EXHIBIT 10.5
[EXECUTION COPY]
================================================================================
GUARANTY
dated as of September 29, 1997
of
GRAND CASINOS, INC.
AND ITS SUBSIDIARIES NAMED HEREIN
in favor of
THE BENEFICIARIES NAMED HEREIN
================================================================================
<PAGE> 2
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. Guaranty...............................................................1
2. Guarantor's Guaranteed Obligations Unconditional.......................3
3. Waiver and Agreement...................................................5
4. Assignment.............................................................6
5. Waiver of Subrogation..................................................6
6. Rights of the Beneficiaries............................................7
7. Term of Guaranty.......................................................7
8. Agreement of Guarantor.................................................7
9. Representations and Warranties.........................................7
10. Completion Guaranty...................................................8
11. Further Assurances....................................................8
12. Notices, Etc..........................................................9
13. Amendments, Etc.......................................................9
14. Severability..........................................................9
15. Joinder...............................................................9
16. Choice of Law.........................................................9
17. Successors and Assigns................................................9
<PAGE> 3
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of September 29, 1997, made
by GRAND CASINOS, INC., a Minnesota corporation ("Parent"), and each of the
undersigned corporations, together with each other Person who may become a party
hereto pursuant to Section 15 of this Guaranty (each, including Parent, a
"Guarantor"), in favor of the Beneficiaries named below pursuant to that certain
Participation Agreement, dated as of September 29, 1997 (the "Participation
Agreement"), among BL Resorts I, LLC, a Minnesota limited liability company ("BL
Resorts"), GCG Resorts I, LLC, a Minnesota limited liability company ("GCG
Resorts" and, together with BL Resorts, the "Initial Lessees"), each other
Subsidiary of Parent that becomes a Lessee with respect to the Operative
Documents in the manner specified in Section 9.22 of the Participation Agreement
(collectively, with the Initial Lessees, "Lessees"), as Lessees and Construction
Agents, Hancock Bank, not in its individual capacity but solely as Lessor and
Trustee, BA Leasing & Capital Corporation, a California corporation, as Arranger
and Administrative Agent, the Co-Agents identified therein, and the Lenders
identified therein. Capitalized terms used and not otherwise defined in this
Guaranty shall have the meaning assigned to such terms in Appendix 1 to the
Participation Agreement.
WHEREAS, Parent is the direct beneficial owner of all the issued and
outstanding membership interests of Lessees and Construction Agents; and
WHEREAS, pursuant to the Master Lease and the Participation Agreement,
Trustee has agreed, on behalf of the Trust and each Lender, to purchase the
Facilities and Facility F, F&E relating thereto and lease such Facilities and
Facility F, F&E to Lessees pursuant to the Master Lease and Lease Supplements to
be executed from time to time in connection therewith; and
WHEREAS, each Guarantor is entering into this Guaranty in order to
induce the parties to the Participation Agreement to enter into the transactions
contemplated thereby;
NOW, THEREFORE, each Guarantor covenants and agrees as follows:
SECTION 2. Guaranty. Each Guarantor jointly and severally hereby
absolutely, unconditionally and irrevocably guarantees to Trustee (both
individually and in its capacity as Trustee), the Administrative Agent, each
Lender, the Bank and each other Indemnitee and their respective successors and
assigns (individually, a "Beneficiary" and, collectively, the "Beneficiaries"):
(a) the due, punctual and full payment of all amounts
(including amounts payable as damages in case of default and any
amounts due pursuant to Article VII of the Participation Agreement and
Section 3.2 and Article IV of each of the Construction Agency
Agreements)payable by each of the Lessees and Construction Agents
pursuant to
-1-
<PAGE> 4
Guaranty
the Master Lease, the Lease Supplements, the Construction Agency
Agreements, the Participation Agreement, or any other Operative
Document to which any Lessee or Construction Agent is or is to be a
party, whether such obligations now exist or arise hereafter, as and
when the same shall become due and payable in accordance with the terms
thereof (including in all cases all such amounts which would become due
but for the operation of the automatic stay under Section 362(a) of the
United States Bankruptcy Code, 11 U.S.C. ss.362(a), the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. ss.502(b) and ss.506(b) or the commencement or operation of any
other bankruptcy, insolvency, reorganization or like proceeding
relating to any Lessee or Construction Agent); and
(b) the due, prompt and faithful performance of, and
compliance with, all other obligations, covenants, terms, conditions
and undertakings of each of the Lessees contained in the Participation
Agreement, the Master Lease, the Lease Supplements or any other
Operative Documents to which any Lessee is or may be a party in
accordance with the terms thereof or of each of the Construction Agents
contained in the Participation Agreement, the Construction Agency
Agreements or any other Operative Document to which any Construction
Agent is or may be a party in accordance with the terms thereof.
(such obligations referred to in clauses (a) and (b) above being hereinafter
called the "Guaranteed Obligations"); provided, however, that such Guarantor
shall be liable under this Guaranty only for the maximum amount of such
liability that can be hereby incurred without rendering this Guaranty, as it
relates to such Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount and, provided
further that, in the case of any Guarantor that is also a Lessee, such Guarantor
shall be liable under this Guaranty only for that portion of the Guaranteed
Obligations with respect to which such Guarantor is not liable as a Lessee.
Each Guarantor further will pay any and all reasonable costs and
expenses (including reasonable fees and disbursements of counsel, which may
include allocated costs of staff counsel of any Beneficiary) that may be paid or
incurred by any Beneficiary in collecting any Guaranteed Obligations or in
preserving or enforcing any rights under this Guaranty or under the Guaranteed
Obligations, it being understood that no Guarantor shall be obligated to pay
hereunder to the extent that the applicable Lessees have made such corresponding
payments under the Operative Documents.
This Guaranty constitutes an unconditional and irrevocable guaranty of
payment, performance and compliance and not of collectability, is in no way
conditioned or contingent upon any attempt to collect from or enforce
performance or compliance by any Lessee or
-2-
<PAGE> 5
Guaranty
Construction Agent or upon any other event, contingency or circumstance
whatsoever, and shall be binding upon and against each Guarantor without regard
to the validity or enforceability of the Master Lease, the Lease Supplements,
the Participation Agreement, the Construction Agency Agreements or any other
Operative Document.
If for any reason whatsoever any Lessee or Construction Agent shall
fail or be unable duly, punctually and fully to pay such amounts as and when the
same shall become due and payable or to perform or comply with any such
obligation, covenant, term, condition or undertaking, each applicable Guarantor
will immediately pay or cause to be paid such amounts to the Person or Persons
entitled to receive the same under the terms of the Operative Documents, as
appropriate, together with interest at the Overdue Rate on any amount due and
owing from the date the same shall have become due and payable to the date of
payment, or perform or comply with any such obligation, covenant, term,
condition or undertaking or cause the same to be performed or complied with.
SECTION 3. Guarantor's Guaranteed Obligations Unconditional. The
covenants and agreements of each Guarantor set forth in this Guaranty shall be
primary obligations of such Guarantor, and shall be continuing, absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by such Guarantor with its obligations
hereunder), whether based upon any claim that any Lessee, Construction Agent,
such Guarantor, or any other Person may have against any Beneficiary or any
other Person or otherwise, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not such Guarantor, any Lessee
or Construction Agent shall have any knowledge or notice thereof) including,
without limitation:
(a) any amendment, modification, addition, deletion,
supplement or renewal to or of or other change in the Guaranteed
Obligations, the Master Lease, the Lease Supplements, the Construction
Agency Agreements or any Operative Document, or any of the agreements
referred to in any thereof, or any other instrument or agreement
applicable to any such agreements or any of the parties to such
agreements, or to any of the Facilities or any Facility F,F&E, or any
assignment, mortgage or transfer thereof or of any interest therein, or
any furnishing or acceptance of additional security for, guaranty of or
right of offset with respect to, any of the Guaranteed Obligations; or
the failure of any security or the failure of any Beneficiary to
perfect or insure any interest in any collateral;
(b) any failure, omission or delay on the part of any Lessee,
Construction Agent, Beneficiary or other Person to conform or comply
with any term of any instrument or agreement referred to in clause (a)
above;
-3-
<PAGE> 6
Guaranty
(c) any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of any
instrument, agreement, guaranty, right of offset or security referred
to in clause (a) above or any obligation or liability of any Lessee,
Construction Agent or Beneficiary, or any exercise or non-exercise by
any Beneficiary or any other Person of any right, remedy, power or
privilege under or in respect of any such instrument, agreement,
guaranty, right of offset or security or any such obligation or
liability;
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with
respect to any Lessee or Construction Agent, any Beneficiary or any
other Person, or any of their respective properties or creditors, the
imposition of any stay or injunction in connection with any such
proceeding, or any action taken by any trustee or receiver or by any
court in any such proceeding;
(e) any limitation on (i) the liability or obligations of any
Lessee, Construction Agent, such Guarantor or any other Person under
any agreement or instrument referred to in clause (a) above, or (ii)
the enforceability or validity of any of the Guaranteed Obligations or
any security for the Guaranteed Obligations;
(f) any other guaranty of the Guaranteed Obligations or any
discharge, termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of any of the
foregoing, or any other agreement or instrument, referred to in clause
(a) above or any term of any thereof;
(g) any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or
loss or destruction of, or any interruption or cessation in the
construction or use of, any Facility or any Facility F,F&E by any
Lessee, Construction Agent or any other Person for any reason
whatsoever (including any governmental prohibition or restriction,
condemnation, requisition, seizure or any other act on the part of any
governmental or military authority, or any act of God or of the public
enemy) regardless of the duration thereof (even though such duration
would otherwise constitute a frustration of the Master Lease, any Lease
Supplement or any Construction Agency Agreement), whether or not
resulting from accident and whether or not without fault on the part of
any Lessee, Construction Agent, or other Person;
(h) any merger or consolidation of any Lessee, Construction
Agent or such Guarantor into or with any other Person or any sale,
lease or transfer of any of the assets
-4-
<PAGE> 7
Guaranty
of any Lessee, Construction Agent or such Guarantor to any other
Person; Guaranty
(i) any change in the ownership of any of the membership
interests of any Lessee or Construction Agent or any organizational
change in any Lessee or Construction Agent;
(j) a failure of the Master Lease or any Lease Supplement to
become effective;
(k) any assignments, transfers or subleases of any Lease
Supplement or any of any Lessee's rights thereunder including an
assignment, transfer or sublease pursuant to Article IV of the Master
Lease; or
(l) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other circumstance that
might otherwise constitute a legal or equitable defense or discharge of
the liabilities of a guarantor or surety or that might otherwise limit
recourse against such Guarantor.
The unconditional obligations of each Guarantor set forth herein
constitute the full recourse obligations of such Guarantor enforceable against
it to the full extent of all its assets and properties.
SECTION 4. Waiver and Agreement. Each Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guaranty or acceptance of this Guaranty, and the Guaranteed Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guaranty. Each Guarantor unconditionally waives,
to the extent permitted by law: (a) acceptance of this Guaranty and proof of
reliance by any Beneficiary hereon; (b) notice of any of the matters referred to
in Section 2, or any right to consent or assent to any thereof; (c) all notices
that may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve intact any rights against such Guarantor, including without
limitation, any demand, presentment, protest, proof or notice of nonpayment
under any agreement or instrument referred to in clause (a) of Section 2, and
notice of default or any failure on the part of any Lessee to perform and comply
with any covenant, agreement, term or condition of any agreement or instrument
referred to in clause (a) of Section 2; (d) any right to the enforcement,
assertion or exercise against any Lessee or Construction Agent of any right,
power, privilege or remedy conferred in any agreement or instrument referred to
in clause (a) of Section 2 or otherwise; (e) any requirement of diligence on the
part of any Person; (f) any requirement of any Beneficiary to take any action
whatsoever, to exhaust any remedies or to mitigate the damages resulting from a
default by any Person under any agreement or instrument referred to in clause
(a) of Section 2; (g) any notice of any sale, transfer or other disposition by
any Person of any right under, title to or interest in any agreement or
instrument referred to in
-5-
<PAGE> 8
Guaranty
clause (a) of Section 2 or the Collateral; and (h) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or that might otherwise limit
recourse against such Guarantor.
Each Guarantor agrees that this Guaranty shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Lessee or Construction Agent is rescinded or must be otherwise restored
by any of the Beneficiaries, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise.
Each Guarantor further agrees that, without limiting the generality of
this Guaranty, if a Lease Event of Default or Construction Agency Event of
Default shall have occurred and be continuing and Trustee or its assignee is
prevented by applicable law from exercising its remedies under the Master Lease
or if any Construction Agency Agreement or any agreement or instrument referred
to in clause (a) of Section 2 shall be terminated as a result of the rejection
or disaffirmance thereof by any trustee, receiver or liquidating agent of any
Lessee, Construction Agent, or other Person upon the insolvency, bankruptcy or
reorganization of such Lessee, Construction Agent or other Person, such
Guarantor's Guaranteed Obligations hereunder shall continue to the same extent
as if Trustee had exercised any remedies available under the Master Lease or had
such Construction Agency Agreement or other agreement or instrument not been
rejected or disaffirmed.
SECTION 5. Assignment. Each Guarantor hereby acknowledges that it is
contemplated that on the date hereof the Trustee will assign to the
Administrative Agent for the benefit of the Lenders all of the Trustee's rights,
title and interest in and to this Guaranty in respect of any Guaranteed
Obligations hereunder which are part of the Trust Estate and such Guarantor
hereby agrees to such assignment.
SECTION 6. Waiver of Subrogation. Each Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
any Lessee or Construction Agent that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Guaranty
or any other Operative Document, including any right of subrogation,
reimbursement, exoneration, or indemnification, any right to participate in any
claim or remedy of Beneficiaries against any Lessee or Construction Agent or any
Collateral which the Administrative Agent now has or hereafter acquires, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including the right to take or receive from any Lessee or
Construction Agent, directly or indirectly, in cash or other property or by
set-off or in any manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Guaranteed Obligations shall not have been
indefeasibly paid in cash, such amount shall be deemed to have been paid to such
Guarantor for the benefit of, and held in trust for, the
-6-
<PAGE> 9
Guaranty
Beneficiaries, and shall forthwith be paid to the Administrative Agent to be
credited and applied pursuant to the terms of the Loan Agreement and the Trust
Agreement. Each Guarantor acknowledges that it will receive substantial economic
benefits from the financing arrangements contemplated by the Operative Documents
and that the waiver set forth in this Section 5 is knowingly made in
contemplation of such benefits. Each Guarantor hereby absolutely,
unconditionally and irrevocably waives and agrees not to assert or take
advantage of any defense based upon an election of remedies by the
Administrative Agent, including an election to proceed by non-judicial rather
than judicial foreclosure, which destroys or impairs any right of subrogation of
such Guarantor or the right of such Guarantor to proceed against any Person for
reimbursement or both.
SECTION 7. Rights of the Beneficiaries. This Guaranty is made for the
benefit of, and shall be enforceable by, each Beneficiary as its interest may
appear or by the Administrative Agent on behalf of the Beneficiaries.
SECTION 8. Term of Guaranty. This Guaranty and all guaranties,
covenants and agreements of each Guarantor contained herein shall continue in
full force and effect and shall not be discharged until such time as all the
Guaranteed Obligations shall be indefeasibly paid in full in cash and all the
agreements of such Guarantor hereunder and the Lessees and Construction Agents
hereunder and under the Master Lease and all Lease Supplements thereto, the
Participation Agreement and the other Operative Documents shall have been duly
performed. If, as a result of any bankruptcy, dissolution, reorganization,
insolvency, arrangement or liquidation proceedings (or proceedings similar in
purpose or effect), or if for any other reason any payment received by any
Beneficiary in respect of the Guaranteed Obligations is rescinded or must be
returned by such Beneficiary, this Guaranty shall continue to be effective as if
such payment had not been made and, in any event, as provided in the preceding
sentence.
SECTION 9. Agreement of Guarantor. Each Guarantor assumes the
responsibility for being and keeping itself informed of the financial condition
of each of the Lessees and Construction Agents and of all other circumstances
with respect to any of the Guaranteed Obligations, and such Guarantor agrees
that no Beneficiary shall be under any duty to advise such Guarantor of
information known to it regarding such condition or any such circumstance,
whether or not any Beneficiary has a reasonable opportunity to communicate such
information or has reason to believe that any such information is unknown to
such Guarantor or materially increases the risk to such Guarantor beyond the
risk such Guarantor intends to assume hereunder.
SECTION 10. Representations and Warranties. Each Guarantor (other
than Parent) hereby represents and warrants to each Beneficiary as follows:
(a) Such Guarantor is a corporation duly organized, validly
existing and in good
-7-
<PAGE> 10
Guaranty
standing under the laws of the jurisdiction of its incorporation, and
has full corporate power and authority to enter into this Guaranty and
the other Operative Documents to which it is a party and to carry out
the transactions contemplated hereby and thereby.
(b) The execution and delivery by such Guarantor of this
Guaranty and the other Operative Documents to which it is a party and
the consummation by such Guarantor of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action of such Guarantor. This Guaranty and the other Operative
Documents to which such Guarantor is a party have each been duly
executed and delivered by such Guarantor and each constitutes the
legal, valid and binding obligation of such Guarantor enforceable
against such Guarantor in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium or similar
laws at the time in effect affecting the rights of creditors generally
and subject to the effects of general principles of equity (regardless
of whether considered in a proceeding in law or equity).
(c) The execution and delivery of this Guaranty and the other
Operative Documents to which such Guarantor is a party and the
consummation by such Guarantor of the transactions contemplated hereby
do not (i) contravene or result in a default under such Guarantor's
articles of incorporation or bylaws, (ii) contravene or result in a
default under any contractual restriction, law or governmental
regulation or court decree or order binding on such Guarantor, (iii)
require any filings, consents or authorizations which have not been
duly obtained or (iv) result in the creation or imposition of any Lien
on such Guarantor's properties, other than Permitted Liens.
SECTION 11. Completion Guaranty. Each Guarantor jointly and severally
hereby absolutely, unconditionally and irrevocably guarantees to each
Beneficiary that if any Construction Agent fails to cause the Completion Date of
any applicable Facility to occur on or before the Construction Termination Date,
such Guarantor shall within five days thereafter, with the written consent of
such Construction Agent, acknowledging that it will not be released thereby from
any obligations under the Operative Documents, which consent may be waived by
Trustee, notify Trustee that such Guarantor will perform in place of the
applicable Construction Agent all obligations of such Construction Agent then
remaining unperformed to cause title to each such unfinished Facility to be
conveyed to Trustee and to complete the construction and installation of each
such unfinished Facility in accordance with the provisions of the applicable
Construction Agency Agreement and the Participation Agreement, including any
obligation of such Construction Agent under the applicable Construction Agency
Agreement or any other Operative Document to pay to Trustee, the applicable
Prime Contractor or any other Person at any time any amount which Trustee may
determine is required to complete installation and construction of each such
unfinished Facility or to reimburse Trustee, any Lender or any Person
-8-
<PAGE> 11
Guaranty
for any amount incurred at any time by Trustee, such Lender or such Person in
performing such obligations on behalf of such Construction Agent as permitted by
the applicable Construction Agency Agreement or the other Operative Documents.
SECTION 12. Further Assurances. Each Guarantor hereby agrees to execute
and deliver all such instruments and take all such action as any Beneficiary may
from time to time reasonably request in order to fully effectuate the purposes
of this Guaranty.
SECTION 13. Notices, Etc. All notices, demands, requests, consents,
approvals and other instruments hereunder shall be in writing and shall be
deemed to have been properly given if given as provided for in Section 9.3 of
the Participation Agreement.
SECTION 14. Amendments, Etc. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by any Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Beneficiaries, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 15. Severability. In case any provisions of this Guaranty or
any application thereof shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions and statements
and any other application thereof shall not in any way be affected or impaired
thereby. To the extent permitted by law, each Guarantor hereby waives any
provision of law that renders any term or provision hereof invalid or
unenforceable in any respect.
SECTION 16. Joinder. Any other Person may become a Guarantor under and
become bound by the terms and conditions of this Guaranty by executing and
delivering to the Administrative Agent an Instrument of Joinder substantially in
the form attached hereto as Exhibit A, accompanied by (a) such documentation as
the Administrative Agent may require to establish the due organization, valid
existence and good standing of such Person, its qualification to engage in
business in each material jurisdiction in which it is required to be so
qualified, its authority to execute, deliver and perform this Guaranty, and the
identity, authority and capacity of each responsible official thereof authorized
to act on its behalf and (b) a written legal opinion from counsel to such
Person, which legal opinion shall (i) include or otherwise address with respect
to such Person and its joinder to the Guaranty all related matters similar to
those set forth in Exhibit M-1 to the Participation Agreement and (ii) be
provided by counsel reasonably acceptable to the Required Lenders.
SECTION 17. Choice of Law. THIS GUARANTY HAS BEEN DELIVERED IN AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTY SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF NEW YORK,
INCLUDING SECTION 5-
-9-
<PAGE> 12
Guaranty
1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF
LAWS AND CONFLICTS RULES OF SUCH STATE, EXCEPT TO THE EXTENT THAT THE EXERCISE
OF CERTAIN RIGHTS OR REMEDIES HEREUNDER OR UNDER THE OTHER OPERATIVE DOCUMENTS
MAY REQUIRE COMPLIANCE WITH GAMING LAWS.
SECTION 18. Successors and Assigns. This Guaranty shall be binding upon
each Guarantor and its successors, transferees and assigns and inure to the
benefit of and be enforceable by the respective successors, transferees, and
assigns of the Beneficiaries; provided, however, that such Guarantor may not
delegate any of its obligations hereunder without the prior written consent of
the Trustee and each Lender.
[Signature pages follow]
-10-
<PAGE> 13
Guaranty
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed as of the date first above written.
GRAND CASINOS, INC.
By: ______________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS RESORTS, INC.
By: ______________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC. -
GULFPORT
By: ______________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
By: ______________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
-11-
<PAGE> 14
Guaranty
GRAND CASINOS BILOXI THEATER, INC.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
MILLE LACS GAMING CORPORATION
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. -
TUNICA-BILOXI
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. -
COUSHATTA
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GCA ACQUISITION SUBSIDIARY, INC.
-12-
<PAGE> 15
Guaranty
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL DEVELOPMENT CORP.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, INC.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, INC.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, LLC
By: ___________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
-13-
<PAGE> 16
Guaranty
GCG RESORTS I, LLC
By: ___________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
-14-
<PAGE> 17
EXHIBIT A
TO
GUARANTY
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
___________________, _____, by ____________________________________________, a
___________________________ ("Joining Party"), and delivered to BA Leasing &
Capital Corporation, as Administrative Agent, pursuant to the Guaranty, dated as
of September 29, 1997, made by Grand Casinos, Inc., a Minnesota corporation
("Parent"), and the other Guarantors identified therein, in favor of the
Administrative Agent and the other Beneficiaries described therein (the
"Guaranty"). Terms used but not defined in this Joinder shall have the meanings
defined for those terms in the Guaranty.
RECITALS
(a) The Guaranty was made by the Guarantors in favor of the
Beneficiaries with respect to the Participation Agreement and the other
Operative Documents.
(b) Joining Party is a Subsidiary of Parent and has elected to
become a Guarantor under the terms and conditions of the Guaranty.
(c) Joining Party expects to realize direct and indirect
benefits as a result of the availability of the financing arrangements provided
by the Operative Documents.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
(1) By this Joinder, Joining Party becomes a "Guarantor" under
and pursuant to Section 15 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Guaranteed Obligations heretofore or hereafter incurred under the Operative
Documents, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty, in each case for all purposes of the Operative
Documents as if Joining Party was a originally a party to the Guaranty and the
Participation Agreement.
(2) The effective date of this Joinder is __________________.
"Joining Party"
-15-
<PAGE> 18
________________________________
a _________________________
By:______________________________
Title:_____________________________
ACKNOWLEDGED:
BA LEASING & CAPITAL
CORPORATION, as Administrative Agent
By:________________________________
Title:_______________________________
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> SEP-28-1997
<CASH> 140,333
<SECURITIES> 0
<RECEIVABLES> 17,407
<ALLOWANCES> 0
<INVENTORY> 6,053
<CURRENT-ASSETS> 192,569
<PP&E> 1,027,266
<DEPRECIATION> 93,061
<TOTAL-ASSETS> 1,227,660
<CURRENT-LIABILITIES> 116,988
<BONDS> 454,498
0
0
<COMMON> 420
<OTHER-SE> 494,099
<TOTAL-LIABILITY-AND-EQUITY> 1,227,660
<SALES> 460,586
<TOTAL-REVENUES> 495,360
<CGS> 162,539
<TOTAL-COSTS> 346,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,572
<INCOME-PRETAX> 89,563
<INCOME-TAX> 34,503
<INCOME-CONTINUING> 55,060
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,060
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
