UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO
________
COMMISSION FILE NO. 1-12030
STRATOSPHERE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 88-0292318
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2000 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89104
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(702) 382-4446
(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 ______
INDICATE THE NUMBER OF SHARES OUTSTANDING FOR EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: 58,393,105.
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CONDENSED CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 20,952,024 $ 92,595,770
Cash and cash equivalents-restricted 11,038,063 --
Accounts receivable 8,133,707 5,417,030
Other current assets 7,654,166 1,125,548
------------ -------------
Total Current Assets 47,777,960 99,138,348
----------- -------------
Property and Equipment, Net 395,499,463 194,908,237
------------ ------------
Other Assets:
Cash and cash equivalents-restricted -- 115,413,435
Securities available for sale 8,891,460 5,140,950
Debt issuance and deferred licensing costs-net 13,559,392 13,507,699
Pre-opening costs-net 15,228,430 5,796,862
------------ -------------
Total Other Assets 37,679,282 139,858,946
------------ -------------
TOTAL ASSETS $480,956,705 $ 433,905,531
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable-trade $ 3,467,614 338,745
Accounts payable-construction 20,576,434 33,523,612
Current installments of long-term debt and capital leases 11,170,375 --
Accrued interest 3,964,269 3,645,657
Accrued payroll and related expenses 3,871,021 166,485
Affiliate payable 2,643,636 803,865
Other accrued expenses 2,698,911 137,403
------------ -------------
Total Current Liabilities 48,392,260 38,615,767
------------ -------------
Long-term Liabilities:
Long-term debt and capital lease-less current installments 230,500,000 203,000,000
------------ -------------
Total Long-Term Liabilities 230,500,000 203,000,000
------------ -------------
TOTAL LIABILITIES 278,892,260 241,615,767
------------ -------------
COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.01 par value; authorized 100,000,000 shares;
issued and outstanding 58,393,105 and 56,361,117
at June 30, 1996 and December 31, 1995, respectively 583,931 563,611
Additional paid-in-capital 218,640,651 199,697,889
Accumulated deficit (17,160,137) (7,971,736)
------------ -------------
Total Shareholders' Equity 202,064,445 192,289,764
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $480,956,705 $433,905,531
============ ============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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CONDENSED CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1996 1996 1995
------------ ----------
<S> <C> <C>
REVENUES:
Casino $ 12,310,040 $ --
Hotel 5,005,218 --
Food and beverage 7,235,360 --
Tower, retail and other income 7,221,066 3,490
------------ ----------
Gross Revenues 31,771,684 3,490
Less: Promotional allowances 1,882,982 --
------------ ----------
NET REVENUES 29,888,702 3,490
------------ ----------
COSTS AND EXPENSES:
Casino 5,992,036 --
Hotel 2,120,199 --
Food and beverage 5,504,968 --
Other operating expenses 2,347,734 (135,197)
Depreciation and amortization 2,250,614 526,015
Pre-opening costs amortization 7,652,258 --
Selling, general and administrative 11,776,922 63,553
------------ ----------
Total Costs and Expenses 37,644,731 454,371
------------ ----------
LOSS FROM OPERATIONS (7,756,029) (450,881)
OTHER INCOME (EXPENSE):
Interest income 934,357 2,236,029
Interest expense (4,361,515) (4,117,096)
Gain on sale of investments -- (166,815)
------------ ----------
Total other expense, net (3,427,158) (2,047,882)
------------ ----------
Loss before income taxes (11,183,187) (2,498,763)
Provision (benefit) for income taxes (78,807) --
------------ ----------
NET LOSS $(11,104,380) $ (2,498,763)
============ ============
Loss per Common Share $ (0.19) $ (0.07)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 58,332,097 34,698,352
============ ============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996 1996 1995
----------- ----------
<S> <C> <C>
REVENUES:
Casino $12,310,040 $ --
Hotel 5,005,218 --
Food and beverage 7,235,360 --
Tower, retail and other income 7,229,943 21,656
----------- ----------
Gross Revenues 31,780,561 21,656
Less: Promotional allowances 1,882,982 --
----------- ----------
NET REVENUES 29,897,579 21,656
----------- ----------
COSTS AND EXPENSES:
Casino 5,992,036 --
Hotel 2,120,199 --
Food and beverage 5,504,968 --
Other operating expenses 2,347,734 --
Depreciation and amortization 2,489,017 656,311
Pre-opening costs amortization 7,652,258 --
Selling, general and administrative 11,814,608 328,750
----------- ----------
Total Costs and Expenses 37,920,820 985,061
----------- ----------
LOSS FROM OPERATIONS (8,023,241) (963,405)
----------- ----------
OTHER INCOME (EXPENSE):
Interest income 3,301,999 2,903,702
Interest expense (4,467,159) (5,270,219)
Gain on sale of investment -- (166,815)
----------- ----------
Total other expense, net (1,165,160) (2,533,332)
----------- ----------
Loss before income taxes (9,188,401) (3,496,737)
Provision (benefit) for income taxes -- --
----------- ----------
NET LOSS $ (9,188,401) $(3,496,737)
============ ===========
LOSS PER COMMON SHARE $ (0.16) $ (0.11)
============ ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 57,875,097 32,459,392
============ ===========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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CONDENSED CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996 1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,188,401) $ (3,496,737)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 2,908,855 --
Amortization of pre-opening costs 7,652,258 656,311
Loss on sale of property and equipment -- 166,815
Changes in operating assets and liabilities:
Other current assets (26,329,121) (3,235)
Accounts payable - trade 3,128,869 (600,727)
Accrued expenses and income taxes 6,584,658 9,059,918
------------- -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (15,242,882) 5,782,345
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to stockholder -- (4,411,798)
(Increase) decrease in cash and cash equivalents-restricted 104,079,491 (147,358,981)
Decrease in securities available for sale (3,750,510) (32,370,497)
Payments for property and equipment (197,584,257) (24,704,118)
Increase in other long-term assets -- (657,536)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (97,255,276) (209,502,930)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock-net 1,296,446 --
Costs of secondary stock offering (242,243) --
Debt issuance costs and deferred financing costs (709,935) (10,176,595)
Proceeds from issuance of long-term debt and capital lease obligations 38,670,374 216,493,458
Payments on long-term debt and capital lease obligations -- (3,737,763)
Increase in affiliate payable 1,839,770 --
Cash proceeds from sale of property and equipment -- 928,134
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 40,854,412 203,507,234
------------- -------------
Net decrease in cash and cash equivalents (71,643,746) (213,351)
Cash and cash equivalents - beginning of period 92,595,770 516,479
------------- -------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 20,952,024 $ 303,128
============= =============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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<CAPTION>
CONDENSED CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996 1996 1995
------------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S> <C> <C>
Cash paid during the period for:
Interest - net of capitalized interest 3,255,453 --
Income taxes -- --
Non-Cash Investing and Financing Activities:
Decrease in land and improvements and construction in progress
included in long-term debt and accounts payable - construction (12,947,178) (121,409)
Issuance of common stock in purchase of land 18,204,760 --
Issuance of common stock in payment of underwriting fees in connection
with First Mortgage Notes -- 4,000,000
Purchase of land, buildings, furniture and equipment from
stockholder (principally Vegas World assets) as follows:
Purchase price -- 1,000,000
Cash paid -- --
------------- ----------
Note payable to stockholder -- 1,000,000
Preferential distribution to
stockholder -- 1,226,841
------------- ----------
Predecessor cost of assets aquired for non-cash consideration -- 2,226,841
============= ==========
Increase in furniture and equipment from
reduction in notes receivable from stockholder -- 80,000
Offering costs recognized as a reduction in additional paid-in capital
in connection with initial public offering of common stock -- 23,570
Issuance of preferred stock to parent in payment of notes payable -- 33,519,750
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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NOTES TO CONDENSED CONSOLIDATED STRATOSPHERE CORPORATION AND SUBSIDIARIES
FINANCIAL STATEMENTS
(1) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
The accompanying condensed consolidated financial statements present
the financial position, results of operations and cash flows of Stratosphere
Corporation and its wholly-owned subsidiaries, Stratosphere Gaming Corporation,
Stratosphere Land Corporation and Stratosphere Advertising Agency (collectively
the "Company"). The Company commenced operations on April 29, 1996 with a 1,149
foot, free standing observation tower with an integrated casino, hotel and
entertainment facility.
Principles of Presentation
The condensed consolidated financial statements have been prepared in
accordance with the accounting policies described in the Company's 1995 Annual
Report on Form 10-K. Although the Company believes that the disclosures are
adequate to make the information presented not misleading, it is suggested that
these financials be read in conjunction with the Notes to Consolidated Financial
Statements which appear in that report.
In the opinion of management, the accompanying financial statements
include all adjustments (of a normal recurring nature) which are necessary for a
fair presentation of the results for the interim periods presented. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted pursuant to such rules and regulations of the
Securities and Exchange Commission.
Reclassifications
Certain amounts in the 1995 condensed consolidated financial statements
have been reclassified to conform with the 1996 presentation. These
reclassifications had no effect on the Company's net income.
Revenues and Expenses
Casino revenue is the net win from gaming activities (the difference
between gaming wins and losses). Casino revenues are net of accruals for
anticipated payouts of progressive and certain other slot machine jackpots.
Revenues include the retail value of rooms, food and beverage, and other items
that are provided to customers on a complimentary basis. A corresponding amount
is deducted as promotional allowances. The costs of such complimentaries are
included in hotel, food and beverage expenses in the accompanying Condensed
Consolidated Statements of Operations.
Property and Equipment
Property and equipment are stated at cost, except in the case of
capitalized lease assets, which are stated at the lower of the present value of
the future minimum lease payments or fair market value at the inception of the
lease. Expenditures for additions, renewals and improvements are capitalized.
Costs of repairs and maintenance are expensed when incurred. Leasehold
acquisition costs are amortized over the shorter of their estimated useful lives
or the term of the respective leases once the assets are placed in service.
Depreciation and amortization of property and equipment is computed
using the straight-line method over the following estimated useful lives:
Building and Leasehold Improvements 30 years
Leasehold Acquisition Costs 30 years
Furniture and Equipment 3-15 years
Land Improvements 15 years
Loss Per Share
Loss per common share was computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Stock options and
warrants have not been included in these calculations as their impact would be
anti-dilutive.
(2) COMMITMENTS
On May 3, 1996, the Company consummated a $37.5 million capital lease
transaction. No event of default has occurred under the terms of the capital
lease. However, based upon the Company's current operations it is likely that at
the end of the third fiscal quarter the Company will not meet certain financial
covenants that it has made as part of the capital lease. Any failure to meet
such financial covenants constitutes an event of dafault under the capital lease
that gives the lender the right to accelerate such indebtedness. The
acceleration of such indebtedness would also constitute an event of default
under the Company's First Mortgage Note Indenture.
(3) CONTINGENCIES
On August 6, 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 the Company, Lyle A. Berman (an officer and
director of the Company and Grand Casinos, Inc. ("Grand"), Robert E. Stupak (a
former officer and director of the Company), Bob Stupak Enterprises, David R.
Wirshing (a former officer and director of the Company), Thomas A. Lettero (an
officer of the Company), Thomas G. Bell (a director of the Company), Andrew S.
Blumen (an officer and director of the Company), and Grand. The complaint
purports to seek relief on behalf of a class of plaintiffs who purchased the
Company's Common Stock during the period from December 19, 1995, through July
22, 1996, inclusive. The complaint alleges that the defendants made
misrepresentations and engaged in other wrong doing. The Company believes that
the claims made in the complaint are without merit. The Company plans to
vigorously defend such claims.
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996 for information regarding other pending legal
proceedings.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company commenced operations on April 29, 1996, with a 1,149 foot,
free standing observation tower with an integrated casino, hotel and
entertainment complex. Prior to opening, the Company was in the development
stage and did not have any historical operating income as there were no
operating revenues. Expenses consisted primarily of interest and amortization of
costs and expenses relating to the First Mortgage Notes issued in March 1995.
Due to the short operating period, historical results may not be indicative of
future operating results.
Three Months Ended June 30, 1996
The Company operated sixty-two days during the second-quarter producing
gross revenues of $31.8 million. Casino revenue represented 39% of gross
revenue, hotel 16%, food and beverage 22%, and tower, retail and other revenue
23%. The net loss for the quarter was $11.1 million inclusive of amortization of
pre-opening expenses of $7.7 million. The loss per common share was $0.19
consisting of $0.06 from operations and $0.13 from the amortization of
pre-opening expenses.
The Company experienced hotel occupancy of 75.9% at an average daily
rate of $73 for the quarter. Tower visitation totaled 704,749 for the period
inclusive of guests dining at the Top of The World revolving restaurant.
Six Months Ended June 30, 1996
As indicated above, the Company operated sixty-two days during the
entire six month period. Accordingly, operating revenues were the same as
indicated for the three months ended and the net loss was $9.2 million, which is
less than the second-quarter loss due to the positive impact of accounting for
capitalized interest and interest income from the first quarter. The loss per
Common Share was $0.16 consisting of $0.03 from operations and $0.13 from the
amortization of pre-opening expenses.
Other Factors Affecting Earnings
The Company amortized pre-opening expenses of $7.7 million during the
first sixty-two days of operations. The Company's policy is to fully amortize
such costs over the six-month period following commencement of operations.
Approximately $15.2 million remains to be amortized, the majority of which will
be amortized during the third quarter.
Construction of the facility continued during the second quarter and
the Company capitalized interest of $3.8 million for the three months ended June
30, 1996, and $11.2 million for the six months ended June 30, 1996. A portion of
the interest will be capitalized through the completion of Phase II.
Based on an evaluation of operations since opening, the Company is
currently planning to remodel portions of the casino and reconfigure the casino
floor layout. It is anticipated that these changes will better accommodate guest
traffic patterns and enhance the display of the gaming product. Concurrently,
casino operations will be positioned and marketed as providing the best gaming
value in Las Vegas by offering favorable rules on table games and liberal
paybacks on slot machines. The initial cost of the advertising campaign, the
relocation of slot machines, changing of table games odds and rules and slot
machine payback percentages will likely negatively impact earnings. The total
cost of this campaign has not yet been determined. This entire program, with the
exception of some remodeling which will take longer, is expected to be completed
and implemented by October 7, 1996. There can be no assurance that these
measures will significantly improve the Company's results of operations.
As of June 30, 1996, the Retail Center remained incomplete with only
twelve shops open. Although the Company does not directly participate in the
retail shop revenues, the result of the delayed opening of several retail stores
and the resulting lack of an exciting environment unfavorably impacted other
areas of the Company's revenues. The current retail status also impacts the
Company's ability to market itself as a complete resort. Phase I of the Retail
Center is expected to be completed on or about September 30, 1996, with the
opening of approximately thirty shops. There can be no assurance that when Phase
I of the Retail Center is completed, it will increase visitation and gaming
levels.
Since opening, the roller coaster at the top of the tower has only
operated for parts of 28 days. Its shutdown negatively impacted tower
visitation. Modification to the roller coaster is expected to be completed by
August 30, 1996 at which point full time operation will commence. These
modifications are being performed by an outside vendor. As such the Company can
give no assurance that they will be completed on time. There can also be no
assurance that the modified roller coaster will increase visitation and gaming
levels.
When opened the Company employed approximately 3,200 associates. The
property currently employs approximately 2,800 associates. The majority of the
impact related to the staff reduction will be realized beginning July 1, 1996.
Management continues to assess the appropriate levels of employment and future
decreases are expected.
LIQUIDITY AND CAPITAL RESOURCES
On May 3, 1996, the Company consummated a $37.5 million capital lease
transaction of which $31.6 million had been advanced to the Company as of June
30, 1996. No event of default has occurred under the terms of the capital lease.
However, based upon the Company's current operations it is likely that at the
end of the third fiscal quarter the Company will not meet certain financial
covenants that it has made as part of the capital lease. Any failure to meet
such financial covenant (which is required to be reported to the lender 45 days
after the end of each fiscal quarter) constitutes an event of default under the
capital lease that gives the lender the right to accelerate the maturity of
such indebtedness evidenced by such capital lease. The Company has initiated
discussons regarding the likelihood of such an event of default with the agent
for the lenders. There can be no assurance that if an event of default occurs,
the Company will be able to obtain an appropriate waiver from the lenders to
such default. It is possible that such lenders will accelerate the capital lease
indebtedness and pursue other legal remedies. If such indebtedness is
accelerated, the Company does not currently have the ability to repay such
indebtedness. The acceleration of such capital lease indebtedness would also
constitute an event of default under the Company's First Mortgage Note Indenture
by reason of a cross default provision in the First Mortgage Note Indenture.
As of June 30, 1996, the Company has substantially completed
construction of Phase I and anticipates additional funding requirements of $24.8
million. The Company utilized $197.6 million of cash for capital expenditures
through the six month period ended June 30, 1996.
During the quarter the Company engaged an independent consultant to
evaluate and audit the costs associated with Phase I and re-evaluate the
estimated costs for Phase II. Based on that evaluation, the current estimate to
complete Phase II is $142.0 million, which exceeds the original contractor's
estimate of $93.0 million. The estimate includes 1,000 hotel bays that will
result in 841 new rooms and suites, a new pool area, new casino slot, interior
and exterior signage, expanded retail, expanded casino and public areas, a
remodel of the existing slot high limit area, construction of a poker room, a
race and sports book and remodeling the casino front entrance and the
construction of a 33,000 square foot building shell to house an aquarium
attraction or, in the alternative, another amenity or attraction. Feasibility
for a gorilla ride is still being investigated by the Company, but at the
present time the Company believes that is highly unlikely such ride will be
built. The Company has cancelled its plans for the proposed aquarium due to the
developer's inability to meet certain financial requirements.
As of June 30, 1996, $28.4 million has been spent toward the completion
of Phase II. On July 23, the Company sent notice of termination to its managing
contractor and has begun negotiation for a fixed price contract with another
general contractor that has built large casino, hotel and resort projects.
As of June 30, 1996 the Company had funds available of $40.9 million
through cash and cash equivalents, restricted cash, and marketable securities
and expects to receive an additional $48.5 million from Grand as a loan under
the Completion Guarantee associated with the First Mortgage Notes. In addition,
the Company received $5.0 million on July 10, 1996, through funding related to
equipment operating leases and expects to draw on the remaining $5.9 million of
the available funds relating to the capital lease obligations.
Cash on hand and projected internally generated funds will not be
sufficient to fund both the cash requirements of the Company's existing
operations, including debt service, and the currently anticipated capital
requirements to complete Phase II. The current cash shortfall, for Phase I and
II, absent additional funding is approximately $38.1 million. The Company is
exploring a variety of means to obtain additional financing, including, to the
extent permitted under the Company's First Mortgage Note Indenture, debt and
equity financing. There can be no assurance that additional financing will be
available to the Company, or that if available, will be on terms favorable to
the Company. In the event the Company does not obtain additional funding by
November 15, 1996 (the interest payment date for the First Mortgage Notes) the
Company may be forced to delay Phase II construction to meet its interest
payment obligations under its First Mortgage Notes or seek other alternatives
with its creditors. The Company believes that completion of the Phase II
construction is critical to its long-term viability. The Company currently plans
to continue construction of Phase II. In the event the Company does not obtain
additional financing in a timely manner, the Company will be required to
restructure its existing indebtedness. If the Company cannot restructure its
existing indebtedness there will be serious doubt as to whether the Company will
be able to continue as a going concern.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for 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, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources and the effects of regulation
(including gaming and tax regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could significantly
affect anticipated results in the future 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), 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).
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 6, 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 the Company, Lyle A. Berman (an officer and
director of the Company and Grand Casinos, Inc. ("Grand"), Robert E. Stupak (a
former officer and director of the Company), Bob Stupak Enterprises, David R.
Wirshing (a former officer and director of the Company), Thomas A. Lettero (an
officer of the Company), Thomas G. Bell (a director of the Company), Andrew S.
Blumen (an officer and director of the Company), and Grand. The complaint
purports to seek relief on behalf of a class of plaintiffs who purchased the
Company's Common Stock during the period from December 19, 1995, through July
22, 1996, inclusive. The complaint alleges that the defendants made
misrepresentations and engaged in other wrongdoing. The Company believes that
the claims made in the complaint are without merit. The Company plans to
vigorously defend such claims.
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996 for information regarding other pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on May 22, 1996.
(b) Matters voted upon:
(1) Directors elected at meeting:
Affirmative Negative
Votes Votes Abstentions
----- ----- -----------
Lyle Berman 56,069,599 247,711 1,938,366
Patrick R. Cruzen 56,067,849 249,461 1,938,366
Neil I. Sell 56,067,354 249,956 1,938,366
Stanley M. Taube 55,164,068 1,153,242 1,938,366
Bob Stupak 56,062,799 254,511 1,938,366
Robert A. Maheu 56,066,399 250,911 1,938,366
David R. Wirshing 56,069,399 247,911 1,938,366
Andrew S. Blumen 56,069,369 247,941 1,938,366
Thomas G. Bell 56,068,454 248,856 1,938,366
(2) Proposal to approve Amendments to the 1993 Stock Option Plan
and the 1993 Stock Option Plan for Non-Employee Directors to
increase the number of shares of common stock reserved for
issuance thereunder by 1,000,000 shares.
Affirmative Negative
Votes Votes Abstentions
----- ----- -----------
48,568,505 6,286,315 137,257
(3) Proposal to approve an agreement and plan of merger as a
result of which Stratosphere Corporation's state of
incorporation will be changed from Delaware to Nevada.
Affirmative Negative
Votes Votes Abstentions
----- ----- -----------
47,151,639 96,070 74,928
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO.
- ---------
10.01 Participation Agreement dated as of April 29, 1996
among Stratosphere Gaming Corp., Stratosphere
Corporation, First Security Trust Company of Nevada,
The Persons Listed on Schedule II, Bank of Scotland,
First Interstate Bank of Nevada and Societe
Generale, Credit Lyonnais, Los Angeles Branch, and
BA Leasing & Capital Corporation
10.02 Lease Agreement dated as of April 29, 1996 between
First Security Trust Company of Nevada and
Stratosphere Gaming Corp
10.03 Loan Agreement dated as of April 29, 1996 among
First Security Trust Company of Nevada; BA Leasing &
Capital Corporation; Bank of Scotland, First
Interstate Bank of Nevada and Societe Generale;
Credit Lyonnais, Los Angeles Branch and the Persons
Named on Schedule I
10.04 Promissory Notes from the Borrower to the various lenders
10.05 Trust Agreement dated as of April 29, 1996 between
Stratosphere Gaming Corp., as Grantor, and First
Security Trust Company of Nevada, as Trustee
10.06 Security Agreement and Assignment of Lease dated as
of April 29, 1996 between First Security Trust
Company of Nevada and BA Leasing & Capital
Corporation
10.07 Guaranty dated as of April 29, 1996 of Stratosphere
Corporation in favor of The Beneficiaries Named
10.08 Subordination Agreement entered into as of April 29,
1996 among Stratosphere Gaming Corp., Stratosphere
Corporation, Grand Casinos, Inc., First Security
Trust Company of Nevada, and BA Leasing & Capital
Corporation
10.09 Landlord Waiver and Consent
10.10 Facility Lease between Parent and Lessee.
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K filed on June 7, 1996,
reporting under Item 5.
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 thereto duly authorized.
STRATOSPHERE CORPORATION
Date: August 14, 1996 By: /s/ THOMAS A. LETTERO
Name: Thomas A. Lettero
Title: Chief Financial Officer
/s/ THOMAS A. LETTERO
Name: Thomas A. Lettero
Title: Chief Financial Officer
EXHIBIT INDEX
STRATOSPHERE CORPORATION
EXHIBIT
NO. PAGE
- --------- ----
10.01 Participation Agreement dated as of April 29, 1996
among Stratosphere Gaming Corp., Stratosphere
Corporation, First Security Trust Company of Nevada,
The Persons Listed on Schedule II, Bank of Scotland,
First Interstate Bank of Nevada and Societe
Generale, Credit Lyonnais, Los Angeles Branch, and
BA Leasing & Capital Corporation
.....................................................
10.02 Lease Agreement dated as of April 29, 1996 between
First Security Trust Company of Nevada and
Stratosphere Gaming
Corp...............................
10.03 Loan Agreement dated as of April 29, 1996 among
First Security Trust Company of Nevada; BA Leasing &
Capital Corporation; Bank of Scotland, First
Interstate Bank of Nevada and Societe Generale;
Credit Lyonnais, Los Angeles Branch and the Persons
Named on Schedule I
...............................................................
10.04 Promissory Notes from the Borrower to the Various Lenders
10.05 Trust Agreement dated as of April 29, 1996 between
Stratosphere Gaming Corp., as Grantor, and First
Security Trust Company of Nevada, as Trustee
................................................................
10.06 Security Agreement and Assignment of Lease dated as
of April 29, 1996 between First Security Trust
Company of Nevada and BA Leasing & Capital
Corporation
.....................................................
10.07 Guaranty dated as of April 29, 1996 of Stratosphere
Corporation in favor of The Beneficiaries Named
..................................................
10.08 Subordination Agreement entered into as of April 29,
1996 among Stratosphere Gaming Corp., Stratosphere
Corporation, Grand Casinos, Inc., First Security
Trust Company of Nevada, and BA Leasing & Capital
Corporation
.....................................................
10.09 Landlord Waiver and Consent
.......................................................
10.10 Facility Lease between Parent and Lessee.
.........................................
[EXECUTION COPY]
PARTICIPATION AGREEMENT
dated as of April 29, 1996
among
STRATOSPHERE GAMING CORP.,
as Lessee,
STRATOSPHERE CORPORATION,
as Guarantor,
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity, but solely
as Lessor and Trustee
THE PERSONS LISTED ON SCHEDULE II,
as Lenders,
BANK OF SCOTLAND,
FIRST INTERSTATE BANK OF NEVADA, and
SOCIETE GENERALE,
as Co-Agents,
CREDIT LYONNAIS, LOS ANGELES BRANCH,
as Lead Manager
and
BA LEASING & CAPITAL CORPORATION,
as Arranger and Agent
---------------------------------------------
Acquisition Financing for Equipment Associated with
Stratosphere Casino and Hotel in Las Vegas, Nevada
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
2.1. Effectiveness of Agreement. . . . . . . . . . . . . . . . . . 2
2.2. Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4. Procedures for Advance; Use of Proceeds . . . . . . . . . . . 5
2.5. Postponement of Advance . . . . . . . . . . . . . . . . . . . 5
2.6. Obligations Several . . . . . . . . . . . . . . . . . . . . . 6
2.7. Timing of Advance to the Trustee and Payments to the Lenders. 6
2.8. Lenders' Instructions to Agent. . . . . . . . . . . . . . . . 7
2.9. Computations. . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11. Legal and Tax Representation. . . . . . . . . . . . . . . . . 8
2.12. Amortization Schedule . . . . . . . . . . . . . . . . . . . . 8
2.13. Replacement of Equipment. . . . . . . . . . . . . . . . . . . 8
2.14. The Account . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1. Advance Date. . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Lessee and the Guarantor. . 13
4.2. Representations and Warranties of Each Lender . . . . . . . . 20
4.3. Representations and Warranties of the Trustee . . . . . . . . 22
4.4. Representations and Warranties of the Agent . . . . . . . . . 24
ARTICLE V
COVENANTS OF LESSEE AND PARENT
5.1. Further Assurances. . . . . . . . . . . . . . . . . . . . . . 25
5.2. Consolidation, Merger, Sale, etc. . . . . . . . . . . . . . . 26
5.3. Corporate Existence.. . . . . . . . . . . . . . . . . . . . . 28
5.4. Ownership of Lessee.. . . . . . . . . . . . . . . . . . . . . 29
5.5. Liens.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.6. Financial Covenant Compliance Certificates. . . . . . . . . . 29
5.7. Investigation by Governmental Authorities . . . . . . . . . . 30
5.8. Books and Records . . . . . . . . . . . . . . . . . . . . . . 30
5.9. Payment of Taxes, Etc.. . . . . . . . . . . . . . . . . . . . 30
5.10. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11. Maintenance of Property, etc. . . . . . . . . . . . . . . . . 31
5.12. Maintenance of Insurance. . . . . . . . . . . . . . . . . . . 32
5.13. Change of Name or Principal Place of Business . . . . . . . . 32
5.14. Financial and Other Information . . . . . . . . . . . . . . . 32
5.15. Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.16. Financial Covenants . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
COVENANTS OF TRUSTEE AND LENDERS
6.1. Covenants of Trustee and the Lenders. . . . . . . . . . . . . 36
6.2. Restrictions On and Effect of Transfer. . . . . . . . . . . . 39
6.3. Participations. . . . . . . . . . . . . . . . . . . . . . . . 42
6.4. Required Transfers. . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII
GENERAL INDEMNITY
7.1. General Indemnification . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII
GENERAL TAX INDEMNITY
8.1. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . 47
8.2. Exclusions from General Tax Indemnity . . . . . . . . . . . . 48
8.3. Contests. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.5. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.6. Withholding Tax Exemption . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
MISCELLANEOUS
9.1. Survival of Agreements. . . . . . . . . . . . . . . . . . . . 52
9.2. No Broker, etc. . . . . . . . . . . . . . . . . . . . . . . . 52
9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.4. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.5. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.6. Headings, etc.. . . . . . . . . . . . . . . . . . . . . . . . 54
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 54
9.8. Transaction Costs . . . . . . . . . . . . . . . . . . . . . . 54
9.9. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 55
9.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . 55
9.11. Final Agreement. . . . . . . . . . . . . . . . . . . . . . . 55
9.12. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 55
9.13. Release of Lien. . . . . . . . . . . . . . . . . . . . . . . 55
9.14. Reproduction of Documents. . . . . . . . . . . . . . . . . . 56
9.15. Submission to Jurisdiction . . . . . . . . . . . . . . . . . 56
9.16. Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.17. Payments Set Aside . . . . . . . . . . . . . . . . . . . . . 57
9.18. Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . 57
Schedule I -- Equipment
Schedule II -- Lender Commitments
Schedule III -- Notice Information, Funding Offices and Wire
Instructions
Schedule IV -- Recordings, Filings and Registrations
Schedule V -- Required Licenses
Schedule VI -- Amortization Schedule
Schedule VII -- Disclosure Schedule
Appendix 1 -- Definitions
Exhibit A -- Form of Lease
Exhibit B -- Form of Loan Agreement
Exhibit C -- Form of Trust Agreement
Exhibit D -- Form of Security Agreement
Exhibit E -- Form of Guaranty
Exhibit F -- Form of Subordination Agreement
Exhibit G -- Form of Landlord Waiver and Consent
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 for Lessee and
Guarantor
Exhibit M-2 -- Form of Opinion of Nevada Counsel to Lessee
Exhibit M-3 -- Form of Opinion of Special New York Counsel to Agent
Exhibit N -- Form of Financial Covenant Compliance Certificate
Exhibit O -- Form of Pricing Ratio Certificate
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement"), dated as of April 29,
1996, is entered into by and among STRATOSPHERE GAMING CORP., a Nevada
corporation, as Lessee; STRATOSPHERE CORPORATION, a Delaware corporation, as
Guarantor; FIRST SECURITY TRUST COMPANY OF NEVADA, a Nevada trust company, not
in its individual capacity, except as expressly stated herein, but solely as
Lessor and Trustee; the persons listed on Schedule II hereto, as Lenders; BANK
OF SCOTLAND, FIRST INTERSTATE BANK OF NEVADA, and SOCIETE GENERALE, as
Co-Agents; CREDIT LYONNAIS, LOS ANGELES BRANCH, as Lead Manager; and BA LEASING
& CAPITAL CORPORATION, a California corporation, as Arranger and Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Lease, Lessor will lease to Lessee,
and the Lessee will lease from Lessor, the Equipment; and
WHEREAS, pursuant to the Trust Agreement, Lessee will apply the Advance
from the Trust to finance the acquisition of the Equipment subject to the terms
of the Lease; 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 Equipment Costs; and
WHEREAS, to secure such financing by the Lenders, 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 Equipment and other Collateral and an
assignment of Lessor's rights in the Operative Documents; and
WHEREAS, Lessee's 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 I
DEFINITIONS
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.
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
SECTION 2.1. Effectiveness of Agreement. This Agreement shall become
effective upon the happening of each of the following conditions (the
"Closing Date"):
(a) Authorization, Execution and Delivery of the Operative Documents.
Each of the Operative Documents shall have been duly authorized, executed
and delivered by each of the parties thereto, and shall be in full force
and effect. No Default or Event of Default shall exist under any of the
Operative Documents to which Lessee is a party (either before or after
giving effect to the transactions contemplated by the Operative Documents).
(b) Articles of Incorporation, Bylaws, Corporate Resolutions and
Certificates of Good Standing. Agent shall have received from each of
Lessee and the Guarantor:
(i) certificates of existence and good standing issued by the
Secretary of State of the State of Nevada with respect to Lessee and
the Secretary of State of the State of Delaware with respect to the
Guarantor, respectively, each dated within thirty Business Days of the
Closing Date;
(ii) copies of the respective articles of incorporation and
by-laws certified to be true and correct by a Responsible Officer of
each of Lessee and the Guarantor, respectively; and
(iii) certificates of a Responsible Officer of each of Lessee and
the Guarantor certifying as to (A) the resolutions of the Board of
Directors duly authorizing the execution, delivery and performance by
Lessee and the Guarantor, respectively, 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 Lessee and Guarantor, respectively and (C) the
accuracy of all representations and warranties and absence of
Defaults.
(c) No Material Adverse Effect. Since December 31, 1995, 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 PLLP, counsel to Lessee and
Guarantor, as to the matters set forth in the form of Exhibit M-1;
(ii) from Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada
counsel to Lessee, as to the matters set forth in the form of Exhibit
M-2; and
(iii) from Mayer, Brown & Platt, special New York counsel to
Agent, as to matters set forth in the form of Exhibit M-3.
(e) Financial Statements. Agent shall have received (with copies for
Trustee and each Lender) copies of the audited consolidated financial
statements of the Parent and its consolidated Subsidiaries for the last
fiscal year ended December 31, 1995, together with a statement or
certificate from the controller, treasurer or chief financial officer of
the Parent to the effect that (i) such financial statements are true,
complete and correct, (ii) the financial condition of the Parent and its
consolidated Subsidiaries has not materially adversely changed since the
date of such financial statements and (iii) no other event affecting the
Parent and its consolidated Subsidiaries shall have occurred since the date
of such financial statements which could reasonably be expected to have a
Material Adverse Effect.
(f) Indenture, etc. Agent shall have received (with copies for Trustee
and each Lender) true and correct copies of (i) the Indenture, (ii) the
Notes Completion Guaranty and (iii) the Standby Equity Commitment
Agreement, together with all exhibits and schedules and all amendments and
modifications to each of the foregoing documents. In addition, Agent shall
have received a certificate of a Responsible Officer of the Parent and GCI
certifying that the Standby Equity Commitment Agreement is and shall
continue to be in full force and effect.
(g) Purchase Order Assignment. Agent shall have received (with copies
for Trustee and each Lender) (i) an assignment transferring all of Parent's
right, title and interest in certain purchase orders to Lessee, and (ii) a
Purchase Order Assignment, fully executed by Lessee and Lessor.
(h) Recordation. Agent shall have received evidence satisfactory to
the Lenders that the Uniform Commercial Code financing statements with
respect to the Collateral shall have been or are being filed with the
appropriate Governmental Authorities.
(i) 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, the Arranger Fee Letter and the Co-Agents
Fee Letter. Arranger shall have received payment of the Arrangement Fee.
Arranger shall have received, for the account of each Co-Agent, payment of
the Co-Agents Fee.
SECTION 2.2. Advances. 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 the Advance Request, on the Advance Date
each Lender shall finance a portion of the applicable Advance by making a Loan
to the Trustee (in accordance with the Trustee's payment instructions set forth
on Schedule III) in an amount in immediately available funds equal to such
Lender's Commitment Percentage of the aggregate amount of the Commitment Amount.
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, and the
aggregate original principal amount of all Loans made since the Closing Date
would exceed the Commitment Amount. No amounts paid or prepaid with respect to
the Loans may be readvanced.
SECTION 2.3. Notes. Each amount made available by a Lender pursuant to
Section 2.2 shall be evidenced by one or more Notes issued by the Trustee
payable to the order of such Lender in a maximum principal amount equal to such
Lender's Commitment and shall be repayable in accordance with the terms of the
Loan Agreement.
SECTION 2.4. Procedures for Advance; Use of Proceeds.
(a) Request. With respect to the funding of the Advance, Lessee shall
deliver to Trustee, Agent and the Lenders, not later than 12:00 noon, Las
Vegas, Nevada time, three Business Days prior to the proposed Advance Date,
an irrevocable written notice substantially in the form of Exhibit H (an
"Advance Request"), specifying (i) the proposed Advance Date, (ii) the
total Equipment Cost, including Charges therefor, and (iii) the invoice
charges of each item of Equipment.
(b) Funding. 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 Section 3.1, (A) Lessor shall purchase, and Lessee, or a vendor
shall deliver a bill of sale conveying to Lessor, as collateral security,
all of such Person's right, title and interest in the Equipment described
in the Advance Request, and (B) in consideration therefor, Trustee shall
pay, from funds made available by the Lenders pursuant to Section 2.2 and
the Loan Agreement, the amount specified in the Advance Request in
immediately available funds remitted by wire transfer to the Persons
therein listed.
(c) Number and Dates of Advances. There shall be one Advance which
shall be made no later than 1:00 p.m., Las Vegas, Nevada time, on May 31,
1996, and no Advance may occur following suspension of the Commitments.
(d) Use of Proceeds. Proceeds from all Loans shall be used
solely for the purpose of funding Equipment Costs.
(e) Interest Rate. Each determination of an Interest Rate
pursuant to any provision of the Loan Agreement shall be conclusive
and binding on the Trustee, the Lessee and the Lenders in the absence
of manifest error.
SECTION 2.5. Postponement of Advance. If the Lenders make a Loan requested
pursuant to the Advance Request and the conditions precedent to such Advance
have not been satisfied on the date specified in the Advance Request, the Lessee
shall pay to the Trust Company, 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 returned to such
Lender or such Advance Date shall have occurred, less any interest earned by the
Trust Company on behalf of the Lenders by investing such funded amounts. Trust
Company (or its assignee) shall not be required to invest such funds in
interest-bearing investments, but Trust Company (or its assignee) shall upon
direction of Lessee (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 the Lessee 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 the
Advance Date shall not have occurred by the third Business Day following the
Advance Date in respect thereof, then all such interest shall be due and payable
on such date, and the Trust Company shall refund to each Lender all amounts
funded by such Lender and all accrued interest allocable to such Lender. No
additional Advance Request shall be required if the Advance Date is postponed
and thereafter consummated.
SECTION 2.6. 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 the Lessee and Guarantor 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 2.7. Timing of Advance to the Trustee and Payments to the
Lenders.
(a) Timing of Advances to Trustee. 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 available to the Trust Company by 1:00 p.m., Las Vegas, Nevada
time, on the requested Advance Date, and the Trust Company will forward any
such amounts so received to the Lessee, not later than 4:00 p.m., Las
Vegas, Nevada 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 Agent pursuant to Section 2.1 of the Security Agreement, and Agent has
appointed the Trust Company as its agent to receive such payments of Rent
under Section 7.1 of the Loan Agreement. Any payments received by the Agent
(or the Trust Company as agent to the Agent) from or on behalf of the
Lessee not later than 10:00 a.m., Las Vegas, Nevada time, shall be paid by
the Agent (or the Trust Company) to the Lenders in immediately available
funds no later than 1:00 p.m., Las Vegas, Nevada time, on the same day, and
any payments received by the Agent (or the Trust Company) from or on behalf
of the Lessee after 10:00 a.m., Las Vegas, Nevada time, shall be paid by
the Agent or the Trust Company to the Lenders as soon after receipt as
practicable, but not later than 10:00 a.m., Las Vegas, Nevada time, on the
next succeeding Business Day. Rent and all other payments due to Trustee,
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 the
Trustee, Agent and Lessee in a notice pursuant hereto. All such payments
shall be received by the Trustee (in its individual or trust capacity), the
Agent or such Lender, as applicable, not later than 10:00 a.m., Las Vegas,
Nevada 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 to the Trust Company as agent for the Agent and as Trustee's assignee
under the Operative Documents.
SECTION 2.8. Lenders' Instructions to 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, and (ii) authorization
and direction by such Lender to Agent to make a Loan pursuant to Section 2.3 of
the Loan Agreement.
SECTION 2.9. Computations.
(a) Determination of Interest. 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 the Lessee, the
Trustee, or the Agent, including the Advance or any payment of Rent, shall
be made only in Dollars in immediately available funds.
SECTION 2.10. Fees. Lessee shall pay to the Agent, for the account of each
Lender, a nonrefundable upfront fee in an amount equal to the fee set forth
opposite such Lender's name on Schedule II payable upon the Closing Date. Lessee
shall pay to Agent, for the account of each Co-Agent, the Co-Agents Fee.
SECTION 2.11. Legal and Tax Representation. Lessee acknowledges and agrees
that neither Agent, Arranger, Trustee nor any Lender has made any representation
or warranty concerning the tax, accounting or legal characteristics of the Lease
or any of the other Operative Documents, and that Lessee has obtained and relied
on such tax, accounting and legal advice regarding the 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 Lease and the other Operative
Documents as it deems appropriate.
SECTION 2.12. Amortization Schedule. Schedule VI sets forth the mandatory
principal amortization schedule for the Loans (the "Amortization Schedule").
Lenders will receive principal payments on each Scheduled Principal Payment Date
so as to cause all of the Loans to amortize in an amount on each Scheduled
Principal Payment Date equal to the product of (u) the percentage set forth
opposite each Scheduled Principal Payment Date on the Amortization Schedule and
(v) Lessor's Cost. Each Note or the Notes will reflect mandatory principal
amortization equal to the product of (w) such Lender's Commitment Percentage and
(x) the aggregate amount payable to the Lenders on such Payment Date pursuant to
the preceding sentence.
SECTION 2.13. Replacement of Equipment. Trustee and Agent shall release
from the lien of the Security Agreement and the Lease items of Equipment which
the Lessee has elected to replace under Section 7.3 or 9.1 of the Lease, upon
satisfaction by Lessee of the conditions contained in Section 9.1(b) of the
Lease.
SECTION 2.14. 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 Agent into which proceeds of the Loan on the Advance
Date shall be remitted upon satisfaction of the provisions of Section 3.1.
Trustee shall release funds on deposit in the Account to the order of the
Lessee, or to a vendor as directed by the Lessee, as the case may be, upon
receipt of a certificate from the Lessee, dated the date of such requested
release, stating that (i) the sum requested is required to pay, or reimburse the
Lessee for, the invoices and purchase orders of the vendors identified in such
certificate, together with copies of such invoices and purchase orders attached
to such certificate and evidence satisfactory to the Agents of all amounts
previously paid to any vendor identified in such certificate for which Lessee is
requesting reimbursement and (ii) all of the statements contained in Section
3.1(b) are true and correct on and as of such date as though made on and as of
such date, except to the extent such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct on and as of such earlier date. With respect to
the final payment to each of International Game Technology, Otis Elevator
Company and Premier Restaurant Equipment Company, Lessee shall attach to the
certificate an executed release by such vendor addressed to Trustee stating that
all amounts due and owing under the purchase order, invoice or purchase
contract, as the case may be, have been paid in full. In the event of a dispute
over payment of any amount owed under an invoice or purchase order referenced in
such certificate, Trustee shall not release funds from the Account until such
time as Lessee notifies Trustee of the resolution of such dispute. All funds
deposited in the Account shall constitute Collateral.
ARTICLE III
CONDITIONS TO THE ADVANCE
SECTION 3.1. Advance Date. The obligation of the Trustee and each Lender to
perform their respective obligations on the Advance Date shall be subject to the
fulfillment to the satisfaction of, or the waiver in writing by, Trustee and
each Lender of the conditions precedent set forth in this Section 3.1 on or
before the 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 the Advance, Agent, Trustee and
each Lender shall have received, at least three Business Days before the
Advance Date, a fully executed Advance Request duly executed by Lessee, in
accordance with Section 2.4(a). Each of the delivery of the Advance Request
and the acceptance by the Lessee of the proceeds of such Advance shall
constitute a representation and warranty by Lessee 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(c) and in such Advance Request, are true and correct.
(b) Accuracy of Representations and Warranties, No Default, etc.
On the Advance Date, the following statements shall be true and
correct:
(i) All of the representations and warranties of the parties
hereto contained herein and in each of the other Operative Documents
are true and correct on and as of the 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 on and as of such earlier date; and
(ii) Except as set forth in the Disclosure Schedule, no labor
controversy, litigation, arbitration or governmental investigation or
proceeding shall be pending or, to the knowledge of the Lessee and/or
the Parent, threatened against the Lessee and/or the Parent or any
other Guarantor which might have a Material Adverse Effect or which in
the reasonable judgement of the Agent would or might, enjoin,
prohibit, limit or restrain the making of the Advance.
(c) Officer's Certificates. Agent shall have received (with copies for
Trustee and each Lender) certificates of the Secretary or Assistant
Secretary of Parent and the Lessee 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 the 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 on and as of such earlier date.
(d) Gaming Permits. Lessee and Parent shall have obtained all Gaming
Permits required for or in connection with the conduct of its gaming
business and the conduct of games of chance at the Casino 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. Lessee and Parent shall have obtained all Liquor
Permits required for or in connection with the operation and use of the
Casino and the Resort 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 the Casino and/or the
Resort.
(f) Taxes. All Taxes other than Charges due and payable by Lessee on
or prior to the 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) Filings and Recordings. All filings, registrations and recordings
set forth on Schedule IV 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 3.1(h) shall have been paid in
full, and satisfactory evidence thereof shall have been delivered to
Trustee and Agent, or arrangements for such payment shall have been made to
the satisfaction of Trustee and the Agents.
(h) Searches. 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 Lessee and the Equipment with the
applicable filing offices in the States of Delaware and Nevada, and such
report shall show no Liens other than Permitted Liens.
(i) Insurance. 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 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 are current.
(j) Governmental Approvals, Permits, Consents, etc. Agent shall have
received copies of all material permits, approvals or consents by all
Governmental Authorities required for or in connection with the use and
operation of the Equipment and the transactions provided for in this
Agreement which can be obtained as of the Advance Date, together with all
supporting documents and materials reasonably requested by the Agent, the
Trustee or any Lender, including a copy of each order or license issued by
the Gaming Commission or the Liquor Authority, as then available or
required by Applicable Laws, evidencing approval of all licenses necessary
for the creation and continued existence of the Lessee as the operator of
the Casino and of the Parent as the parent corporation of the Lessee.
(k) Bill of Sale. Agent shall have received (i) a fully-executed Bill
of Sale from Parent to Lessee and (ii) a fully executed Bill of Sale from
Lessee to Trustee substantially in the form of Exhibit I with respect to
the items of Equipment identified in such Advance Request.
(l) Certificates of Acceptance. Lessee shall have delivered to Agent a
fully-executed Certificate of Acceptance substantially in the form of
Exhibit J with respect to each item of Equipment identified in such Advance
Request.
(m) Release of Lien. Lessee shall have delivered to Agent a
fully-executed release of lien in recordable form with respect to the
Indenture, together with executed copies of Uniform Commercial Code
termination statements (Form UCC-3) sufficient to release the items of
Equipment identified in such Advance Request and evidence such release.
(n) Third Party Approvals. All third party approvals, necessary in the
reasonable opinion of Agent for the operation and use of the Equipment and
for Lessee to perform its obligations with respect to the Lease shall have
been obtained.
(o) 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 the
Advance and this Agreement.
(p) Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of the Lessee and Parent shall be
satisfactory in form and substance to Agents and their counsel; Agents and
their counsel shall have received all information, approvals, opinions,
documents or instruments as Agent or its counsel may reasonably request.
(q) Transaction Costs. Lessee shall have paid all Transaction Costs
invoiced three Business Days prior to the Advance Date to the parties to
whom such Transaction Costs are payable (or shall have requested payment
thereof or reimbursement therefor pursuant to the Advance Request). Such
payment shall be made by wire transfer of immediately available funds.
(r) 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 Agent would or might, enjoin, prohibit, limit or restrain the making
of the Advance.
(s) No Material Adverse Effect. Since December 31, 1995, there
shall not have occurred any Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of Lessee and the Guarantor.
Lessee and the Guarantor jointly and severally represent and warrant to each of
the other parties hereto as follows:
(a) Due Organization, etc. Each of Lessee and the Guarantor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and Delaware, respectively, and is duly
qualified or licensed and in good standing as a foreign corporation
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 the 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 the Lessee is located at 2000 Las Vegas Boulevard South, Las Vegas,
Nevada 89104; and of the Guarantor is located at 2000 Las Vegas Boulevard
South, Las Vegas, Nevada 89104.
(b) Authorization; No Conflict; No Approvals, Etc. The execution and
delivery by each of the Lessee and the Guarantor 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 action (including any necessary
stockholder 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
the Equipment; (ii) violate any provision of its respective charter or
bylaws; (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 the Lessee or the Guarantor is a party or
by which the Lessee or the Guarantor 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 IV to perfect the rights
of the Trustee, the Lenders and the Agent intended to be created by the
Operative Documents and (y) the required licenses and approvals listed on
Schedule V; and neither the Lessee nor the Guarantor is in default under or
in violation of its respective charters or bylaws.
(c) Enforceability. Each Operative Document to which the Lessee or the
Guarantor 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. Except as set forth on Schedule VII, there is no
action, suit or proceeding, or any governmental investigation or any
arbitration, in each case pending or, to the knowledge of the Lessee or the
Guarantor, threatened against such Person or the Equipment or before any
Governmental Authority (i) which challenges the validity of the Operative
Documents to which such Person is a party or any action taken or to be
taken pursuant to the Operative Documents to which 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
of the Lessee. Except as set forth on Schedule VII, 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 of the Lessee.
(f) Financial Statements. The audited consolidated financial
statements of the Parent and its consolidated Subsidiaries for the fiscal
year ended December 31, 1995 fairly present the financial condition of the
Parent and its consolidated Subsidiaries on such date, and the results of
its consolidated operations for the period then ended, and there has been
no Material Adverse Effect with respect to the Parent and its consolidated
Subsidiaries since such date.
(g) No Other Agreements. Neither the Lessee nor the Guarantor
is a party to any agreement to sell any interest in the Equipment or
any portion thereof (except as otherwise contemplated in the Operative
Documents).
(h) Compliance With Law. With respect to the Equipment and the
operation of the Resort, (i) the Lessee and the Guarantor 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. Neither Lessee nor the Guarantor 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. Neither Lessee nor the Guarantor
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, 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 the 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. There are no conditions existing currently
which would be likely to subject the Trustee, the Agent, the Lenders or the
Lessee, or the Guarantor to damages, penalties, injunctive relief or
cleanup costs under any Environmental Laws or assertions thereof, or which
require or are likely to require cleanup, removal, remedial action or other
response at or with respect to the Resort pursuant to Environmental Laws;
(ii) neither the Lessee nor any Guarantor 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 the Lessee and the
Guarantor, any litigation or administrative proceeding threatened against
any of them, which asserts or alleges that the Lessee or the Guarantor, or
the Resort has violated or is violating Environmental Laws with respect to
the Resort or that the Lessee or the Guarantor 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 the Resort; (iii) neither the Lessee nor the Guarantor is
subject to any judgment, decree or order or citation arising out of
Environmental Laws which relates to the Resort (or any interest therein);
and (iv) neither the Lessee nor the Guarantor 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 the Resort.
(m) Subjection to Government Regulation. Except in the case of the
ownership of, or the holding of an interest in, the Equipment following the
exercise of remedies under the Lease, none of the Trustee, the Agent or any
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. The exercise of remedies by the
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.
(n) Securities Laws. Neither the Lessee nor anyone authorized to act
on its behalf has, directly or indirectly, offered or sold any interest in
the Notes, the Equipment, the 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 the 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
of Governors). No part of the 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 of Governors.
(p) Taxes. Lessee and the Guarantor 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
contemporaneously furnished by or on behalf of the Lessee and the Guarantor
in writing to the Agent, the 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 the Lessee and the Guarantor to the Agent, the 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 Agent, the 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 Lessee as of such date by
any Governmental Authority having jurisdiction shall have been obtained for
(i) the use and occupancy of the Resort, and (ii) the installation and
operation of the Equipment on the Resort, except where the failure to
obtain the same would not have, individually or the aggregate, a Material
Adverse Effect.
(s) Title to Property. Except as set forth on the Disclosure Schedule,
Parent has good and marketable title to all of its material assets
reflected on the financial statements delivered pursuant to Section 2.1(f),
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. Lessee
has good and marketable title to the land and buildings constituting the
Resort.
(t) Insurance. Lessee has obtained or caused to be obtained
insurance coverage covering the Equipment which meets in all respects
the requirements of the Lease, and such coverage is in full force and
effect. Lessee 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. Neither the Lessee nor the Guarantor 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 the Lessee or the Guarantor of the
transactions contemplated by the Operative Documents did not and will not
render the Lessee or the Guarantor insolvent, nor was it made in
contemplation of the Lessee's or the Guarantor's insolvency; the value of
the assets and properties of the of the Lessee and the Guarantor at fair
valuation and at their then present fair salable value is and, after the
transactions, will be greater than the respective total liabilities,
including contingent liabilities, as they become due of the Lessee and the
Guarantor; the property remaining in the hands of the Lessee and of the
Guarantor was not and will not be an unreasonably small amount of capital.
(w) Perfection of Security Interests. Upon the filing of an
appropriate UCC Financing Statement with the Secretary of State of Nevada,
the Secretary of State of Delaware and, together with a fixture filing in
the office of the Recorder of Clark County, Nevada, Trustee, for the
benefit of the Lenders, will have an enforceable, perfected first priority
Lien of record in the Collateral granted pursuant to the Lease as against
all Persons, including Lessee and its creditors.
(x) Gaming Permits; Liquor Permits. All Gaming Permits and Liquor
Permits required to be held by Lessee and the Guarantor for the conduct of
its business as then conducted as of each date this representation is made
are current and in good standing and upon the Casino Opening the Lessee and
the Guarantor will hold all Gaming Permits and Liquor Permits necessary for
the operation of the Casino and sale of alcoholic beverages at the Resort.
(y) Location of Gaming Activities. No gaming activities requiring a
Gaming Permit will be maintained on the Resort other than at a location
that has obtained all requisite Gaming Permits.
(z) No Change in Name or Entity. Lessee has not prior to the
date of this Agreement, changed its name, or been the surviving entity
of a merger or consolidation.
(aa) Purchase Price. The fair market value of the items of Equipment
accepted on the Advance Date is approximately equal to the invoice cost for
the items of Equipment identified in such Advance Request plus the Charges
properly attributable thereto.
SECTION 4.2. 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 Equipment, directly or indirectly, may be subject because of the lines
of business or other activities of the 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.
(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) which is subject to Title I of ERISA or Section 4975 of the
Code, or (ii) assets of any Benefit Arrangement (or its related trust)
which 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 of 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 Equipment constituting a part thereof), the Collateral or the 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 Equipment is free and clear of all Lessor
Liens attributable to it.
SECTION 4.3. Representations and Warranties of the Trustee. First Security
Trust Company of Nevada, in its individual capacity ("Trust Company"),
represents and warrants to each of the other parties hereto as follows:
(a) Chief Executive Office. Trust Company'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 is located in 530 Las Vegas Boulevard South, Las Vegas, Nevada 89109.
(b) Due Organization, etc. Trust Company is a trust company duly
organized and validly existing in good standing under the laws of the State
of Nevada 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 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 Trust Company 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 Trust Company (in its individual capacity)
and are, or upon execution and delivery by the Trust Company will be,
legal, valid and binding obligations of the Trust Company (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 Trust Company,
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
Trust Company, 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 Trust Company, 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 Trust
Company, do not and will not contravene any Applicable Laws of the United
States of America or the State of Nevada relating to the banking or trust
powers of the Trust Company, 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 Trust
Company 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 Nevada relating to the banking or
trust powers of the Trust Company.
(f) Litigation. There is no action, proceeding or investigation
pending or threatened against the Trust Company (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 Trust Company (in its
individual capacity or as Trustee) to perform its obligations (in either
capacity) under the Operative Documents to which it is a party.
(g) Lessor Liens. The Equipment is free and clear of all Lessor
Liens attributable to the Trust Company (in its individual capacity).
(h) Securities Act. Neither the Trust Company (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
Equipment or the 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 4.4. Representations and Warranties of the 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. 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 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 Agent, and are, or, upon execution and delivery will be, legal, valid
and binding obligations of the 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 Agent of
the Operative Documents to which it is or will be a party, either in its
individual capacity or as the 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 Agent; (ii) any agreement, to which
the Agent, either in its individual capacity, as Agent, or both, is now a
party or by which it or its property, either in its individual capacity, as
Agent, or both, is bound or affected, where such breach, default or
violation would be reasonably likely to materially and adversely affect the
ability of the Agent, either in its individual capacity or as 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 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 Agent,
where such conflict, breach, default or violation would be reasonably
likely to materially and adversely affect the ability of the Agent, either
in its individual capacity, as 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 Agent is
or will be required in connection with the execution and delivery by the
Agent of the Operative Documents to which it is party or the performance by
the Agent of its obligations under such Operative Documents.
ARTICLE V
COVENANTS OF LESSEE AND PARENT
SECTION 5.1. Further Assurances. Lessee, 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, the Trustee or the
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 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, the Trustee or the
Agent in order to establish, preserve, protect and perfect the title of the
Trustee to the Equipment and the 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 Agreement on the Trust Estate in favor of the Agent
for the Benefit of the Lenders. Without limiting the foregoing, the Parent shall
furnish to each Lender, the Trustee and the 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
Documents.
SECTION 5.2. Consolidation, Merger, Sale, etc.
(a) Subject to Section 5.4, Lessee (for purposes of this Section 5.2,
the Lessee shall be referred to as the "Transferor") shall not 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
the Transferor shall be merged or the Person which shall acquire by
conveyance, transfer or lease all or substantially all of the assets
of the Transferor (the "Surviving Company") shall be a corporation
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 Lessee) shall execute
and deliver to each of the parties hereto an agreement, in form and
substance reasonably satisfactory to the Lenders, the Trustee and the
Agent, containing the assumption by the Surviving Company of the due
and punctual payment, performance and observation of each obligation,
covenant and agreement of the Transferor under this Agreement and each
other Operative Document to which, immediately prior to such
transaction, the Transferor was a party;
(iii) no Lease Default or Lease Event of Default, shall
have occurred or would occur as a result thereof;
(iv) the title of the Trustee to the Equipment and the Trustee's
rights under this Agreement and the other Operative Documents and the
first and prior Lien granted to the Trustee in the Lease shall not be
adversely affected;
(v) the Guaranty shall not be impaired in any respect;
(vi) the Surviving Company (if other than the Lessee) shall have
obtained all Gaming Permits necessary for the continued operation of
the Casino and the Resort; and
(vii) the Transferor shall have delivered to the Lenders, the
Trustee and the Agent a certificate of a Responsible Officer of the
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, the Transferor immediately prior to such transaction under this
Agreement and each other Operative Document to which the Transferor 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, no conveyance, transfer or lease
of all or substantially all of the assets of the Transferor shall release
the Lessee or the Guarantor from its respective payment or other
obligations under this Agreement or any other Operative Document without
the written consent of the Trustee, the Agent and each Lender.
(b) Parent shall not 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 (vi) shall have been
satisfied:
(i) the Person formed by such consolidation with or into which
the Parent shall be merged or the Person which shall acquire by
conveyance, transfer or lease all or substantially all of the assets
of the Parent (the "Surviving Company"), if other than the Parent
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 the Parent),
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, the Trustee and the Agent,
containing the assumption by the Surviving Company of the due and
punctual payment, performance and observation of each obligation,
covenant and agreement of the Parent under this Agreement and each
other Operative Document to which, immediately prior to such
transaction, the Parent was a party;
(iii) no Lease Default or Lease Event of Default shall have
occurred or would occur as a result thereof;
(iv) the Guaranty shall not be impaired in any respect;
(v) the Surviving Company (if other than the Parent) shall have
obtained all Gaming Permits, including a finding of suitability to own
capital stock of Lessee, as then required by Applicable Law;
(vi) the Parent shall have delivered to the Lenders, the Trustee
and the Agent a certificate of a Responsible Officer of the Parent 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
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, the Parent immediately prior to such transaction under this Agreement
and each other Operative Document to which the Parent 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 the Parent shall release
the Lessee from its payment or other obligations under this Agreement or
any other Operative Document without the written consent of the Trustee,
the Agent, and each Lender.
SECTION 5.3. Corporate Existence. Subject to Section 5.2, each of the
Parent and the Lessee 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 5.4. Ownership of Lessee. Parent shall at all times maintain
ownership of 100% of the issued and outstanding capital stock of the Lessee
(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 Lessee to the Indenture Trustee.
SECTION 5.5. Liens. Neither the Lessee nor the Parent shall incur or
suffer to exist any Lien on any of the Equipment or the Collateral other
than Permitted Liens.
SECTION 5.6. Financial Covenant Compliance Certificates.
(a) Annual Certificate. Within 90 days after the close of each fiscal
year, the Lessee shall deliver to the Trustee, the Agent, and each Lender a
certificate of the Lessee signed by a Responsible Officer of the Lessee to
the effect that the signer is familiar with or has reviewed the relevant
terms of this Agreement, the Lease and each other Operative Document to
which the 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 Equipment during the preceding fiscal
year, and that such review has not disclosed the existence during such
fiscal year of any condition 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 such 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, Lessee shall deliver or cause to be
delivered to Agent and Trustee a Financial Covenant Compliance Certificate
(with appropriate insertions) of the Parent signed by a Responsible Officer
of the Parent showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to Agent)
compliance with the financial covenants set forth in Section 5.16 and any
other related information requested by Agent.
(c) Pricing Ratio Certificate. Within 15 Business Days after the end
of each fiscal quarter, Lessee shall deliver or cause to be delivered to
Agent and Trustee a Pricing Ratio Certificate of the Parent signed by a
Responsible Officer of the Parent showing (in reasonable detail and with
appropriate calculations and computations in all respects satisfactory to
Agent) the then effective Applicable Margin. If Lessee fails to deliver or
cause to be delivered such Pricing Ratio Certificate on or before the dates
such information is required to be delivered, then for purpose of Section
2.6 of the Loan Agreement, the Applicable Margin shall be 2.75% for the
Interest Period in which such Pricing Ratio Certificate was supposed to be
delivered.
SECTION 5.7. Investigation by Governmental Authorities. Lessee shall
deliver to the Trustee, each Lender and to the Agent promptly upon the Lessee's
receiving written notice of the intent by a Governmental Authority to (w)
revoke, suspend, enjoin, restrict or modify any Gaming Permit or Liquor Permit
necessary for the ownership or operation of the Casino or gaming operations in
respect thereof, (x) take an action which would constitute a requisition of
title to any of the Equipment, (y) investigate the Equipment for a material
violation of any Applicable Laws with respect to the Equipment, including any
Environmental Law, under which liability may be imposed upon the Trustee, any
Lender, the Agent or the Lessee, or (z) investigate the Equipment (other than
routine fire, life-safety and similar inspections) for any violation of
Applicable Laws under which criminal liability may be imposed upon the Trustee,
any Lender, Agent or the Lessee.
SECTION 5.8. Books and Records. Lessee will, at all times maintain
corporate books and records separate from those of any other Person in
accordance with GAAP.
SECTION 5.9. Payment of Taxes, Etc. Lessee 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, 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 5.10. Inspection. Lessee shall permit the Agent, the 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, the Lessee (except
for any proprietary information which involves trade secrets of the Lessee) and
to discuss the affairs, finances and accounts of the Lessee with any of its
officers. Agent, Trustee, the Lenders and any agents or representatives thereof
shall keep confidential and not disclose any confidential written information
received from Lessee in connection with such inspections, subject to the
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 the Parent and the 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 Participation Agreement and prospective assignees to
which assignments of interest are permitted pursuant to this Participation
Agreement, but only if such participant or prospective assignee agrees in
writing to maintain the confidentiality of such information on 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 Participation 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. Lessee shall upon reasonable notice from the Agent (except that no
notice shall be required if an Event of Default has occurred and is continuing)
permit the Agent, the Trustee and the Lenders and their respective authorized
representatives to inspect the Equipment during normal business hours, provided
that such inspections shall not unreasonably interfere with the Lessee's
business operations at the Resort. Annual inspections by the Agent and all
inspections following the occurrence of Event of Default shall be conducted at
the cost and expense of Lessee.
SECTION 5.11. Maintenance of Property, etc. Lessee shall maintain and
preserve all material assets used or useful in the conduct of its business in
good working order and condition.
SECTION 5.12. Maintenance of Insurance. Lessee shall maintain insurance
coverage covering the Equipment which meets in all respects the requirements of
Article IX of the Lease, and such coverage shall remain in full force and
effect. Without limiting the foregoing, Lessee 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 5.13. Change of Name or Principal Place of Business. Lessee shall
furnish to the Trustee, the Agent and the Lenders 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 Equipment or the Equipment or Lessee
changes its name, identity or corporate structure.
SECTION 5.14. Financial and Other Information. Parent and the Lessee
shall deliver to the Trustee, each Lender and the Agent 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 the Parent, a consolidated
balance sheet of the Parent and its 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, setting
forth in each case in comparative form the figures for the previous fiscal
year, with such consolidated financial statements audited by independent
public accountants of nationally recognized standing acceptable to the
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 the Parent, the consolidated balance sheet of the Parent and its
consolidated Subsidiaries as of the end of such quarter and the related
consolidated statement of operations and cash flows of the Parent and its
consolidated Subsidiaries for the portion of the Parent's fiscal year ended
at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter of, and the corresponding portion
of the 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 the 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 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 the Parent setting forth details as to such occurrence and action, if
any, which the 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 the Parent
setting forth details of such Default or Event of Default and the action
that the 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 the Parent or
any Affiliate of the Parent by or before any Governmental Authority that
might, in the reasonable judgment of the 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 the
Parent proposes to take with respect thereto.
(h) Security Reports. As soon as available and in any event within 45
days 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 90 days after the end of
each fiscal year of Parent, Form 10K of Parent shall have been delivered to
the Trustee (with copies for each Lender).
(i) Annual Projections. As soon as possible and in any event no later
than 45 days after the commencement of each calendar year of the Parent,
financial projections of Parent and its Subsidiaries for such calendar year
setting forth, in reasonable detail, a statement, on a monthly basis, of
the projected consolidated expenses and cash flows of Parent and its
Subsidiaries.
(j) Other Information. Promptly upon written request therefore,
any other information in respect of the Parent or Lessee reasonably
requested by the Agent.
SECTION 5.15. Securities. Neither the Lessee nor the 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 Equipment or the 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 5.16. Financial Covenants.
(a) Fixed Charge Coverage. Commencing with the first full fiscal
quarter after the Casino Opening, Parent shall maintain a ratio of
Consolidated Adjusted EBITDA to Consolidated Fixed Charges, calculated as
of the last day of each Computation Period ending on such date, of not less
than 1.10:1.0.
(b) Consolidated Net Worth. Consolidated Net Worth of the Parent shall
not at any time be less than an amount equal to the sum of (x) the
Consolidated Net Worth of the Parent for the fiscal year ended December 31,
1995 plus (1) 75% of Consolidated Net Income of the Parent beginning with
the 1996 fiscal year, and calculated quarterly thereafter for each
subsequent fiscal quarter, plus (2) 100% of the proceeds from the issuance
by the Parent of an equity interest in the Parent or a Subsidiary to one or
more Persons unaffiliated with Parent, or the Ownership Percentage Interest
of the proceeds from the issuance by a Subsidiary of an equity interest in
such Subsidiary to one or more Persons unaffiliated with the Parent. Any
Consolidated Net Losses of Parent incurred in the 1996 fiscal year and
thereafter shall not be subtracted in computing Consolidated Net Worth of
Parent.
(c) Consolidated Senior Debt/Consolidated Adjusted EBITDA Ratio.
Commencing with the first full fiscal quarter after the Casino Opening,
Parent shall maintain a ratio of Consolidated Senior Debt to Consolidated
Adjusted EBITDA, calculated as of the last day of each Computation Period
ending on such date, of not greater than the ratio set forth below:
Period Ratio
Casino Opening through 12/31/96 3.50:1.0
1/1/97 and thereafter 3.00:1.0
(d) For purposes of computing the financial covenants set forth in
Section 5.16(a) and (c), acquisitions, dispositions and discontinued
operations that have been made by Parent or any of its Consolidated
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.
ARTICLE VI
COVENANTS OF TRUSTEE AND LENDERS
SECTION 6.1. Covenants of Trustee and the Lenders.
(a) Discharge of Liens. Each of the Lenders and the 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 the 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 the Mortgage 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 Equipment, the Lease or the Trust Estate or title
thereto or any interest therein or the payment of Rent; provided, however,
that each Lender and the Trustee shall discharge any such Lessor Lien,
whether or not subject to contest as provided above, upon the purchase of
the Equipment by the Lessee pursuant to the Lease.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Trustee to resign, or the Lenders' right under the Trust
Agreement to remove the Trustee, the Trustee hereby agrees with the Lessee,
the Lenders and the Agent (i) not to terminate or revoke the trust created
by the Trust Agreement except as permitted by Article IV of the Trust
Agreement prior to the later of 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 such party.
(c) Successor Trustee. Trustee or any successor may resign or be
removed by the Lenders as Trustee, a successor Trustee may be appointed,
and a corporation may become the 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 the
Lessee (such consent is not to be unreasonably withheld or delayed). In
addition, so long as there exists no Event of Default, Lessee or Parent may
request Agent to remove the Trustee in accordance with Section 3.10 of the
Trust Agreement. Upon receipt of such request, Agent shall survey the
Required Lenders to determine whether to proceed to remove the Trustee. If
the Required Lenders consent to such removal, the Trustee shall be removed
in accordance with Section 3.10 of the Trust Agreement.
(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 the Lessee, the 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, the Lessee and the Agent if the Trustee's principal
place of business or chief executive office, or the office where the
records concerning the accounts or contract rights relating to the
Equipment or the transactions contemplated by the Operative Documents are
kept, shall cease to be located at 530 Las Vegas Boulevard South, Las
Vegas, Nevada 89101, or if it shall change its name, identity or corporate
structure.
(f) Loan Agreement. Trustee, Agent, Lessee, and each Lender hereby
agrees that, so long as the Lease is in effect, the Trustee shall not
consent to or permit any amendment of the terms and provisions of the Loan
Agreement 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 the Lessee or decreasing the rights
of the Lessee, in each case without the prior written consent of the
Lessee, except that without such consent, the Trustee may waive performance
by the Agent of obligations to the Trustee the non-performance of which
does not adversely affect the Lessee. Each Lender agrees to comply with
Section 7.7 of the Loan Agreement.
(g) Funding. Trustee shall give prompt notice to the Lenders, the
Lessee and the Agent in the event any Lender does not fund the full amount
to be funded by such Lender on the Advance Date as described in Article II.
(h) Lease Financing Party Removal. If any of the Lessor, the Trustee,
the Lenders, the Co-Agents, the Lead Manager, the Arranger or 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 Agent, or otherwise to
be associated with the Lessee or any Guarantor, or the Board of Directors
of the Parent determines in its reasonable judgment that such Lease
Financing Party's continued association with the Lessee or any Guarantor
may result in (i) the disapproval, modification, or non-renewal of any
contract under which the 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 the 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 the 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
Agent, as appropriate, to a suitable party and complete such assignment,
sale or transfer within thirty (30) days of a request by the Parent to do
so (or such lesser period of time as required by any Gaming Authority).
(i) Filings and Recordings. Agent, the Lenders and Trustee shall amend
the UCC Financing Statements filed pursuant to Section 3.1(f) to more
clearly identify the items of Equipment securing the obligations created
under the Lease and other Operative Documents if (A) Lessee proposes to do
another secured financing secured by similar type or types of Equipment and
(B) Lessee requests in writing of Agent, the Lenders and Trustee that the
description of the similar items of Equipment in the UCC Financing
Statements, when it is practical to do so, be modified so that only items
of Equipment subject to the Lease are covered by such UCC Financing
Statements. When it is impractical to further identify the items of
Equipment described in the UCC Financing Statements, the parties hereto
will be under no obligation to modify such financing statements, although
Lessee may propose, at its expense, that Agent, Trustee and Lenders enter
into an intercreditor agreement or similar instrument with the proposed new
secured creditor or creditors to facilitate the proposed secured financing.
SECTION 6.2. 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 the Lessee 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 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):
(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 the Parent, Lessee and the 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 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(a), 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 the Lessee is 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 Agent and the Trust Company 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), as defined in Section 3(3) of ERISA, or with the assets of
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 the Lessee 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 Agent
and the Lessee a certificate confirming the accuracy of the representations
and warranties set forth in Section 4.3 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 $1,000,000, 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, 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 Equipment 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.
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 6.3. 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 the Lessee 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 the Lessee. 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 the Trustee, the Agent and, except as set
forth in Section 6.3(b), the Lessee 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
the Lessee and the Guarantor 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
the Lessee and the 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.
SECTION 6.4. Required Transfers. If at any time during the Lease Term any
Lender shall request from the Trustee or the Lessee reimbursement for any costs
pursuant to Section 2.09, 2.10 or 2.11 of the Loan Agreement (which cost Lessee
is obligated to pay as Supplemental Rent under Section 3.2 of the Lease), such
Lender shall, upon request of the Lessee or the 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).
ARTICLE VII
GENERAL INDEMNITY
SECTION 7.1. General Indemnification. Lessee and the 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 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) the Resort
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 Lease or any sale pursuant to Section 5.1 of the
Lease), return or other disposition of all or any part of any interest in the
Equipment 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; or (d) any activity,
occurrence or condition that violates or results in non-compliance with any
Environmental Law arising out of or in any way relating to the Resort or any
part thereof or interest therein; (e) the offer, issuance, sale or delivery of
the Notes; (f) the breach or alleged breach by the Lessee of any representation
or warranty made by it or deemed made by it in any Operative Document; (g) 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 (h) any other agreement entered into or assumed
by the Lessee in connection with the Equipment; provided, however, that neither
Parent not Lessee 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 Trust Company, 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 Lease, the other Operative Documents or the Equipment, other
than any such transfer either required by the Lease (including a transfer as a
result of a Casualty or a transfer pursuant to Section 5.1 or 5.2 of the 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.
Lessee shall be 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 the Lessee or assigned to the Trustee
by the Lessee.
If the Lessee shall obtain actual knowledge of any Claim indemnified
against under this Section 7.1, the 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 the Lessee, provided that failure
to so notify the Lessee shall release the Lessee from its obligations to
indemnify hereunder only if and to the extent that such failure results in a
forfeiture by the Lessee of substantive rights and defenses. With respect to any
amount that the Lessee is requested by an Indemnitee to pay by reason of this
Section 7.1, such Indemnitee shall, if so requested by the Lessee and prior to
any payment, submit such additional information to the Lessee as the Lessee 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, such
Indemnitee shall notify the Lessee of the commencement thereof, and the Lessee
shall be entitled, at its expense, acting through counsel reasonably acceptable
to such Indemnitee, to participate in, and, to the extent that the Lessee
desires to, assume and control the defense thereof; provided, however, that the
Lessee shall have acknowledged in writing its obligation to fully indemnify such
Indemnitee in respect of such action, suit or proceeding; and provided, further,
that the Lessee 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 Equipment, the Trust Estate or
any part thereof, unless, in the case of this clause (x)(ii), the Lessee 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 the Lessee which the Lessee 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 the Lessee. Indemnitee, on the one hand, and
Lessee 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 the Lessee's expense supply the Lessee with such
information and documents reasonably requested by the Lessee as are necessary or
advisable for the Lessee to participate in any action, suit or proceeding to the
extent permitted by this Section 7.1. 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 the prior written consent of the Lessee, which consent
shall not be unreasonably withheld or delayed, unless such Indemnitee waives its
right to be indemnified under this Section 7.1 with respect to such Claim. In
addition, if an Indemnitee, in violation of Lessee's right to assume and control
the defense of any Claim, refuses to permit Lessee to control the defense, such
Indemnitee waives its right to be indemnified under Section 7.1 with respect to
such Claim.
Upon payment in full of any Claim by the Lessee pursuant to this Section
7.1 to or on behalf of an Indemnitee, the Lessee, 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 the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee 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
the Lessee, such determination shall be verified by a nationally recognized
independent accounting firm mutually acceptable to the Lessee and the Indemnitee
at the Lessee's expense.
ARTICLE VIII
GENERAL TAX INDEMNITY
SECTION 8.1. General Tax Indemnity. Except as otherwise provided in this
Section 8.1, the Lessee 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, the Equipment or any portion thereof, any Operative Document or the
Lessee or any sublessee or user of the Equipment, 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, 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 the Equipment 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 Equipment 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 Equipment 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 the Lessee's indemnification obligation
hereunder in respect of 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 8.2. 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
Nevada (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
Nevada) or local taxing authority in such state to the extent such Taxes
are imposed as a result of the Lessee moving the Equipment 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
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 Equipment and, if the
Equipment is required to be returned to the Trustee in accordance with the
Lease, such return and (B) the discharge in full of the Lessee's
obligations to pay the Lease Balance, or any amount determined by reference
thereto, with respect to the Equipment and all other amounts due under the
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 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 Equipment 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 a voluntary sale: (A) any substitution, replacement or removal
of any of the Equipment by Lessee shall not be treated as a voluntary
action of any Tax Indemnitee, (B) any sale or transfer resulting from the
exercise by Lessee of any early termination option, (C) any transfer under
Section 5.2 of the Lease and (D) any sale or transfer while a Lease Event
of Default shall have occurred and be continuing under the Lease.
SECTION 8.3. 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 Lessee may have an
indemnity obligation pursuant to Section 8.2, or if any Indemnitee shall
determine that any Taxes as to which Lessee may have an indemnity obligation
pursuant to Section 8.2 may be payable, such Indemnitee shall promptly notify
Lessee. Lessee shall be entitled, at its expense, acting through counsel
reasonably acceptable to such Indemnitee, to participate in, and, to the extent
that Lessee desires to, assume and control the defense thereof; provided,
however, that Lessee shall have acknowledged in writing its obligation to
indemnify fully such Indemnitee in respect of such action, suit or proceeding;
and, provided, further, that Lessee shall not be entitled to assume and control
the defense of any such action, suit or proceeding if and to the extent that (A)
Lessee is 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 the Equipment, the Trust Estate or any
part thereof, unless, in the case of this clause (y), Lessee 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 Lessee which Lessee 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 Lessee. Indemnitee, on the one hand, and
Lessee 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 Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee as are necessary or
advisable for Lessee to participate in any action, suit or proceeding to the
extent permitted by this Section 8.3. 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 8.3 without the prior written consent of Lessee, 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 Lessee's right to assume and control
the defense of any Claim, refuses to permit Lessee 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 Lessee 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 Lessee
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 8.4. 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 Lessee, 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
Lessee is required to pay, Lessee shall furnish to such Indemnitee the original
or a certified copy of a receipt for Lessee's payment of such Tax or such other
evidence of payment as is reasonably acceptable to such Indemnitee.
SECTION 8.5. 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, Lessee shall, if Lessee is permitted by Applicable Laws, timely
prepare and file such report, return or statement; provided, however, that if
Lessee is not permitted by Applicable Laws to file any such report Lessee will
promptly so notify the appropriate Indemnitee, in which case the Indemnitee will
file any such report after preparation thereof by Lessee.
SECTION 8.6. 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, partnership or 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 Lessee, the Trustee and the 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 IX
MISCELLANEOUS
SECTION 9.1. 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 Equipment
to or by the Trustee as provided herein or in any other Operative Documents, any
disposition of any interest of the Trustee in the Equipment, 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 9.2. No Broker, etc. Except for the Lessee's 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 sole compensation for acting hereunder other than as a Lender is
the receipt of the amounts provided for in the Operative 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 9.3. 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 9.4. 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 9.5. 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 the Trustee, the Lessee and the Agent. Trustee and the Lessee shall
not be permitted to amend, modify or supplement the Lease without the written
consent of the Required Lenders; provided, that without the prior written
consent of each Lender, the 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;
(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 Lease releasing 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, or 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 9.6. 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 9.7. 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 9.8. Transaction Costs. Lessee shall pay all Transaction Costs
whether or not the transactions contemplated hereby are consummated. In
addition, the Lessee 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; (b) any Casualty or termination of the 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; and (e) any transfer by an Indemnitee of any
interest in the Loan or the Notes during the continuance of an Event of Default.
SECTION 9.9. 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 9.10. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
SECTION 9.11. 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 9.12. 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 Lessee, 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 9.13. Release of Lien. Each Lender hereby instructs the Trustee to
release, and Agent shall also release, the Liens created by the Lease and
Security Documents, respectively, against the Equipment promptly upon Lessee's
payment in full in immediately available funds of the Lease Balance and of all
other amounts then due and owing under the Operative Documents.
Each Lender, at the expense of the Lessee, will promptly and duly execute
and deliver all documents and take such further action as may be necessary to
release, in accordance with the preceding paragraph, the Liens, including if
requested by Lessee the recording or filing of any document evidencing the
release of such Liens in accordance with the laws of the appropriate
jurisdictions.
SECTION 9.14. 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 the Equipment; 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 U.C.C. or any other applicable laws regarding
chattel paper.
SECTION 9.15. 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 Lessee and each Guarantor hereby irrevocably:
(a) submits to the jurisdiction of such courts; and (b) consents to the service
of process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to 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
Lessee and any Guarantor 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 of Lessee or any Guarantor is not
subject to personal jurisdiction or service of process in such forum. Nothing
herein contained shall preclude 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. Lessee and each Guarantor agree
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 9.16. Jury Trial. 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 9.17. Payments Set Aside. To the extent that Lessee makes a payment
to Trustee, Agent or the Lenders, or Trustee, 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 Lessee, any Guarantor or any Subsidiary that is a sublessee,
assignee or transferee of any Equipment 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 Agent upon demand its pro rata share of any amount so recovered
for distribution by Agent in accordance with the Loan Agreement.
SECTION 9.18. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
STRATOSPHERE GAMING CORP.,
as Lessee
By: /s/ Thomas A. Lettero
Name: Thomas A. Lettero
Title: Vice President-Administration/
Chief Financial Officer
STRATOSPHERE CORPORATION,
as Guarantor
By: /s/ Thomas A. Lettero
Name: Thomas A. Lettero
Title: Vice President-Administration/
Chief Financial Officer
FIRST SECURITY TRUST COMPANY OF NEVADA, not in its
individual capacity except as expressly stated
herein, but solely as Lessor and Trustee
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
BA LEASING & CAPITAL CORPORATION, not in its
individual capacity as expressly stated herein,
but solely as Agent and as Lender
By: /s/ Sara Fitch
Name: Sara Fitch
Title: Vice President
BANK OF SCOTLAND, as Co-Agent and as Lender
By: /s/ Catherine M. Oniffrey
Name: Catherine M. Oniffrey
Title: Vice President
FIRST INTERSTATE BANK OF NEVADA, as Co-Agent
and as Lender
By: /s/ Steve Byrne
Name: Steve Byrne
Title: Vice President
SOCIETE GENERALE, as Co-Agent and as Lender
By: /s/ Donald L. Schubert
Name: Donald L. Schubert
Title: Vice President
CREDIT LYONNAIS, LOS ANGELES BRANCH, as Lead
Manager and as Lender
By: /s/ Thierry Vincent
Name: Thierry Vincent
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Lender
By: /s/ John H. Beville
Name: John H. Beville
Title: Senior Vice President
UNITED STATES NATIONAL BANK OF OREGON,
as Lender
By: /s/ Dale Parshall
Name: Dale Parshall
Title: Assistant Vice President
BANK OF BOSTON, as Lender
By: /s/ David B. Herter
Name: David B. Herter
Title: Director
IMPERIAL BANK, as Lender
By: /s/ Steven K. Johnson
Name: Steven K. Johnson
Title: Senior Vice President
TRUSTMARK NATIONAL BANK, as Lender
By: /s/ John W. Ray, Jr.
Name: John W. Ray, Jr.
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A., as Lender
By: /s/ David P. Williams
Name: David P. Williams
Title: Vice President
[EXECUTION COPY]
LEASE AGREEMENT
dated as of April 29, 1996
between
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity,
except as expressly stated herein,
but solely as Trustee, as Lessor,
and
STRATOSPHERE GAMING CORP.,
as Lessee.
ALL RIGHT, TITLE AND INTEREST OF LESSOR UNDER THIS 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 AGENT ("AGENT"), UNDER
THE SECURITY AGREEMENT, DATED AS OF APRIL 29, 1996, FOR THE BENEFIT OF THE AGENT
AND THE LENDERS REFERRED TO IN SUCH SECURITY AGREEMENT. THIS LEASE HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS 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
LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART
HEREOF OTHER THAN THE "ORIGINAL EXECUTED COUNTERPART NO. 1.", WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY AGENT
ON OR FOLLOWING SIGNATURE PAGE THEREOF.
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART NO. 1.
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS; LESSEE LIABILITY
ARTICLE II
LEASE OF EQUIPMENT; LEASE TERM
2.1. Acceptance and Lease of Equipment . . . . . . . . . . . . . . 1
2.2. Acceptance Procedure. . . . . . . . . . . . . . . . . . . . . 1
2.3. Lease Term. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
RENT; QUIET ENJOYMENT; NET LEASE; SUBLEASING
3.1. Periodic Rent . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Supplemental Rent . . . . . . . . . . . . . . . . . . . . . . 2
3.3. Place and Manner of Payment . . . . . . . . . . . . . . . . . 2
3.4. Late Payment. . . . . . . . . . . . . . . . . . . . . . . . . 2
3.5. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 3
3.6. Net Lease; No Setoff, Etc.. . . . . . . . . . . . . . . . . . 3
3.7. No Bar. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8. Intent of the Parties . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
POSSESSION AND SUBLEASING
ARTICLE V
LEASE TERMINATION
5.1. Early Termination . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Termination and Transfer. . . . . . . . . . . . . . . . . . . 6
ARTICLE VI
DISCLAIMER AND ASSIGNMENT OF WARRANTIES
6.1. Disclaimer of Warranties. . . . . . . . . . . . . . . . . . . 7
6.2. Assignment of Warranties. . . . . . . . . . . . . . . . . . . 7
ARTICLE VII
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS
7.1. Maintenance and Repair; Compliance With Law . . . . . . . . . 8
7.2. Alterations . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.3. Replacement and Substitution. . . . . . . . . . . . . . . . . 9
7.4. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.5. Maintenance and Repair Reports. . . . . . . . . . . . . . . . 9
ARTICLE VIII
USE
8.1. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX
CASUALTY; REPLACEMENT; INSURANCE
9.1. Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2. Non-Casualty Losses . . . . . . . . . . . . . . . . . . . . . 12
9.3. Required Coverages. . . . . . . . . . . . . . . . . . . . . . 13
9.4. Delivery of Insurance Certificates. . . . . . . . . . . . . . 14
ARTICLE X
LEASE EVENTS OF DEFAULT
10.1. Lease Events of Default. . . . . . . . . . . . . . . . . . . 14
10.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.3. Waiver of Certain Rights . . . . . . . . . . . . . . . . . . 18
10.4. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . 18
10.5. Remedies Cumulative; No Waiver; Consents . . . . . . . . . . 19
ARTICLE XI
LESSOR'S RIGHT TO CURE
11.1. Lessor's Right to Cure Lessee's Lease Defaults . . . . . . . 19
ARTICLE XII
ASSIGNMENTS
ARTICLE XIII
GRANT OF SECURITY INTEREST
13.1. Grant of Security Interest . . . . . . . . . . . . . . . . . 20
13.2. Retention of Title or Proceeds in the Case of Default. . . . 20
ARTICLE XIV
MISCELLANEOUS
14.1. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 21
14.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 21
14.4. Severability . . . . . . . . . . . . . . . . . . . . . . . . 21
14.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . 21
14.6. Parties in Interest. . . . . . . . . . . . . . . . . . . . . 22
14.7. Limitation of Liability. . . . . . . . . . . . . . . . . . . 22
14.8. Captions; Table of Contents. . . . . . . . . . . . . . . . . 22
14.9. Schedules and Exhibits . . . . . . . . . . . . . . . . . . . 22
LEASE
This LEASE (as amended, supplemented, or otherwise modified from time to
time, this "Lease"), dated as of April 29, 1996, is between FIRST SECURITY TRUST
COMPANY OF NEVADA, not in its individual capacity, except as expressly stated
herein, but solely as Trustee under the Trust Agreement, as Lessor ("Lessor"),
and STRATOSPHERE GAMING CORP., a Nevada corporation, as Lessee ("Lessee").
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 I
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 April 29, 1996 (as amended,
supplemented, or otherwise modified from time to time, the "PARTICIPATION
AGREEMENT"), among Stratosphere Corporation, a Delaware corporation; Lessee;
Lessor; the Lenders, Co-Agents and Lead Manager identified therein; and BA
Leasing & Capital Corporation, as Arranger and Agent. All obligations imposed on
the "LESSEE" in this Lease shall be the full recourse liability of Lessee.
ARTICLE II
LEASE OF EQUIPMENT; LEASE TERM
SECTION 2.1. ACCEPTANCE AND LEASE OF EQUIPMENT. On the Advance Date,
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 for the Equipment theretofore delivered, and
simultaneously lease to Lessee hereunder, and Lessee shall lease from Lessor
hereunder, the Equipment for the Lease Term.
SECTION 2.2. ACCEPTANCE PROCEDURE. Lessee hereby agrees that the execution
and delivery by Lessee on the Advance Date of a Certificate of Acceptance
pursuant to Section 3.1(l) of the Participation Agreement (appropriately
completed) shall, without further act, irrevocably constitute acceptance by
Lessee on behalf of itself and Lessor of the Equipment which is the subject
thereof for all purposes of this Lease and the other Operative Documents.
SECTION 2.3. LEASE TERM. The term of this Lease (the "LEASE TERM")
shall commence on the Lease Commencement Date and shall expire on the third
anniversary thereof.
ARTICLE III
RENT; QUIET ENJOYMENT; NET LEASE; SUBLEASING
SECTION 3.1. PERIODIC RENT. During the Lease Term, Lessee shall pay to
Lessor Periodic Rent on each Payment Date in the amount determined in accordance
with the definition of "PERIODIC RENT".
SECTION 3.2. SUPPLEMENTAL RENT. During the Lease Term, 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
Lessee, on behalf of Lessor, so to pay any such other Person) any and all
Supplemental Rent promptly as the same shall become due and payable, and, in the
event of any failure on the part of 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. Lessee hereby
reaffirms its obligation to pay as Supplemental Rent (i) an amount equal to
Additional Costs as the same become due and payable, (ii) all amounts determined
to be due and payable pursuant to Section 5.1 of the Trust Agreement in
accordance with its terms and (iii) any Premium that becomes due and payable
pursuant to the Section 2.4(d) of the Loan Agreement.
SECTION 3.3. PLACE AND MANNER OF PAYMENT. Rent and all other sums due to
Lessor, Agent or any Lender hereunder shall be paid in accordance with Section
2.7 of the Participation Agreement.
SECTION 3.4. LATE PAYMENT. If any Periodic Rent shall not be paid when due,
Lessee shall pay to Lessor, or if any Supplemental Rent payable to or on behalf
or for the account of Lessor, any Lender, Agent or any other Indemnitee is not
paid when due, 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 3.5. QUIET ENJOYMENT. Subject to the rights of Lessor contained in
ARTICLE X and the other terms of the Operative Documents to which Lessee is a
party, Lessee shall peaceably and quietly have, hold and enjoy the Equipment for
the Lease Term, free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor (other than Lessee) with respect to any matters
arising from and after the Advance Date. 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 Lessee under this Lease.
SECTION 3.6. NET LEASE; NO SETOFF, ETC. THIS LEASE SHALL CONSTITUTE A NET
LEASE AND, NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, IT IS INTENDED
THAT PERIODIC RENT AND SUPPLEMENTAL RENT SHALL BE PAID WITHOUT COUNTERCLAIM,
SETOFF, DEDUCTION OR DEFENSE OF ANY KIND AND WITHOUT ABATEMENT, SUSPENSION,
DEFERMENT, DIMINUTION OR REDUCTION OF ANY KIND, AND LESSEE'S OBLIGATION TO PAY
ALL SUCH AMOUNTS, THROUGHOUT THE LEASE TERM IS ABSOLUTE AND UNCONDITIONAL. The
obligations and liabilities of 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 item of
Equipment, or any failure of any item of Equipment to comply with all Applicable
Laws, including any inability to use any item of Equipment by reason of such
non-compliance; (b) any damage to, abandonment, loss, destruction, requisition,
taking or contamination of or Release from any item of Equipment; (c) any
restriction, prevention or curtailment of or interference with any use of any
item of Equipment; (d) the attachment of any Lien of any third party to any item
of Equipment; (e) any prohibition or restriction of or interference with
Lessee's use of any or all of the Equipment by any Person; (f) any change,
waiver, extension, indulgence or other action or omission or breach in respect
of any obligation or liability of or by Lessor, Agent or any Lender; (g) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to Lessee, Lessor, Agent, any
Lender or any other Person, or any action taken with respect to this Lease by
any trustee or receiver of Lessee, Lessor, Agent, any Lender or any other
Person, or by any court, in any such proceeding; (h) any claim that Lessee has
or might have against any Person, including, without limitation, Lessor, Agent
or any Lender; (i) any failure on the part of Lessor to perform or comply with
any of the terms of this Lease, any other Operative Document or of any other
agreement whether or not related to the transactions contemplated by the
Operative Documents; (j) any invalidity or unenforceability or disaffirmance
against or by Lessee of this Lease or any provision hereof or any of the other
Operative Documents or any provision of any thereof; (k) the impossibility of
performance by Lessee, Lessor or both; (l) any action by any court,
administrative agency or other Governmental Authority; (m) any restriction,
prevention or curtailment of or any interference with the construction or any
use of any item of Equipment; or (n) 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 Lease, this Lease shall be noncancellable by Lessee for
any reason whatsoever, and 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 Lease, or to any diminution, abatement or reduction
of Rent payable by Lessee hereunder. If for any reason whatsoever this 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 Lease, 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 under the terms of this 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 Lease to have remained in effect. Each payment of Rent made by
Lessee hereunder shall be final and, absent manifest error in the determination
of the amount thereof, Lessee shall not seek or have any right to recover all or
any part of such payment from Lessor, Agent or any party to any agreements
related thereto for any reason whatsoever. Lessee assumes the sole
responsibility for the condition, use, operation, maintenance and management of
the Equipment, and Lessor shall have no responsibility in respect thereof and
shall have no liability for damage to the property of Lessee or any subtenant of
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 3.7. NO BAR. Notwithstanding the foregoing, nothing set forth
herein shall bar, limit, preclude, prevent, stay or otherwise adversely affect
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 Lessee further intend and
agree that this Lease is also a conditional sales agreement and that, for the
purpose of securing Lessee's obligations for the repayment of the Loans from
Lessor and the Lenders to Lessee, (i) the Lease 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 Lessee to Lessor, for the benefit of the Lenders, of a security interest in
all of Lessee's present and future right, title and interest in the Equipment,
including but not limited to Lessee's 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 the Equipment 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 the 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
acknowledgements, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such security interest under Applicable Law.
Lessor and Lessee shall, to the extent consistent with the Lease, take such
actions and execute, deliver, file and record such other documents and financing
statements as may be necessary to ensure that the security interest in the
Equipment created in accordance with this Lease will be deemed to be a perfected
security interest with priority over all Liens, other than Permitted Liens,
under Applicable Law and will be maintained as such throughout the Lease Term.
ARTICLE IV
POSSESSION AND SUBLEASING
LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, SUBLEASE ANY
OR ALL OF THE EQUIPMENT OR ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS, INTERESTS OR
OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED SUBLEASE, ASSIGNMENT, TRANSFER OR
ENCUMBERING BY 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. Lessee may, with Lessor's and all of the Lenders prior
written consent, which shall not be unreasonably withheld or delayed, sublease
or assign the Equipment as an integrated whole, if such sublease or assignment
permitted by this ARTICLE IV (a "SUBLEASE") (a) is expressly subject and
subordinate to all of the provisions of this Lease and the rights and interests
of Lessor and the Lenders hereunder in respect of the Equipment covered by such
Sublease upon the occurrence of an Event of Default thereunder or hereunder, (b)
expressly requires the Equipment subject thereto to be returned as directed by
Lessor or the Required Lenders upon notice to such assignee or sublessee that an
Event of Default exists and (c) expressly prohibits any further sublease or
assignment of the Equipment subject thereto. Lessee shall remain primarily
liable for its obligations under this Lease notwithstanding the existence of any
such Sublease. All of Lessee's right, title and interest in, to and under such
Sublease shall be pledged by Lessee to Lessor, as collateral for Lessee's
obligations under this Lease, and 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. If so
requested by Lessor or any Lender, Lessee shall, within 15 days after the
execution of any such Sublease, deliver a conformed copy thereof to Lessor or
such Lender.
ARTICLE V
LEASE TERMINATION
SECTION 5.1. EARLY TERMINATION. On any date after the Lease Commencement
Date, Lessee may, at its option, upon at least 30 days' advance written notice
to Lessor, purchase all (but not less than all) of the Equipment for an amount
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)), (iii) any Premium payable in respect of the Notes, and (iv) all other fees
and expenses and other amounts then due and payable pursuant to this Lease and
the other Operative Documents.
SECTION 5.2. TERMINATION AND TRANSFER. Upon payment in full in cash of all
amounts then due and owing hereunder on the Lease Termination Date, Lessor shall
release the Equipment then subject to the Lease on the Lease Termination Date
from the Lien created by this Lease and transfer all of Lessor's right, title
and interest thereto to Lessee ("AS IS" and without any representations or
warranties and with the disclaimers set forth in SECTION 6.1, except that such
Equipment is free and clear of Lessor Liens), all at Lessee's sole cost and
expense.
ARTICLE VI
DISCLAIMER AND ASSIGNMENT OF WARRANTIES
SECTION 6.1. DISCLAIMER OF WARRANTIES. The Equipment is let by Lessor "AS
IS" in its 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 the Equipment, (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. Lessee has examined the Equipment
(insofar as Lessor is concerned) has found the same to be satisfactory. NEITHER
LESSOR, 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 THE EQUIPMENT OR TO THE VALUE,
MERCHANTABILITY, HABITABILITY, CONDITION, OR FITNESS FOR USE OF THE SAME, OR ANY
PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE EQUIPMENT OR ANY PART THEREOF, AND NEITHER LESSOR,
AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF THE EQUIPMENT, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAWS, except that Lessor hereby represents and warrants that the
Equipment is and shall be free of Lessor Liens (such Lessor representation and
warranty being made by (x) the Bank with respect to any Lessor Liens
attributable to the Bank, and (y) Trustee with respect to any Lessor Liens
attributable to Trustee). Lessee has been afforded full opportunity to inspect
the Equipment, is satisfied with the results of its inspections and is entering
into this 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, Agent and the Lenders, on the one hand, and Lessee, on the
other, are to be borne by 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, Agent or the Lenders, express or
implied, with respect to the Equipment (or any interest therein), that may arise
pursuant to any law now or hereafter in effect, or otherwise.
SECTION 6.2. ASSIGNMENT OF WARRANTIES. Lessor assigns to 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 Equipment; PROVIDED
that such assignment shall be effective only when no Event of Default exists;
and PROVIDED, FURTHER, that any action taken by Lessee by reason thereof shall
be at the expense of Lessee and shall be consistent with Lessee's obligations
pursuant to this Lease.
ARTICLE VII
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS
SECTION 7.1. MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW. Without limiting
Lessee's obligations under Section 5.11 of the Participation Agreement, Lessee,
at its own expense, shall at all times maintain the Equipment 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 the
Equipment and as otherwise required to enforce claims against each vendor or
manufacturer of each item of Equipment 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 the Equipment, but in any
event such Equipment shall be maintained at a standard that is no less than the
standard used by the Lessee for similar equipment it owns or leases.
In addition, Lessee shall make all necessary or appropriate repairs,
replacements, substitutions and modifications in respect of the Equipment (or
any component thereof) which may be required to keep the Equipment in the
condition required above.
SECTION 7.2. ALTERATIONS.
(a) If the Equipment, any item of Equipment or individual component
thereof is required to be altered, added to, replaced, improved or modified
in order to comply with Applicable Law (a "REQUIRED ALTERATION"), Lessee
shall notify Lessor and diligently proceed to make such Required Alteration
at its own expense.
(b) Lessee, at its own expense, may make any alteration, addition,
replacement, improvement or modification to the Equipment or any item of
Equipment (a "PERMITTED ALTERATION"), or remove any part that becomes worn
out, broken or obsolete, if 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 the
item of Equipment, (ii) the originally anticipated use or function thereof,
as applicable, and (iii) the originally anticipated residual value of the
item of Equipment. In addition, the Permitted Alteration shall not cause
the item of Equipment to become suitable for use only by 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 Equipment.
(d) Neither Lessor nor Agent need inquire into or confirm that
Alterations were made in conformity with these requirements.
SECTION 7.3. REPLACEMENT AND SUBSTITUTION. Lessee may replace an item of
Equipment subject to this Lease with a replacement item of equipment that meets
the suitability standards set forth in SECTION 9.1(b). Lessee may request the
replacement of an item of Equipment by delivery of a replacement notice to
Lessor at least 20 days prior to the date of the proposed substitution. Upon a
permitted substitution of equipment pursuant to this SECTION 7.3, Lessor shall
execute and deliver to Lessee 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 Lease, all at Lessee's expense. Leased items of
Equipment that have been substituted or replaced pursuant to this SECTION 7.3
shall become the property of Lessee, and title thereto shall automatically vest
in Lessee upon such permitted substitution or replacement.
SECTION 7.4. REMOVAL. No Required Alteration may be removed or severed from
the item of Equipment to which it is attached (unless no longer required by
Applicable Law so long as CLAUSES (I) and (III) below are satisfied). A
Permitted Alteration (or component thereof) may be removed by Lessee at its
expense if (i) it is readily removable without causing material damage to the
item of Equipment to which it is attached, (ii) the removal does not violate
Applicable Law and (iii) no Default or Event of Default is continuing.
SECTION 7.5. MAINTENANCE AND REPAIR REPORTS. Lessee shall keep maintenance
and repair reports in sufficient detail, and as customary for owners or
operators of casinos, to indicate the nature and date of major work done. Such
reports shall be kept on file by Lessee at its offices during the Lease Term,
and shall be made available to Lessor upon reasonable request. Lessee shall give
notice to Lessor and Agent of any Condemnation or Casualty the cost to repair
which is reasonably expected by Lessee to exceed $250,000, promptly after Lessee
has knowledge thereof.
ARTICLE VIII
USE
SECTION 8.1. USE. Without limiting Lessee's obligations under Section 5.17
of the Participation Agreement, Lessee shall use and operate the Equipment in
compliance with any and all Applicable Law. 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 Equipment.
The Equipment will at all times be and remain in the possession and control of
Lessee, subject, however, to ARTICLES IV and X. The Equipment shall in no event
be located outside of (i) the Resort without prior written notice to Lessor (and
in no event shall any Equipment be located on any space leased from
Strato-Retail LLC pursuant to the Strato-Retail Sublease), (ii) the State of
Nevada 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 Agent therein, and (iii) the continental United States.
ARTICLE IX
CASUALTY; REPLACEMENT; INSURANCE
SECTION 9.1. CASUALTY.
(a) If a Casualty occurs with respect to an item or items of
Equipment, Lessee shall (i) give prompt written notice of such occurrence
and the date thereof to Lessor and (ii) if such Casualty causes damage in
an aggregate amount in excess of $250,000, either (A) replace such item or
items of Equipment with respect to which the Casualty has occurred pursuant
to the following provisions of SECTION 9.1(b) or (B) purchase such item or
items of Equipment 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.
(b) If any item of Equipment 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, Lessee will substitute equipment meeting the suitability
standards set forth in this SECTION 9.1(b) for the item of Equipment
suffering the Casualty. To be suitable as a replacement, such replacement
item of equipment 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 Equipment suffering the Casualty, must
have a fair market value of not less than the fair market value
(immediately preceding the Casualty assuming that such item of Equipment
had been maintained in accordance with ARTICLE VII) of the item of
Equipment suffering the Casualty, and be free and clear of any Liens other
than Permitted Liens. 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 Equipment to this Lease, and upon such execution
and delivery and the receipt by Lessor, Agent and the Lenders of (i) a
certificate of insurance in accordance with SECTION 9.4 evidencing Lessee's
compliance with the insurance provisions of SECTION 9.3 with respect to
such replacement item of Equipment, and (ii) an opinion of counsel to
Lessor in form and substance reasonably satisfactory to the 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 equipment, that the
description of the replacement item of equipment 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 equipment. Such replacement item of equipment
shall be deemed an item of Equipment for all purposes hereof.
(c) If no Event of Default exists and Lessee elects to replace any
item of Equipment suffering a Casualty, Lessee shall be entitled to receive
from Lessor the Casualty Recoveries with respect thereto, to be used to
reimburse Lessee for the cost of replacement of such item of Equipment
after Lessee fully applies the Casualty Recoveries properly received by it
in replacement of such item of Equipment pursuant to SECTION 9.1(D).
Lessor, subject to the rights of any insurer insuring such item of
Equipment as provided herein, shall execute and deliver to Lessee, or to
its assignee or nominee, a quitclaim bill of sale (without representations
or warranties except that such item of Equipment is free and clear of
Lessor Liens) for such item of Equipment, and such other documents as may
be required to release such item of Equipment from the terms of this Lease,
in such form as may reasonably be requested by Lessee. All fees, costs and
expenses relating to a substitution as described herein shall be borne by
Lessee.
(d) All Casualty Recoveries in excess of $250,000 in respect of a
Casualty to any item of Equipment shall be paid directly to Lessor for
deposit into the Account, or if paid to Lessee, such excess funds shall be
immediately paid by Lessee to Lessor. If an Event of Default exists, Lessor
may retain all Casualty Recoveries as cash collateral or, if no Event of
Default exists, Lessee shall be entitled to apply all Casualty Recoveries
in accordance with SECTION 9.1(C), as applicable, and any balance remaining
after compliance with SECTION 9.1(C), as the case may be, shall be retained
by or returned to Lessee. Lessee shall not be entitled to any Casualty
Recoveries in excess of $250,000 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 item of Equipment. If Lessor receives
Casualty Recoveries in an amount that is less than $250,000.00, so long as
no Event of Default exists, Lessor shall promptly remit such funds to
Lessee.
SECTION 9.2. NON-CASUALTY LOSSES.
(a) If any item of Equipment suffers any condemnation, loss, physical
harm or damage not constituting a Casualty (a "NON-CASUALTY LOSS"), Lessee
shall repair such item of Equipment.
(b) All Non-Casualty Recoveries in excess of $250,000 in respect of
any Non-Casualty Loss to an item of Equipment (including any component
thereof) shall be paid directly to Lessor for deposit into the Account.
Non-Casualty Recoveries held by Lessor shall be disbursed by Lessor from
the Account to Lessee from time to time (but no more frequently than twice
per calendar month) to pay Lessee for the costs of repairing and rebuilding
the affected portions of the Equipment as required under SECTION 9.2(A),
subject to such reasonable disbursement conditions as Lessor may impose,
including presentation of invoices and other supporting documentation
reflecting such costs and delivery of Lien waivers; PROVIDED, HOWEVER,
Lessor shall have no obligation to disburse any Non-Casualty Recoveries out
of the Account at any time that Lessor shall reasonably determine (i) that
such Non-Casualty Recoveries are not sufficient to repair and rebuild the
affected portions of the Equipment as required by SECTION 9.2(A) (unless
additional funds which are, in the sole discretion of Lessor, sufficient to
so repair and rebuild the affected portions of the Equipment have been
deposited in the Account) or (ii) that Lessee is not diligently performing
its obligations under SECTION 9.2(A). Notwithstanding the foregoing
provisions of this SECTION 9.2(B), and provided no Event of Default exists,
if the aggregate amount of Non-Casualty Recoveries attributable to any
Non-Casualty Loss is $250,000 or less, Lessee may receive such Non-Casualty
Recoveries directly, without delivery to Lessor, provided such Non-Casualty
Recoveries are applied in accordance with the requirements of SECTION
9.2(A). If Lessor receives Non-Casualty Recoveries in an amount that is
less than $250,000, so long as no Event of Default exists, Lessor shall
promptly remit such funds to Lessee. Notwithstanding any Non-Casualty Loss,
all of Lessee's obligations under this Lease (including its obligation to
make all payments of Rent as they become due) shall continue unabated and
in full force and effect as provided in this Lease.
SECTION 9.3. REQUIRED COVERAGES. Lessee will keep the Equipment insured by
financially sound and reputable insurers against loss or damage of the kinds and
in the amounts customarily insured against by similar corporations engaged in
similar operations and carry such other insurance as is usually carried by such
corporations, PROVIDED that in any event Lessee will maintain:
(a) CASUALTY INSURANCE. Insurance against all risks of loss or damage
with respect to the Equipment with deductibles and in such minimum amounts
as are consistent with industry standards; PROVIDED, HOWEVER, that at no
time shall the amount of coverage be less than one hundred and ten percent
of the Lease Balance.
(b) COMPREHENSIVE GENERAL LIABILITY INSURANCE. Combined single limit
insurance against claims for bodily injury, death or third-party property
damage occurring on, in or about the Equipment 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 equipment.
(c) PROPERTY INSURANCE. Insurance against loss or damage covering the
Equipment or any portion thereof by reason of any peril in an amount and
with such deductibles as are carried by companies similar to Lessee owning
or leasing equipment similar to the Equipment; PROVIDED, HOWEVER, that at
no time shall the amount of such coverage, on a replacement cost basis, be
less than the then outstanding Lease Balance.
(d) OTHER INSURANCE. Such other insurance including workmen's
compensation and business interruption insurance, in each case as generally
carried by owners of similar equipment in the State of Nevada, in such
amounts and against such risks as are then customary for equipment similar
in use. Lessee may elect to self-insure for workmen's compensation coverage
provided such insurance is obtained and maintained in accordance with all
Applicable Laws of the State of Nevada.
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 Lessee, each policy shall name Bank, Agent,
Lessor and Lenders, as additional insureds. In the case of casualty and property
insurance maintained by Lessee, each policy shall name the Trustee as sole loss
payee. Each policy referred to in this SECTION 9.3 shall provide that: (i) it
will not be cancelled 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) the interests of Bank, Agent, Lessor and all Lenders
shall not be invalidated by any act or negligence of Lessee or any person having
an interest in the Resort, or any item of Equipment; (iii) such insurance is
primary with respect to any other insurance carried by or available to Bank,
Agent, Lessor and all Lenders; (iv) the insurer shall waive any right of
subrogation, setoff, counterclaim, or other deduction, whether by attachment or
otherwise, against the Agent or Lessor; and (v) such policy shall contain a
cross-liability clause providing for coverage of Bank, Agent, Lessor and each
Lender as if separate policies had been issued to each of them. Lessee will
notify Trustee and Agent promptly of any policy cancellation, reduction in
policy limits, modification or amendment.
SECTION 9.4. DELIVERY OF INSURANCE CERTIFICATES. On or before the Closing
Date and thereafter 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, Lessee shall
deliver to Trustee and Agent certificates of insurance satisfactory to Trustee
and 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 X
LEASE EVENTS OF DEFAULT
SECTION 10.1. 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 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 Lessee or any
Guarantor contained in any Operative Document or in any certificate, letter
or other writing or instrument furnished or delivered to Lessor, 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 the Guaranty;
(d) 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;
(e) Lessee or Parent 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
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, Agent or any Lender to Lessee or any Guarantor; or (ii) Lessee or
Parent has knowledge thereof;
(f) (i) Lessee, Guarantor or any Subsidiary that is a sublessee,
assignee or transferee of any Equipment 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 Lessee, Guarantor or any Subsidiary that is a
sublessee, assignee or transferee of any Equipment for the purpose of
effectuating any of the foregoing;
(g) Involuntary proceedings or an involuntary petition shall be
commenced or filed against Lessee, the Guarantor or any Subsidiary that is
a sublessee, assignee or transferee of any Equipment under any bankruptcy,
insolvency or similar law or seeking the dissolution, liquidation or
reorganization of Lessee, Guarantor or any Subsidiary that is a sublessee,
assignee or transferee of any Equipment or the appointment of a receiver,
trustee, custodian or liquidator for Lessee, Guarantor or any Subsidiary
that is a sublease, assignee or transferee of any Equipment or of a
substantial part of the property, assets or business of Lessee, 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 Lessee, Guarantor or any Subsidiary that is a sublease,
assignee or transferee of any Equipment, 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, within 60 days after commencement, filing or levy, as the
case may be;
(h) 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 the 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;
(i) 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 Lessee, or Guarantor, as the case may be; or
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 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;
(j) 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 $5,000,000, under
which Parent or Lessee may be obligated as borrower or guarantor;
(k) A final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Parent
or Lessee 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 $5,000,000;
(l) There has occurred any revocation, suspension or loss of any
Gaming Permit of Lessee or Parent (after the same shall have been obtained)
which results in the cessation of gaming business at the Casino or any
other gaming location of Lessee for a period of more than 5 consecutive
days;
(m) 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;
(n) There shall have occurred a Change of Control;
(o) The Casino shall not have commenced gaming operations by
June 30, 1996; and
(p) GCI has materially breached its obligations under the
Standby Equity Commitment Agreement.
SECTION 10.2. REMEDIES. If any Lease Event of Default exists and is
continuing, Lessor shall have the rights, options and remedies of a secured
party at law and 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 proceed by appropriate court action or actions, either
at law or in equity, to enforce performance by Lessee of the applicable
covenants of this Lease or to recover damages for the breach thereof; or
(b) Lessor may by notice in writing to Lessee terminate this Lease,
but Lessee shall remain liable as hereinafter provided; and Lessor may, at
its option, do any one or more of the following: (i) declare the Lease
Balance, all accrued but unpaid Rent (to the extent of the accrued unpaid
interest on the Notes), all other amounts then payable by Lessee under this
Lease and the other Operative Documents to be immediately due and payable,
and recover any other damages and expenses (including the costs and
expenses described in Sections 7.1 and 9.8 of the Participation Agreement)
in addition thereto which Lessor shall have sustained by reason of such
Lease Event of Default; (ii) enforce the Lien given hereunder pursuant to
the UCC or any other law; and (iii) enter upon the premises where any item
of Equipment may be and either remove such Equipment (or any portion
thereof), with any damage to the improvements upon which the Equipment may
be attached to be borne by Lessee, or take possession of the Equipment; or
(c) Lessor may require Lessee immediately to purchase the Equipment
(or the remaining portion thereof) in accordance with the provisions of
SECTION 5.1.
Amounts received by Lessor from the Account will be applied against Lessee's
liabilities hereunder. 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 Lessee under this Lease and the other Operative Documents have been
paid in full, then Lessor shall remit to Lessee any excess amounts received by
Lessor.
SECTION 10.3. WAIVER OF CERTAIN RIGHTS. If this Lease shall be terminated
pursuant to SECTION 10.2, Lessee waives, to the fullest extent permitted by law,
(a) any notice of the institution of legal proceedings to obtain possession; (b)
any right of redemption 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 modify any of Lessor's rights or remedies
under this ARTICLE X.
SECTION 10.4. POWER OF ATTORNEY. 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 Lease on the records of any Governmental
Authority) and other proper instruments as Lessor may reasonably consider
necessary or appropriate. Lessee ratifies and confirms all that such attorney or
any substitute shall lawfully do by virtue hereof. If requested by Lessor or any
purchaser, 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 10.5. 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 Lessee or be an acquiescence therein. Lessor's consent to
any request made by 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, Lessee
hereby waives any rights now or hereafter conferred by statute or otherwise that
may require Lessor to sell, lease or otherwise use the Equipment 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 XI
LESSOR'S RIGHT TO CURE
SECTION 11.1. 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 Lessee, including the failure by
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 Lessee, possess the Equipment 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 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 Lessee to Lessor on demand.
ARTICLE XII
ASSIGNMENTS
All or any of the right, title or interest and obligations of Lessor in and
to this 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 Equipment,
may be assigned or transferred by Lessor only in accordance with the provisions
set forth in the Trust Agreement.
ARTICLE XIII
GRANT OF SECURITY INTEREST
SECTION 13.1. GRANT OF SECURITY INTEREST. Title to the Equipment is held by
Lessor as collateral security for the obligations of Lessee hereunder and under
the Operative Documents to which it is a party until such time as Lessee has
fulfilled all of its obligations hereunder and under such Operative Documents.
Lessee hereby assigns, grants and pledges to Lessor and the Lenders a security
interest and Lien in (a) the Equipment, (b) all of Lessee's right, title and
interest, whether now or hereafter existing or acquired, in to and under each of
the items, accounts, agreements listed in Section 2.1 of the Security Agreement,
and (c) the proceeds thereof (collectively, the "LESSEE COLLATERAL"), to secure
the payment of all sums due hereunder and under the Operative Documents to which
it is a party and the performance of all obligations hereunder and the other
Operative Documents to which it is a party.
SECTION 13.2. 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 item of Equipment 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 the item of Equipment as part of the Lessee Collateral and
shall be entitled to apply such amounts against any amounts due hereunder;
PROVIDED that Lessor shall distribute such amount or transfer the Equipment in
accordance with the other terms of this 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 XIV
MISCELLANEOUS
SECTION 14.1. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN NEW YORK AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS 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 EQUIPMENT, WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE
EQUIPMENT IS LOCATED AND TO THE EXTENT THAT THE EXERCISE OF CERTAIN RIGHTS OR
REMEDIES HEREUNDER OR UNDER THE OPERATIVE DOCUMENTS MAY REQUIRE COMPLIANCE WITH
GAMING LAWS.
SECTION 14.2. 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 14.3. COUNTERPARTS. This Lease has been executed in several
counterparts. One counterpart has been prominently marked "Lessor's Copy" and
the other counterparts have been prominently marked "Lessee's Copy" or "Copy."
Only the counterpart marked "Lessor's Copy" shall evidence a monetary obligation
of 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 14.4. SEVERABILITY. Whenever possible, each provision of this Lease
shall be interpreted in such manner as to be effective and valid under
Applicable Law; but if any provision of this 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 Lease.
SECTION 14.5. SUCCESSORS AND ASSIGNS. This 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.
SECTION 14.6. PARTIES IN INTEREST. Except as expressly PROVIDED herein,
none of the provisions of this Lease is intended for the benefit of any Person
except the parties hereto, their successors and permitted assigns; PROVIDED that
each of Lessor and Lessee agrees that the Lenders shall benefit from all of the
provisions of this Lease applicable to them.
SECTION 14.7. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this 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 but is made and
intended for the purpose for binding only 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 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
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 14.8. CAPTIONS; TABLE OF CONTENTS. Section captions and the table
of contents used in this Lease (including the Schedules, Exhibits and Annexes
hereto) are for convenience of reference only and shall not affect the
construction of this Lease.
SECTION 14.9. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity, except as
expressly stated herein, but solely as
Trustee and as Lessor
By: /s/ Greg A. Hawley
Name Printed: Greg A. Hawley
Title: Trust Officer
STRATOSPHERE GAMING CORP.,
as Lessee
By: /s/ Thomas A. Lettero
Name Printed: Thomas A. Lettero
Title:Vice President-Administration
Chief Financial Officer
[EXECUTION COPY]
LOAN AGREEMENT
dated as of April 29, 1996
among
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity but solely
as Trustee under the Trust Agreement
for the Lenders named therein, as Borrower,
BA LEASING & CAPITAL CORPORATION,
as Agent
BANK OF SCOTLAND,
FIRST INTERSTATE BANK OF NEVADA,
and
SOCIETE GENERALE,
as Co-Agents
CREDIT LYONNAIS, LOS ANGELES BRANCH
as Lead Manager
and
THE PERSONS NAMED ON SCHEDULE I,
as Lenders
TABLE OF CONTENTS
Section 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 . . . . . . . . . . . . . . . 2
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. . . . . . . . . . . . 5
2.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10. Illegality. . . . . . . . . . . . . . . . . . . . . . 6
2.11. Increased Costs and Reduction of Return . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . 9
3.2. Distribution of Mandatory Prepayments . . . . . . . . 9
3.3. Distribution of Payments After Loan
Event of Default. . . . . . . . . . . . . . . . . . 10
3.4. Other Payments. . . . . . . . . . . . . . . . . . . . 11
3.5. Distribution of Excluded Amounts. . . . . . . . . . . 12
3.6. Guaranty Payments . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
CONDITIONS PRECEDENT
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWER
5.1. Performance by the Borrower . . . . . . . . . . . . . 12
5.2. Waiver by the Borrower. . . . . . . . . . . . . . . . 12
ARTICLE VI
LOAN EVENTS OF DEFAULT; REMEDIES
6.1. Loan Events of Default. . . . . . . . . . . . . . . . 13
6.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
AGENT
7.1. Appointment and Authorization . . . . . . . . . . . . 16
7.2. Delegation of Duties. . . . . . . . . . . . . . . . . 16
7.3. Liability of Agent. . . . . . . . . . . . . . . . . . 16
7.4. Reliance by Agent . . . . . . . . . . . . . . . . . . 17
7.5. Notice of Default . . . . . . . . . . . . . . . . . . 18
7.6. Credit Decision . . . . . . . . . . . . . . . . . . . 18
7.7. Indemnification of Agent. . . . . . . . . . . . . . . 19
7.8. Agent in Individual Capacity. . . . . . . . . . . . . 19
7.9. Successor Agent . . . . . . . . . . . . . . . . . . . 20
7.10. Withholding Tax . . . . . . . . . . . . . . . . . . . 20
7.11. Concerning the Trust Estate.. . . . . . . . . . . . . 22
7.12. Distribution and Receipt of Payments by
Trust Company . . . . . . . . . . . . . . . . . . . 23
7.13. Lead Manager. . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII
MISCELLANEOUS
8.1. Amendments and Waivers. . . . . . . . . . . . . . . . 24
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . 24
8.3. Successors and Assigns; Transfers and
Participations. . . . . . . . . . . . . . . . . . . 24
8.4. Counterparts. . . . . . . . . . . . . . . . . . . . . 24
8.5. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 25
8.6. Survival and Termination of Agreement . . . . . . . . 25
8.7. Entire Agreement. . . . . . . . . . . . . . . . . . . 25
8.8. Severability. . . . . . . . . . . . . . . . . . . . . 25
SCHEDULE I - Lenders
EXHIBIT A - Form of Note
LOAN AGREEMENT
THIS LOAN AGREEMENT (as amended and supplemented from time to time, this
"Loan Agreement"), dated as of April 29, 1996, is entered into by and among
FIRST SECURITY TRUST COMPANY OF NEVADA, a Nevada trust company, 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 Agent; BANK OF
SCOTLAND, a Scottish banking corporation, FIRST INTERSTATE BANK OF NEVADA, a
Nevada banking corporation, and SOCIETE GENERALE, a French banking
corporation (collectively, the "Co-Agents"), CREDIT LYONNAIS, LOS ANGELES
BRANCH, a French banking corporation (the "Lead Manager") and the Persons named
on Schedule I hereto, as Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower desires to pay costs associated with the acquisition
of Equipment and to pay certain costs related thereto, 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 of the Equipment;
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 I
DEFINITIONS
SECTION 1.1. 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 Stratosphere Gaming
Corp., as Lessee; Stratosphere Corporation, as Guarantor; the Borrower; the
Agent; the Co-Agents and the Lenders identified therein (as amended,
supplemented or otherwise modified from time to time, the "Participation
Agreement") for all purposes hereof.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENTS;
REPAYMENT AND PREPAYMENT OF LOANS
SECTION 2.1. Commitment; Term. Subject to the terms and conditions hereof
and of the Participation Agreement, each Lender severally agrees to make a term
loan to the Borrower ("Loans") for the purpose of enabling the Trustee to pay
for Equipment Costs, in an aggregate principal amount at any one time
outstanding not to exceed the amount of such Lender's Commitment.
SECTION 2.2. 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 (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 the Advance, each Lender shall, and is hereby
authorized by the Borrower and the Lessee 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 the 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.
SECTION 2.3. 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 the
Advance Date upon receipt by the Agent from the Lessee of the Advance Request in
accordance with Section 2.4(a) of the Participation Agreement.
(b) The Advance Request shall be delivered to the Trustee, Agent and the
Lenders in accordance with Section 2.4 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 2.4. 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 Principal Payment Date, the Borrower shall make a
mandatory repayment of a portion of the outstanding principal amount of each
Note in an amount determined pursuant to Section 2.12 of the Participation
Agreement.
(c) No other principal amortization of the Loans will be required prior to
the Final Maturity Date thereof, except that upon the occurrence of (i) a
Casualty that results in a purchase by Lessee of the Equipment suffering the
Casualty, (ii) Lessee exercising the early termination option to purchase all of
the Equipment pursuant to Sections 5.1 of the Lease or (iii) a Lease Event of
Default that results in Lessor exercising its right to have Lessee purchase all
of the Equipment, Borrower shall prepay the aggregate outstanding principal
amount of the Loans or in the event of a Casualty, an amount equal to the
Casualty Item Amount, together with interest accrued to the date of such
prepayment on the principal amount so prepaid, plus, Additional Costs, if any.
(d) In the event that Lessee elects to exercise the early termination
option to purchase all of the Equipment pursuant to Sections 5.1 of the Lease
prior to the first anniversary of the Lease Commencement Date, Lessee shall pay
to the Agent for the account of the Lenders a premium (the "Premium") in an
amount equal to one percent of the amount of such prepayment.
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 three months 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 Payment Date.
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 2.6. 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. Agent shall, as soon as practicable, but in no event later than 12:00
noon, Las Vegas, Nevada time, one Business Day prior to the first day of each
Interest Period, notify the Borrower, who shall notify the Lessee 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 2.7. 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 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 Agent, for the account of the Lenders, at the Agent's office referred to
in Schedule III of the Participation Agreement, in lawful money of the United
States of America and in immediately available funds. The Agent shall distribute
such payments to each Lender at its LIBOR Office, promptly upon receipt in like
funds as received.
SECTION 2.8. Payment from Trust Estate Only. All payments to be made by the
Borrower in respect of the Loans and this Loan Agreement shall be made only from
the income and the proceeds from the Trust Estate and only 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 to the extent available for distribution to such Lender as herein
provided and that none of the Borrower or the Agent is or shall be personally
liable to any Lender for any amount payable hereunder or under any Note except
as specifically provided for in the Trust Agreement or the Participation
Agreement.
SECTION 2.9. Taxes.
(a) Any and all payments by the Borrower to each Lender or the 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
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
the Lender or the 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
the Lender or the 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 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 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 Agent for the account 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 Agent the original or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any Lender or
the 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 2.10. 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 Agent, any
obligation of that Lender to make LIBO Rate Loans shall be suspended until the
Lender notifies the 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 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 2.11. Increased Costs and Reduction of Return.
(a) If any Lender determines that, due to either (i) the introduction of or
any change in or 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 Agent), pay to the 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 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 2.12. 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) the Advance Request;
(c) the failure of the Borrower to make any 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 arising by reason of the liquidation or
reemployment of 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, however, 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 2.13. Inability to Determine Rates. If the 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 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 Agent revokes
such notice in writing. Upon receipt of such notice, the Borrower may revoke the
Advance Request submitted by it. If the Borrower does not revoke such notice,
the Lenders shall make, convert or continue the Loans, as proposed by the
Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Alternate Base
Rate Loans instead of LIBO Rate Loans.
SECTION 2.14. Survival. The agreements and obligations of the
Borrower in this Article II shall survive the payment of all other
obligations.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE
SECTION 3.1. Rent Distribution. Except as otherwise provided in Section 3.3
hereof, each payment of Rent as well as any payment of interest on overdue
installments of Rent under the Lease, and any other monies paid over by the
Lessee or the Borrower to the 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 Agent under the Lease on a timely basis and in accordance
with the provisions of the 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 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.
SECTION 3.2. 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 (other than any
Premium paid pursuant to Section 2.4(d)) 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 Loans)
overdue interest) then due and payable on the Notes, plus Additional Costs,
if any, 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 the Lessee pursuant to the Lease, solely because a Lease Default or
Lease Event of Default exists shall be held by the Trustee as security for the
obligations of the Lessee under the 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 Lessee, unless the Agent (as assignee of the Borrower) shall have
theretofore declared the Lease to be terminated pursuant to Section 10.2
thereof, in which event such portion shall be distributed forthwith upon such
declaration in accordance with the provisions of Section 3.3 hereof.
SECTION 3.3. 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 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 Agent as part of the Trust
Estate while such Loan Event of Default shall be continuing, shall be
distributed forthwith by the Agent in the following order of priority:
first, so much of such payments or amounts as shall be required to
reimburse the Agent or Trustee for any tax, expense or other loss incurred
by the Agent or Trustee (to the extent not previously reimbursed and to the
extent incurred in connection with its duties as the Agent or Trustee,
respectively) and any unpaid ongoing fees of the Agent shall be distributed
to the Agent;
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 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 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 Agent and
otherwise distributable pursuant to Section 3.1 or 3.2 shall be distributed as
provided in Section 3.3(a).
SECTION 3.4. Other Payments.
(a) Any payments received by the 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 Agent in the order of priority
set forth in Section 3.1.
(b) All payments received and amounts realized by the Agent under the Lease
or otherwise with respect to the Equipment to the extent received or realized at
any time after payment in full of the principal of and interest on 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 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 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 Agent to the Person for the purpose for
which such payment was made in accordance with the terms of such Operative
Document.
SECTION 3.5. Distribution of Excluded Amounts. All amounts
constituting Excluded Amounts received by the Agent shall be distributed to
the Person or Persons entitled thereto.
SECTION 3.6. Guaranty Payments. Any payment received by the Agent from the
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 Lease.
ARTICLE IV
CONDITIONS PRECEDENT
The agreement of each Lender to make the Loan requested to be made by it on
the 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 V
AFFIRMATIVE COVENANTS OF THE BORROWER
SECTION 5.1. 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.
SECTION 5.2. 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 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 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 VI
LOAN EVENTS OF DEFAULT; REMEDIES
SECTION 6.1. 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 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 Lessee from
the 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 days after written
notice thereof to the Borrower and the Lenders from the 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 6.2. Remedies.
(a) Upon the occurrence of a Loan Event of Default hereunder, (i) if
such event is a Loan Event of Default specified in clause (d) of Section 6.1 or
clauses (f) or (g) of Section 10.1 of the Lease, automatically the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Loan Agreement and the Notes shall immediately become due and payable, and (ii)
if such event is any other Loan Event of Default, upon the written instructions
of the Required Lenders, the 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 Agent upon the occurrence of a Loan Event of
Default specified in clause (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 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 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 Lease and the Guaranty 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 Agent
may proceed to protect and enforce this Loan Agreement, the Notes, the other
Operative Documents, the Lease and the Guaranty by suit or suits or proceedings
in equity, at law or in bankruptcy, and whether for 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 the Equipment, 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 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 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 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 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 the 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 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 VII
AGENT
SECTION 7.1. Appointment and Authorization. Each Lender hereby irrevocably
(subject to Section 7.9) appoints, designates and authorizes the 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
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 Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Operative Document, nor shall the 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
Agent.
SECTION 7.2. Delegation of Duties. Agent may execute any of its
duties under this Loan Agreement or any other Operative Document by or
through agents (including the Trust Company), employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects with reasonable care.
SECTION 7.3. Liability of Agent. None of the 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 or in
any other Operative Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by 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
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 7.4. Reliance by Agent.
(a) 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 Agent. 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. 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 upon consent of the Required Lenders and such request and any
action taken or 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 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 7.5. Notice of Default. 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 Agent directly for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Lessee referring
to this Loan Agreement, describing such Loan Default or Loan Event of Default
and stating that such notice is a "notice of default". Agent will notify the
Lenders of its receipt of any such notice. 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 Agent has
received any such request, the 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 7.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Parent, Lessee and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any 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 the Parent, Lessee and its 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 the Lessee hereunder.
Each Lender also represents that it will independently and without reliance upon
any 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 the Lessee and
Parent. Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the 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 the Lessee and Parent which may come
into the possession of any of the Agent-Related Persons.
SECTION 7.7. Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand any
Agent-Related Person (to the extent not reimbursed by or on behalf of the Lessee
and without limiting the obligation of the Lessee 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 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 Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including attorney costs) incurred by the 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 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 Agent.
SECTION 7.8. 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 the Parent, its Subsidiaries and Affiliates as though BA Leasing & Capital
Corporation were not the 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 the
Parent or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Parent or such Affiliate) and
acknowledge that the 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 Agent, and the terms
"Lender" and "Lenders" include BA Leasing & Capital Corporation in its
individual capacity.
SECTION 7.9. Successor Agent. Agent may, and at the request of the Required
Lenders shall, resign as Agent upon 30 days' notice to the Lenders. If the 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 Agent, the 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 Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as 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 Agent under this Agreement. If
no successor agent has accepted appointment as Agent by the date which is 30
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Lenders appoint an successor agent as provided for above.
SECTION 7.10. Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or 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 Agent, to deliver to the 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 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
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 Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding tax by
filing IRS Form 4224 with the 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 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 Agent, then the 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 IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the 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 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 Agent fully for all amounts paid, directly or
indirectly, by and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with all costs and
expenses (including attorney costs and the allocated cost of internal legal
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 Agent.
SECTION 7.11. Concerning the Trust Estate.
(a) Agent accepts the agency applicable to it and agrees to cause the
Trust Company (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, Agent shall execute and
deliver, at the Lessee's 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.
(c) In the event that the Required Lenders shall notify Agent that an
event of default under a security instrument has occurred, Agent shall take such
action with respect thereto as the Required Lenders may require by written
instructions, but Agent shall not be required to take any action not expressly
set forth in such written instructions.
(d) Agent shall not have any duty or obligation to manage, operate,
control, use, sell, dispose of or otherwise deal with the Equipment 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 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 Equipment 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 Trust Estate or Collateral, (iv)
to confirm or verify any notices or reports of the Lessee other than to furnish
(to the extent not otherwise furnished) the Lenders with a copy of each notice
or report furnished to the Agent by the Lessee pursuant to a security instrument
or (v) to inspect the Equipment at any time or ascertain or inquire as to the
performance or observance of the Lessee's covenants under any security
instrument.
(f) In accepting the agency hereby created, the Agent acts solely as
Agent hereunder and not in its individual capacity, and all persons, other than
the Lenders, having any claim against the Agent by reason of the transactions
contemplated hereby shall look only to the Trust Estate for payment or
satisfaction thereof.
(g) The agency created hereby shall be terminated by notice given by
the Agent to the Lenders at any time upon the final disposition of all
Collateral and the final distribution by the Agent of all monies or other
property or proceeds received pursuant to the Operative Documents in accordance
with their terms.
SECTION 7.12. Distribution and Receipt of Payments by Trust Company. Agent,
for the benefit of the Lenders, hereby appoints the Trust Company as the agent
of the Lenders for purposes of receiving proceeds of Advances, payments under
the Lease and making distributions to the Lenders, Lessee and other Persons
under this Loan Agreement. Agent may at any time by notice in writing terminate
the Trust Company's appointment hereby as agent of collection and payment of the
payments under the Lease, in which event Lessee, upon receipt of copy of such
notice, shall pay any and all payments payable to Agent hereunder and under the
other Operative Documents directly to Agent at the account set forth in Schedule
III of the Participation Agreement
SECTION 7.13. 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 Agent under this
Article VII.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. 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 8.2. 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 Agent or the
Lenders pursuant to Section 2.3 shall not be effective until received.
SECTION 8.3. 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 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 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 Agent in connection
with such transfer.
SECTION 8.4. 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 Agent.
SECTION 8.5. 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 8.6. 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 Agent and each Lender under Article II and the obligations of the Lenders
to the Agent under Section 7.7 shall survive the payment in full of the Notes.
SECTION 8.7. 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.
SECTION 8.8. 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]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not in
its individual capacity, except as
specifically provided herein, but solely as
Trustee and as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
BA LEASING & CAPITAL CORPORATION, as Agent and
as Lender
By: /s/ Sara Fitch
Name: Sara Fitch
Title: Vice President
BANK OF SCOTLAND, as Co-Agent and as Lender
By: /s/ Catherine M. Oniffrey
Name: Catherine M. Oniffrey
Title: Vice President
FIRST INTERSTATE BANK OF NEVADA, as Co-Agent
and as Lender
By: /s/ Steve Byrne
Name: Steve Byrne
Title: Vice President
SOCIETE GENERALE, as Co-Agent and as Lender
By: /s/ Donald L. Schubert
Name: Donald L. Schubert
Title: Vice President
CREDIT LYONNAIS, LOS ANGELES BRANCH, as Lead
Manager and as Lender
By: /s/ Thierry Vincent
Name: Thierry Vincent
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING INC.,
as Lender
By: /s/ John H. Beville
Name: John H. Beville
Title: Senior Vice President
UNITED STATES NATIONAL BANK OF OREGON,
as Lender
By: /s/ Dale Parshall
Name: Dale Parshall
Title: Assistant Vice President
BANK OF BOSTON, as Lender
By: /s/ David B. Herter
Name: David B. Herter
Title: Director
IMPERIAL BANK, as Lender
By: /s/ Steven K. Johnson
Name: Steven K. Johnson
Title: Senior Vice President
TRUSTMARK NATIONAL BANK, as Lender
By: /s/ John W. Ray, Jr.
Name: John W. Ray, Jr.
Title: Vice President
FIRST SECURITY BANK OF UTAH, N.A., as
Lender
By: /s/ David P. Williams
Name: David P. Williams
Title: Vice President
SCHEDULE I
TO
LOAN AGREEMENT
LENDERS
Lenders Commitment Commitment
- ------- ---------- Percentage
-----------
BA Leasing & Capital $5,664,508 15.10535467
Corporation
Bank of Scotland 5,664,508 15.10535467
Societe Generale 4,531,607 12.08428533
First Interstate Bank 4,531,607 12.08428533
of Nevada
The CIT 3,398,705 9.06321333
Group/Equipment
Financing Inc.
Credit Lyonnais, 3,398,705 9.06321333
Los Angeles Branch
United States 2,265,804 6.04214400
National Bank of Oregon
Bank of Boston 2,265,804 6.04214400
Imperial Bank 2,265,804 6.04214400
Trustmark National 2,380,046 6.34678933
Bank
First Security Bank 1,132,902 3.02107200
of Utah, N.A.
--------- ----------
TOTAL (Lenders) $37,500,000 100.00%
EXHIBIT A
TO LOAN AGREEMENT
FORM OF NOTE
NOTE NO. __
U.S. $____________
Dated as of ________________, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 Loan Agreement, dated as of ___________, 1996, among
the Borrower, BA Leasing & Capital Corporation, a California corporation, as
agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity but
solely as Trustee, as Borrower
By: _______________________________
Name:
Title:
GRID ATTACHED TO NOTE
DATED AS OF ____________, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
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>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED _____________, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF [INSERT LENDER'S NAME]
Principal
Date Repayment Amount
- ---- ----------------
NOTE NO. 1
U.S. $5,664,508 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 BA LEASING & CAPITAL CORPORATION, (the "Lender"), the principal sum of
Five Million Six Hundred Sixty-Four Thousand Five Hundred Eight 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BA LEASING & CAPITAL CORPORATION
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BA LEASING & CAPITAL CORPORATION
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 2
U.S. $5,664,508 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 BANK OF SCOTLAND, (the "Lender"), the principal sum of Five Million Six
Hundred Sixty-Four Thousand Five Hundred Eight 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF
NEVADA, not in its individual
capacity but solely as Trustee, as
Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BANK OF SCOTLAND
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BANK OF SCOTLAND
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 3
U.S. $4,531,607 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 SOCIETE GENERALE, (the "Lender"), the principal sum of Four Million
Five Hundred Thirty-One Thousand Six Hundred Seven 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF SOCIETE GENERALE
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF SOCIETE GENERALE
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 4
U.S. $4,531,607 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 FIRST INTERSTATE BANK OF NEVADA, (the "Lender"), the principal sum of
Four Million Five Hundred Thirty-One Thousand Six Hundred Seven 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF FIRST INTERSTATE BANK OF NEVADA
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF FIRST INTERSTATE BANK OF NEVADA
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 5
U.S. $3,398,705 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 CIT GROUP/EQUIPMENT FINANCING INC., (the "Lender"), the principal sum
of Three Million Three Hundred Ninety-Eight Thousand Seven Hundred Five 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 Loan Agreement, dated as of April 29, 1996, among the Borrower, BA
Leasing & Capital Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF CIT GROUP/EQUIPMENT FINANCING INC.
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF CIT GROUP/EQUIPMENT FINANCING INC.
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 6
U.S. $3,398,705 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 CREDIT LYONNAIS, LOS ANGELES BRANCH, (the "Lender"), the principal sum
of Three Million Three Hundred Ninety-Eight Thousand Seven Hundred Five 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 Loan Agreement, dated as of April 29, 1996, among the Borrower, BA
Leasing & Capital Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF CREDIT LYONNAIS, LOS ANGELES BRANCH
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF CREDIT LYONNAIS, LOS ANGELES BRANCH
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 7
U.S. $2,265,804 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 UNITED STATES NATIONAL BANK OF OREGON, (the "Lender"), the principal
sum of Two Million Two Hundred Sixty-Five Thousand Eight Hundred Four 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 Loan Agreement, dated as of April 29, 1996, among the Borrower, BA
Leasing & Capital Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF UNITED STATES NATIONAL BANK OF OREGON
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF UNITED STATES NATIONAL BANK OF OREGON
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 8
U.S. $2,265,804 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 BANK OF BOSTON, (the "Lender"), the principal sum of Two Million Two
Hundred Sixty-Five Thousand Eight Hundred Four 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BANK OF BOSTON
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF BANK OF BOSTON
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 9
U.S. $2,265,804 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 IMPERIAL BANK, (the "Lender"), the principal sum of Two Million Two
Hundred Sixty-Five Thousand Eight Hundred Four 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF IMPERIAL BANK
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF IMPERIAL BANK
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 10
U.S. $2,380,046 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 TRUSTMARK NATIONAL BANK, (the "Lender"), the principal sum of Two
Million Three Hundred Eighty Thousand Forty-Six 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF TRUSTMARK NATIONAL BANK
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF TRUSTMARK NATIONAL BANK
Principal
Date Repayment Amount
---- ----------------
NOTE NO. 11
U.S. $1,132,902 April 29, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY TRUST COMPANY OF
NEVADA, 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 FIRST SECURITY BANK OF UTAH, N.A., (the "Lender"), the principal sum of
One Million One Hundred Thirty-Two Thousand Nine Hundred Two 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 Loan
Agreement, dated as of April 29, 1996, among the Borrower, BA Leasing & Capital
Corporation, a California corporation, as agent (the "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 Agent referred to in the
Loan Agreement and reference is hereby made to the Loan Agreement and such
Security Documents 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.
[signature page follows]
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.
FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity but solely as
Trustee, as Borrower
By: /s/ Greg A. Hawley
Name: Greg A. Hawley
Title: Trust Officer
GRID ATTACHED TO NOTE
DATED AS OF APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF FIRST SECURITY BANK OF UTAH, N.A.
Loans made by the Lender to the Trustee, as Borrower, and payments of principal
of such Loans.
<TABLE>
<CAPTION>
Principal Amount Interest
Principal Bearing Paid
Amount Interest
Period Base LIBO Principal Notation
Date Advances (If Applicable) Base Rate LIBO Rate Rate Rate Amount Total Made By
- ---- -------- --------------- --------- --------- ---- ---- ------------ -------
<S> <C>
</TABLE>
AMORTIZATION SCHEDULE ATTACHED TO NOTE
DATED APRIL 29, 1996 OF
FIRST SECURITY TRUST COMPANY OF NEVADA
AS TRUSTEE
PAYABLE TO THE ORDER OF FIRST SECURITY BANK OF UTAH, N.A.
Principal
Date Repayment Amount
---- ----------------
TRUST AGREEMENT
dated as of April 29, 1996
between
STRATOSPHERE GAMING CORP.,
as Grantor,
and
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Trustee
TABLE OF CONTENTS
Section Page
ARTICLE I
THE TRUST ESTATE
1.1. Appointment, Authorization and Direction to
Trustee. . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Declaration and Purpose . . . . . . . . . . . . . . . . 2
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. . . . . . . . . . . . . . . . 5
3.5. Certain Duties and Responsibilities of the
Trustee. . . . . . . . . . . . . . . . . . . . . . . 5
3.6. Certain Rights of Trustee . . . . . . . . . . . . . . . 7
3.7. NO REPRESENTATIONS OR WARRANTIES AS TO THE
EQUIPMENT OR DOCUMENTS . . . . . . . . . . . . . . . 9
3.8. Status of Moneys Received . . . . . . . . . . . . . . . 9
3.9. Permitted Activities. . . . . . . . . . . . . . . . . . 9
3.10. Resignation or Removal of Trustee . . . . . . . . . . . 10
3.11. Estate and Rights of Successor Trustee. . . . . . . . . 10
3.12. Merger or Consolidation of Trustee. . . . . . . . . . . 11
3.13. Co-Trustees . . . . . . . . . . . . . . . . . . . . . . 11
3.14. Books and Records . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
TERMINATION OF AND AMENDMENTS TO TRUST
4.1. Termination . . . . . . . . . . . . . . . . . . . . . . 11
4.2. Distribution of Trust Estate Upon Termination . . . . . 12
4.3. Amendments. . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
MISCELLANEOUS
5.1. Compensation and Indemnification. . . . . . . . . . . . 13
5.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 14
5.4. Tax Reports; Information Reporting; Withholding
Taxes. . . . . . . . . . . . . . . . . . . . . . . . 14
5.5. Headings. . . . . . . . . . . . . . . . . . . . . . . . 14
5.6. Successors and Assigns. . . . . . . . . . . . . . . . . 15
5.7. Severability. . . . . . . . . . . . . . . . . . . . . . 15
5.8. Only Written Waivers. . . . . . . . . . . . . . . . . . 15
5.9. Counterparts. . . . . . . . . . . . . . . . . . . . . . 15
5.10. Rights in Trust Agreement . . . . . . . . . . . . . . . 15
5.11. Payment of Trustee Fees, Costs and Expenses . . . . . . 15
5.12. Identification of Trust . . . . . . . . . . . . . . . . 16
TRUST AGREEMENT
THIS TRUST AGREEMENT (as amended and supplemented from time to time,
this "Trust Agreement") dated as of April 29, 1996, is entered into by and
between FIRST SECURITY TRUST COMPANY OF NEVADA, a Nevada trust company (in its
individual capacity, the "Trust Company"; the Trust Company, 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, the
"Trustee"); and Stratosphere Gaming Corp., as grantor (the "Grantor"). 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 April 29, 1996, among the Trustee; the
Lenders, Co-Agents and Lead Manager identified therein; Grantor; Stratosphere
Corporation, as Guarantor; and BA Leasing & Capital Corporation, as Arranger and
Agent.
ARTICLE I
THE TRUST ESTATE
SECTION 1.1. APPOINTMENT, AUTHORIZATION AND DIRECTION TO TRUSTEE.
Grantor hereby requests that the Trust Company act as Trustee of the trust
created hereunder (the "Trust") and Trust Company hereby accepts its appointment
as trustee of the Trust, effective as of the date hereof. The Lenders and the
Grantor authorize and direct the Trustee, subject to confirmation by the Lenders
of the satisfaction or waiver of all appropriate conditions set forth in the
Participation Agreement, to enter into, execute and deliver:
(a) on the Closing Date and from time to time thereafter
(including on the 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.
SECTION 1.2. 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 in trust for the use
and benefit of the Grantor.
(b) The purpose of the Trust is to acquire and hold title
to the Equipment and the remainder of the Trust Estate 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 of the Trust Estate to any mortgage, lien, security
interest or other claim or encumbrance, other than in favor of the
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 EQUIPMENT AND TO COLLECT AND
CONSERVE THE VALUE THEREOF AND OF THE TRUST ESTATE, SUBJECT TO THE
RIGHTS OF THE AGENT AND THE GRANTOR, 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 AGENT AND THE LENDERS.
ARTICLE II
COLLECTIONS AND DISTRIBUTIONS
SECTION 2.1. COLLECTIONS AND REMITTANCES BY THE TRUSTEE. Trustee
agrees that, subject to the provisions of this Trust Agreement, it will, during
the term of this Trust, administer the Trust Estate and, at the direction of the
Grantor, or if the Loan Agreement has not been fully discharged, the Agents (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 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. 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 in the manner and at its address referred to in Section 9.3 of the
Participation Agreement.
SECTION 2.2. DISTRIBUTION OF PAYMENTS.
(a) Payments to the Trustee for the benefit of the Lenders
and 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 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 the Grantor with respect to the Trustee's fees and
disbursements, or pursuant to Section 5.1, 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 2.3. 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.
ARTICLE III
CERTAIN PROVISIONS RESPECTING TRUSTEE
SECTION 3.1. ACCEPTANCE OF TRUSTS AND DUTIES. Trust Company accepts
the trusts 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 3.2. 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 the Equipment 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 the Lease and with the
Equipment and the proceeds thereof as provided in the 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 the 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 3.3. NOTICE OF EVENT OF DEFAULT. If an 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 Grantor and the Agent in the manner specified in Section 5.2.
Subject to Section 3.4, the Trustee shall take such action with respect to any
such event as shall be specified in written instructions from the Instructing
Party. For all purposes of this Trust Agreement and the Lease, 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 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 3.4. 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 as may be specified in such instructions:
(a) give such notice or direction or exercise such right or
power under the 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 Equipment) to the Grantor; and
(d) any other action as specified by the Instructing Party.
SECTION 3.5. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) Except during the continuance of a Lease Event of Default
or a Loan Event of Default:
(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 the Equipment or any other
part of the Trust Estate in any manner whatsoever, except as
required by the Operative Documents and as otherwise provided
herein; and
(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 Agreement or any other Operative
Document, including, without limitation, Articles VII and VIII of the
Participation Agreement, shall be construed to relieve the Trust
Company in its individual capacity 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 an 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 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 the Grantor prior to receiving
notice from Agent that the Loan Agreement has been discharged
in full pursuant to its terms;
(iii) no provision hereof shall require the Trust
Company in its individual capacity 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 Trust Company 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 Trust Company in its individual
capacity 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, 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 3.6. 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 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 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;
(f) provided no 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 the Grantor related to the Equipment
to reasonably determine whether the Grantor is in compliance with the
terms and conditions of the Lease and to examine the Equipment, by
agent or attorney, all upon the terms and conditions contained in the
Lease; and
(g) without limiting the generality of 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 Equipment or to effect or
maintain any such insurance, whether or not the Grantor 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 the Grantor pursuant to the Lease (unless the Lenders are
to receive such certificates, reports and other written information
directly from the 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,
other than Lessor Liens attributable to it, (iv) to confirm or verify
any financial statements of the Grantor or any other Person, or (v) to
inspect the Equipment at any time or ascertain or inquire as to the
performance or observance of any of the Grantor's or any other Person's
(other than its or the Trust Company's) covenants under the Operative
Documents with respect to the Equipment.
SECTION 3.7. NO REPRESENTATIONS OR WARRANTIES AS TO THE EQUIPMENT OR
DOCUMENTS . THE TRUST COMPANY IS NOT A BUILDER, DEVELOPER OR MANUFACTURER OF THE
EQUIPMENT OR A DEALER IN OR VENDOR OF SIMILAR EQUIPMENT AND HAS NOT INSPECTED
THE EQUIPMENT BEFORE DELIVERY TO AND ACCEPTANCE BY THE GRANTOR. THE TRUST
COMPANY 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 THE EQUIPMENT, 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 TRUST COMPANY), 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 3.8. STATUS OF MONEYS RECEIVED. All moneys received by the
Trustee or the Trust Company under or pursuant to this Trust Agreement or any
other Operative Document (other than Excluded Amounts to be paid to the Trust
Company) 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 3.9. 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 have commercial relations and otherwise
deal with the Grantor or any other Person or with any other corporation having
relations with the Grantor to the full extent permitted by Applicable Law.
SECTION 3.10. RESIGNATION OR REMOVAL OF TRUSTEE. Trust Company 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 Agent and the
Grantor, and the Agents may at any time remove the Trustee without cause by an
instrument in writing delivered to the Trustee, the Agent and the 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 Agent and, so long as a
Lease Event of Default shall not have occurred and be continuing, the Grantor,
the Agents may, at any time upon 30 days' prior written notice to the Agent and
the Grantor by an instrument in writing, appoint a successor trustee; provided,
however, 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 the Nevada Gaming Commission shall have determined that such successor
trustee is a suitable holder of Lessee's Gaming License. If the Agents do not
appoint a successor trustee within 30 days after the giving of notice of such
resignation or removal, the 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 Agents 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 Agents within one year from
the date of the appointment by such court.
SECTION 3.11. ESTATE AND RIGHTS OF SUCCESSOR TRUSTEE. Any successor
trustee, whether appointed by the Agents 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 trusts of the
predecessor Trustee in the trusts 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 trusts 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.
SECTION 3.12. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trust Company 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 Trust Company 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 3.13. 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 Agents 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 the Trust Estate, and to vest in such Person or Persons,
in such capacity, such title to the Trust Estate or any part thereof, and such
rights, powers, duties, trusts or obligations as the Agents 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 3.14. 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 IV
TERMINATION OF AND AMENDMENTS TO TRUST
SECTION 4.1. 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 Agents shall by notice in writing to the Trustee,
the Lenders, the 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 the Trust created and
provided for hereby shall cease and terminate, provided, however, that
this 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 proceeds constituting part
of the Trust Estate in accordance with the terms hereof; provided,
however, that the Trust Estate shall not 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 4.2. DISTRIBUTION OF TRUST ESTATE UPON TERMINATION. Upon any
termination of this 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 Agents delivered to the Trustee before the date of
termination; provided that (a) if at the time of any termination the Lease
remains in force and effect, then the Trust Estate shall be conveyed as a unit
subject to the 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 the 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(c).
SECTION 4.3. AMENDMENTS. Subject to Section 5.8 hereof 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 Grantor or the Agent, as the
case may be, 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 Trustee, any document required to be executed by it
pursuant to this Section 4.3 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 V
MISCELLANEOUS
SECTION 5.1. COMPENSATION AND INDEMNIFICATION. Trustee shall receive
reasonable compensation for its services hereunder from the Grantor and shall be
reimbursed by the Grantor 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 Grantor for any expenses it
may incur in relation to taking any such action. Grantor 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 Trust Company 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 Equipment, the Trust
Estate or the Rent and 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 the Equipment 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 Grantor 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 Trust Company or the negligence of the
Trust Company in handling of funds, (b) any taxes on, with respect to or
measured by any amounts paid to the Trust Company as compensation for services
as Trustee hereunder or otherwise under the Operative Documents, or (c) the
inaccuracy of representations and warranties made by the Trust Company in its
individual capacity in the Participation Agreement or in any certificate or
documents delivered pursuant thereto. The provisions of this Section 5.1 (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 this Trust, the
resignation or removal of the Trustee or the obligation of any other party to
any other Operative Document to make any payment to the Trustee which Grantor is
required to make pursuant to this Section 5.1.
SECTION 5.2. 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 5.3. GOVERNING LAW. THIS TRUST IS BEING CREATED IN THE STATE
OF NEW YORK AND THE VALIDITY, CONSTRUCTION AND ALL RIGHTS UNDER THIS 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 CHOICE OF LAWS AND CONFLICTS OF
LAWS RULES OF SUCH STATE. IF ANY PROVISION OF THIS TRUST 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 5.4. TAX REPORTS; INFORMATION REPORTING; WITHHOLDING TAXES. If
any tax report or tax return is required to be made by the Trustee with respect
to the Trust Estate and the Grantor is not required to prepare and file the same
pursuant to the Leases, each Lender will prepare such tax report or return in
respect of its interest in the Trust and deliver a copy thereof to the Trustee.
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 Grantor.
SECTION 5.5. 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 5.6. 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 the Trust, except as expressly
contemplated in the Operative Documents.
SECTION 5.7. 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 5.8. 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 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 5.9. 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 5.10. 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 5.11. PAYMENT OF TRUSTEE FEES, COSTS AND EXPENSES. Grantor
shall pay to the Trustee for its services hereunder such fees and expenses as
heretofore have been agreed upon by Trustee and Grantor 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 the Instructing Party. Trustee agrees that it
shall have no right against the Lenders or Agent for any fee as compensation for
its services hereunder, except as hereafter expressly agreed upon by the
Lenders, the Agent and the Trustee.
SECTION 5.12. IDENTIFICATION OF TRUST. The name of the trust created
hereby is the STRATOSPHERE 1996-1 TRUST.
IN WITNESS WHEREOF, the Trust Company and the Grantor have caused this
Trust Agreement to be duly executed all as of the day and year first above
written.
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Trust Company and as Trustee
By: /s/ GREG A. HAWLEY
Name: Greg A. Hawley
Title: Trust Officer
STRATOSPHERE GAMING CORP.,
as Grantor
By:/s/ THOMAS A. LETTERO
Name: Thomas A. Lettero
Title: Vice President-Administration/
Chief Financial Officer
[EXECUTION COPY]
SECURITY AGREEMENT AND ASSIGNMENT OF LEASE
dated as of April 29, 1996
between
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity but solely
as Trustee,
and
BA LEASING & CAPITAL CORPORATION,
as Agent
SECURITY AGREEMENT AND ASSIGNMENT OF LEASE
THIS SECURITY AGREEMENT AND ASSIGNMENT OF LEASE (this "Security
Agreement"), dated as of April 29, 1996, is made by FIRST SECURITY TRUST COMPANY
OF NEVADA, not in its individual capacity but solely as Trustee ("Grantor")
under that certain Trust Agreement dated as of April 29, 1996, between
Stratosphere Gaming Corp. and Grantor, in favor of BA LEASING & CAPITAL
CORPORATION, as Agent ("Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, Grantor, Agent, Co-Agents, the Lead Manager, the Lenders,
Guarantor and Stratosphere Gaming Corp., a Nevada corporation, as Lessee
("Lessee"), have entered into that certain Participation Agreement, dated as of
April 29, 1996 (as amended, modified or supplemented from time to time, the
"Participation Agreement"); and
WHEREAS, concurrently herewith pursuant to the Participation Agreement, (i)
Grantor will obtain Loans from the Lenders pursuant to the Loan Agreement, the
proceeds of which will be used to provide funding for the purchase of certain
items of Equipment, and (ii) Grantor, as lessor, and Lessee, as lessee, are
entering into the Lease; and
WHEREAS, it is a condition precedent to the consummation by the Lenders of
the transactions to be consummated on each Advance Date that Grantor execute and
deliver this Security Agreement as security for Grantor's obligations under the
Loan Agreement; and
WHEREAS, it is in the best interests of Grantor that the transactions
contemplated by the Operative Documents occur; and
WHEREAS, Grantor has duly authorized the execution, delivery and
performance of this Security Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to enter into the transactions contemplated by the Operative Documents, Grantor
agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"COLLATERAL" is defined in SECTION 2.1.
"SECURED OBLIGATIONS" is defined in SECTION 2.2.
SECTION 1.2. PARTICIPATION AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in Appendix 1 to
the Participation Agreement.
SECTION 1.3. UCC DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the UCC are
used in this Security Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. GRANT OF SECURITY. Grantor hereby assigns and pledges to
Agent, and hereby grants to Agent, for the benefit of the Lenders, a security
interest in and to all of the following, whether now existing or hereafter
arising or acquired (the "COLLATERAL"):
(i) all of Grantor's right, title and interest in, to and under
each item of Equipment;
(ii) all of Grantor's right, title and interest in, to and under
each Bill of Sale and each Certificate of Acceptance;
(iii) all of Grantor's right, title and interest in, to and under the
Participation Agreement and the Lease, including the security interest
granted thereunder in favor of the Grantor and including all rights to
receive payments thereunder (including Rent) other than Excluded Amounts;
(iv) all of Grantor's right, title and interest in, to and under
the Guaranty, the Security Documents and the other Operative
Documents;
(v) all of Grantor's right, title and interest in, to and under
any and all contracts necessary to operate and maintain the Equipment,
or any portion thereof;
(vi) all books, records, writings, databases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing; and
(vii) all products, accessions, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in the
foregoing clauses of this Section 2.1, proceeds deposited from time to time
in any lockboxes of the Grantor, and, to the extent not otherwise included,
all payments under insurance (whether or not the Agent is the loss payee
thereof), or any indemnity, warranty or guaranty payable by reason of loss
or damage to or otherwise with respect to any of the foregoing Collateral).
Grantor hereby assigns, transfers and conveys to Agent all payments (except
Excluded Amounts) payable by Lessee under the Lease.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Security Agreement secures the
payment of all obligations of Grantor now or hereafter existing under the Notes,
the Loan Agreement and any other Operative Document to which it is a party,
whether for principal, interest, costs, fees, expenses or otherwise, and all
other obligations of Grantor to the Lenders howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereinafter existing or due or to become due (all such obligations being the
"SECURED OBLIGATIONS").
SECTION 2.3. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Security Agreement shall create a continuing security interest in the
Collateral and shall
(a) remain in full force and effect until the payment in full of all
Secured Obligations and the termination of the Commitments and any other
commitments of the Lenders to or for the benefit of Grantor;
(b) be binding upon Grantor, its successors, transferees and
assigns; and
(c) inure, together with the rights and remedies of Agent hereunder,
to the benefit of Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing CLAUSE (C), each transferee of
a Note shall, upon such transfer, become vested with all the rights and benefits
in respect thereof granted under any Operative Document (including this Security
Agreement) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer. Upon the payment in full and performance of all Secured
Obligations and the termination of the Commitments, and any other commitments of
the Lenders to Grantor, the security interest granted herein shall terminate and
all rights to the Collateral shall revert to Grantor. Upon any such termination,
Agent will, on behalf of the Lenders and at Grantor's sole expense, execute and
deliver to Grantor such documents as Grantor shall reasonably request to
evidence such termination.
SECTION 2.4. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding
(a) Grantor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein, and shall
perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not been
executed;
(b) the exercise by Agent of any of its rights hereunder shall not
release Grantor from any of its duties or obligations under any such
contracts or agreements included in the Collateral; and
(c) Agent shall not have any obligation or liability under any such
contracts or agreements included in the Collateral by reason of this
Security Agreement, nor shall Agent be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants unto Agent as set forth in this Article.
SECTION 3.1.1. OWNERSHIP, NO LIENS, ETC. Grantor owns the Collateral free
and clear of any lien, security interest, charge or encumbrance except for the
security interest created by this Security Agreement, Permitted Liens and
Lessee's interest in the Lease.
SECTION 3.1.2. VALIDITY, ETC. This Security Agreement creates a valid first
priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken. The Assigned
Agreements have been duly authorized, executed and delivered by the parties
thereto, have not been amended or otherwise modified, are in full force and
effect, and are binding upon and enforceable against the parties thereto in
accordance with their terms.
SECTION 3.1.3. AUTHORIZATION, APPROVAL, ETC. No authorization,
approval or other action by, and no notice to or filing with, any
Governmental Authority is required either
(a) for the grant by Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by Grantor; or
(b) for the perfection of or the exercise by the Agent of its rights
and remedies hereunder, except for filings specified in Schedule IV to the
Participation Agreement.
SECTION 3.1.4. COMPLIANCE WITH LAWS. Grantor is in compliance with all
Applicable Laws of every Governmental Authority, the non-compliance with which
might have a Material Adverse Effect.
ARTICLE IV
COVENANTS
SECTION 4.1. CERTAIN COVENANTS. Grantor covenants and agrees that, so long
as any portion of the Secured Obligations shall remain unpaid or the Lenders
shall have any outstanding Commitments to Grantor, Agent may exercise, in its
sole and absolute discretion, any and all rights and powers set forth in this
Section.
SECTION 4.1.1. AS TO COLLATERAL.
(a) Agent may, at the expense of Grantor, endeavor to collect, as and
when due, all amounts due with respect to any of the Collateral. Agent, as
assignee hereunder of the Lease, may, at any time, enforce collection of
any of the Collateral by suit or otherwise and surrender, release, or
exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby.
(b) Agent is authorized to endorse, in the name of Grantor, any item,
howsoever received by Agent, representing any payment on or other proceeds
of any of the Collateral.
(c) If a Lease Default shall have occurred and be continuing, then the
Agent, as assignee hereunder of the Lease may declare, in its sole and
absolute discretion, a Lease Event of Default and may, in its sole and
absolute discretion, exercise any or all of the rights and powers and
pursue any or all of the remedies of Lessor pursuant to Article X of the
Lease.
SECTION 4.1.2. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral;
(b) cancel or terminate the Assigned Agreements or consent to or
accept any cancellation or termination thereof;
(c) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder, except pursuant to Section 9.8 of
the Participation Agreement;
(d) waive any default under or breach of the Assigned
Agreements;
(e) create or suffer to exist any Lien or other charge or encumbrance
upon or with respect to any of the Collateral to secure indebtedness of any
Person or entity, except for the security interest created by this Security
Agreement, Permitted Liens or Lessee's interest in the Lease; or
(f) take any other action in connection with the Assigned Agreements
which would impair the value of the interest or rights of Grantor
thereunder or which would impair the interest or rights of Agent.
SECTION 4.1.3. FURTHER ASSURANCES, ETC. Grantor agrees that, from time to
time and at its own expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that may be necessary or
desirable, or that Agent may request, in order to perfect, preserve and protect
any security interest granted or purported to be granted hereby or to enable
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Grantor will:
(a) execute and file or record such instruments or notices as may be
necessary or desirable, or as Agent may request, in order to perfect and
preserve the security interests and other rights granted or purported to be
granted to Agent hereby; and
(b) furnish to Agent, from time to time at Agent's request, statements
and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.
ARTICLE V
THE AGENT
SECTION 5.1. AGENT APPOINTED ATTORNEY-IN-FACt. Grantor hereby irrevocably
appoints Agent as Grantor's attorney-in-fact, with full authority in the place
and stead of Grantor and in the name of Grantor or otherwise, from time to time
in Agent's discretion, after the occurrence of a Loan Event of Default (subject
to Section 6.2 of the Loan Agreement) to take any action and to execute any
instrument which Agent may deem necessary or advisable to accomplish the
purposes of this Security Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above;
(c) to file any claims or take any action or institute any proceedings
which Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Agent with respect to
any of the Collateral; and
(d) to perform the affirmative obligations of Grantor hereunder
(including all obligations of Grantor pursuant to Section 4.1.3).
Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. AGENT MAY PERFORM. If Grantor fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the expenses of Agent incurred in connection therewith shall be
payable by Grantor pursuant to Section 6.2.
SECTION 5.3. AGENT HAS NO DUTY. In addition to, and not in limitation of,
Section 2.4, the powers conferred on Agent hereunder are solely to protect
Agent's interest in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for the reasonable care of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
Agent shall not have any duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. Agent is required to exercise reasonable care
in the custody and preservation of any of the Collateral in its possession;
provided, however, that Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any of the Collateral if it takes such action
for that purpose as Grantor reasonably requests in writing at times other than
upon the occurrence and during the continuance of any Loan Event of Default, but
failure of Agent to comply with any such request at any time shall not in itself
be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Loan Event of Default shall
have occurred and be continuing:
(a) Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral), and also may
exercise any and all rights and remedies of Grantor under or in connection
with the Collateral, including, without limitation, any and all rights of
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements. Grantor agrees
that, to the extent notice of sale shall be required by law, at least ten
(10) days' prior notice to Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Agent shall not be obligated to make any sale of
Collateral regardless of whether notice of sale has been given. Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) All payments received by Grantor under or in connection with the
Assigned Agreements or otherwise in respect of the Collateral shall be
received in trust for the benefit of Agent, shall be segregated from other
funds of Grantor, and shall be forthwith paid over to Agent in the same
form as so received (with any necessary endorsement).
(c) All cash proceeds received by Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of Agent, be held by Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any
amounts payable to Agent pursuant to Section 6.2) in whole or in part by
Agent against, all or any part of the Secured Obligations in such order as
Agent shall elect. Any surplus of such cash or cash proceeds held by Agent
and remaining after payment in full of all the Secured Obligations shall be
paid over to Grantor or to whomsoever may be lawfully entitled to receive
such surplus.
SECTION 6.2. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Agent from and against any and all
claims, losses and liabilities arising out of or resulting from this
Security Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities resulting from
Agent's gross negligence or wilful misconduct.
(b) Grantor will upon demand pay to Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which Agent may incur in connection
with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of
Agent hereunder or
(iv) the failure by Grantor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. OPERATIVE DOCUMENT. This Security Agreement is an Operative
Document executed pursuant to the Participation Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 7.2. AMENDMENTS; ETC. No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by Grantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.3. ADDRESSES FOR 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.
SECTION 7.4. SECTION CAPTIONS. Section captions used in
this Security Agreement are for convenience of reference only, and shall
not affect the construction of this Security Agreement.
SECTION 7.5. SEVERABILITY. Wherever possible, each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under Applicable Laws, but if any provision of this Security Agreement
shall be prohibited by or invalid under such 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
Security Agreement.
SECTION 7.6. COUNTERPARTS. This Security 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 7.7. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS SECURITY
AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE
ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
IN WITNESS WHEREOF, Grantor has caused this Security Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
FIRST SECURITY TRUST COMPANY OF NEVADA, not in its
individual capacity but solely as Trustee under
the Trust Agreement
By: /s/ GREG A. HAWLEY
Name: Greg A. Hawley
Title: Trust Officer
BA LEASING & CAPITAL CORPORATION, as Agent under
the Participation Agreement
By: /s/ SARA FITCH
Name: Sara Fitch
Title: Vice President
[EXECUTION COPY]
GUARANTY
dated as of April 29, 1996
of
STRATOSPHERE CORPORATION
in favor of
THE BENEFICIARIES NAMED HEREIN
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. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. Operative Document. . . . . . . . . . . . . . . . . . . . . . . . . 9
15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 9
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of April 29, 1996, made by
STRATOSPHERE CORPORATION, a Delaware corporation (the "GUARANTOR"), in favor of
the Beneficiaries named below pursuant to that certain Participation Agreement,
dated as of April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Stratosphere
Gaming Corp., a Nevada corporation, as Lessee ("LESSEE"), First Security Trust
Company of Nevada, not in its individual capacity but solely as Lessor and
Trustee, BA Leasing & Capital Corporation, a California corporation, as Arranger
and Agent, and the Co-Agents, the Lead Manager, and the Lenders identified
therein. Capitalized terms used and not otherwise defined in this Guaranty shall
have the meaning assigned to such term in Appendix 1 to the Participation
Agreement.
WHEREAS, Guarantor is the direct beneficial owner of all the issued
and outstanding capital stock of Lessee; and
WHEREAS, pursuant to the Lease and the Participation Agreement, Trustee has
agreed, on behalf of the Trust and each Lender, to purchase the Equipment and
lease such Equipment to Lessee pursuant to the Lease; and
WHEREAS, 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, Guarantor covenants and agrees as follows:
SECTION 1. GUARANTY. Guarantor hereby absolutely, unconditionally and
irrevocably guarantees to Trustee (both individually and in its capacity as
Trustee), Agent, each Lender 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 Articles VII and VIII of the Participation Agreement payable by Lessee
pursuant to the Lease, the Participation Agreement, or any other Operative
Document to which Lessee 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.
Section 362(a), the operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b) or the
commencement or operation of any other bankruptcy, insolvency,
reorganization or like proceeding relating to Lessee); and
b. the due, prompt and faithful performance of, and compliance with,
all other obligations, covenants, terms, conditions and undertakings of
Lessee contained in the Participation Agreement, the Lease or any other
Operative Documents to which Lessee 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 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
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer, and not for any greater amount.
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 Guarantor shall not be obligated to pay
hereunder to the extent that Lessee has 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 Lessee or upon any other event, contingency or
circumstance whatsoever, and shall be binding upon and against Guarantor without
regard to the validity or enforceability of the Lease, the Participation
Agreement or any other Operative Document.
If for any reason whatsoever Lessee 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, 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, or perform or comply with any
such obligation, covenant, term, condition or undertaking or cause the same to
be performed or complied with, together with interest on any amount due and
owing from the date the same shall have become due and payable to the date of
payment.
SECTION 2. GUARANTOR'S GUARANTEED OBLIGATIONS UNCONDITIONAL. The covenants
and agreements of Guarantor set forth in this Guaranty shall be primary
obligations of 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 Guarantor with its obligations hereunder), whether
based upon any claim that Lessee, 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 Guarantor or Lessee 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 Lease
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 the Equipment,
or any assignment 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 Lessee, any
Beneficiary or any other Person to conform or comply with any term of any
instrument or agreement referred to in CLAUSE (A) above;
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 Lessee or any 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 Lessee 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 Lessee,
Guarantor or any other Person under any agreement or instrument referred to
in CLAUSE (A) above, or (ii) the Guaranteed Obligations, any collateral
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 use of the
Equipment by Lessee 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 Lease), whether or not resulting from accident and
whether or not without fault on the part of Lessee or any other Person;
h. any merger or consolidation of Lessee or Guarantor into or with any
other Person or any sale, lease or transfer of any of the assets of Lessee
or Guarantor to any other Person;
i. any change in the ownership of any shares of capital stock of
Lessee or any corporate change in Lessee;
j. a failure of the Lease to become effective;
k. any assignments, transfers or subleases of the Lease or any of
Lessee's rights thereunder including an assignment, transfer or sublease
pursuant to Article IV of the 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
Guarantor.
The unconditional obligations of Guarantor set forth herein constitute the
full recourse obligations of Guarantor enforceable against it to the full extent
of all its assets and properties.
SECTION 3. WAIVER AND AGREEMENT. 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. 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 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 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 Lessee 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 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 Guarantor.
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 Lessee 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.
Guarantor further agrees that, without limiting the generality of this
Guaranty, if a Lease 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 Lease or if 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 Lessee or
any other Person upon the occurrence of an Insolvency Event, Guarantor's
Guaranteed Obligations hereunder shall continue to the same extent as if Trustee
had exercised any remedies available under the Lease and any such agreement or
instrument had not been rejected or disaffirmed.
SECTION 4. ASSIGNMENT. Guarantor hereby acknowledges that it is
contemplated that on the date hereof the Trustee will assign to the 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 Guarantor hereby agrees to such assignment.
SECTION 5. WAIVER OF SUBROGATION. Guarantor hereby irrevocably waives any
claim or other rights which it may now or hereafter acquire against Lessee that
arise from the existence, payment, performance or enforcement of 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 Lessee or any
Collateral which 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 Lessee, 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 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 Guarantor for the benefit of, and held in trust for, the Beneficiaries,
and shall forthwith be paid to Agent to be credited and applied pursuant to the
terms of the Loan Agreement and the Trust Agreement. 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. 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 Agent,
including an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or impairs any right of subrogation of Guarantor or
the right of Guarantor to proceed against any Person for reimbursement or both.
SECTION 6. 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 Agent on behalf of the Beneficiaries.
SECTION 7. TERM OF GUARANTY. This Guaranty and all guaranties, covenants
and agreements of 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
Guarantor hereunder and the Lessee hereunder and under the Lease, 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 8. AGREEMENT OF GUARANTOR. Guarantor assumes the responsibility for
being and keeping itself informed of the financial condition of Lessee and of
all other circumstances with respect to any of the Guaranty Obligations, and
Guarantor agrees that no Beneficiary shall be under any duty to advise 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
Guarantor or materially increases the risk to Guarantor beyond the risk
Guarantor intends to assume hereunder.
SECTION 9. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants to each Beneficiary as follows:
a. Guarantor is a corporation duly organized, validly existing and in
good 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 Guarantor of this Guaranty and the
other Operative Documents to which it is a party and the consummation by
Guarantor of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action of Guarantor. This
Guaranty and the other Operative Documents to which Guarantor is a party
have each been duly executed and delivered by Guarantor and each
constitutes the legal, valid and binding obligation of Guarantor
enforceable against 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 Guarantor is a party and the consummation by Guarantor
of the transactions contemplated hereby do not (i) contravene or result in
a default under 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 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
Guarantor's properties, other than Permitted Liens.
SECTION 10. FURTHER ASSURANCES. 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 11. 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 12. AMENDMENTS, ETC. No amendment to or waiver of any provision of
this Guaranty, nor consent to any departure by 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 13. 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, Guarantor hereby waives any provision of law
that renders any term or provision hereof invalid or unenforceable in any
respect.
SECTION 14. OPERATIVE DOCUMENT. This Guaranty is an Operative Document
executed pursuant to the Participation Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 15. GOVERNING 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 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING
ALL OTHER CHOICE OF LAWS AND CONFLICTS RULES OF SUCH STATE.
SECTION 16. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
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 Guarantor may not delegate any of its
obligations hereunder without the prior written consent of the Trustee and each
Lender.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed as of
the date first above written.
STRATOSPHERE CORPORATION
By: /s/ THOMAS A. LETTERO
Name: Thomas A. Lettero
Title:Vice President-Administration
Chief Financial Officer
[EXECUTION COPY]
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "AGREEMENT") is entered into as of April
29, 1996, among STRATOSPHERE GAMING CORP., a Nevada corporation ("LESSEE"),
STRATOSPHERE CORPORATION, a Delaware corporation ("PARENT"; Parent and Lessee
and each of their Subsidiaries are each sometimes referred to herein as a
"SIGNATORY AFFILIATE"), GRAND CASINOS, INC., a Minnesota corporation ("GCI"),
FIRST SECURITY TRUST COMPANY OF NEVADA, a Nevada trust company, not in its
individual capacity but solely as Lessor and Trustee ("TRUSTEE"), and BA LEASING
& CAPITAL CORPORATION, a California corporation, not in its individual capacity
but solely as Agent for the Lenders ("AGENT").
W I T N E S S E T H:
Reference is made to that certain Participation Agreement, dated as of
April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, Parent, Trustee,
Agent, Co-Agents, Lead Manager, Arranger and the several Lenders identified
therein, pursuant to which, among other things: (a) Lessee has entered into the
Lease; and (b) Parent has executed and delivered the Guaranty.
It is contemplated that from time to time a Signatory Affiliate may incur
Affiliate Liabilities to GCI or a Subsidiary of GCI (other than to another
Signatory Affiliate) (each such entity a "GCI LENDER").
Agents, Trustee and the Lenders have required, as a material condition to
the consummation of the transactions contemplated by the Participation
Agreement, that GCI execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings assigned to them in Appendix 1 to the Participation
Agreement. As used in this Agreement, the terms set forth below in this Section
1 shall have the meanings provided below:
"AFFILIATE LIABILITIES" means any Indebtedness or any other liabilities
whatsoever (other than trade payables) owed by a Signatory Affiliate to a GCI
Lender).
"AGENT" is defined in the Preamble.
"BANKRUPTCY CODE" means 11 U.S.C. 101 et seq., as from time to time
hereafter amended, and any successor or similar statute.
"GCI" is defined in the Preamble.
"GCI LENDER" is defined in the Recitals.
"INDENTURE SUBORDINATION" means the Completion Guarantor Subordination
Agreement, dated as of March 9, 1995, between GCI and American Bank National
Association.
"LESSEE" is defined in the Preamble.
"PARENT" is defined in the Preamble.
"PARTICIPATION AGREEMENT" is defined in the Recitals.
"PERSON" means and includes an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"SENIOR INSTRUMENTS" means the Participation Agreement, the Lease, the
Guarantee, the Loan Agreement and all other Operative Documents pursuant to
which any obligation of any of the Signatory Affiliates in favor of Agents,
Trustee or the Lenders may be incurred, as any of the same may hereafter from
time to time be amended, modified or supplemented in accordance with the terms
thereof.
"SENIOR OBLIGATIONS" means (a) all obligations now or hereafter incurred by
any of the Signatory Affiliates under any of the Senior Instruments, (b)
interest thereon (including, without limitation, any such interest accruing
subsequent to the filing by or against any of the Signatory Affiliates of any
proceeding brought under Chapter 11 of the Bankruptcy Code, whether or not such
interest is allowed as a claim pursuant to the provisions of such Chapter), and
(c) all fees, expenses, indemnities and other amounts now or hereafter payable
pursuant to or in connection with the Senior Instruments.
"SIGNATORY AFFILIATE" is defined in the Preamble.
"TRUSTEE" is defined in the Preamble.
2. SUBORDINATION PROVISIONS.
2.1 SUBORDINATION TO SENIOR OBLIGATIONS. (a) GCI hereby covenants and
agrees (and GCI shall cause each of its other Subsidiaries, before any such
Subsidiary extends credit to any Signatory Affiliate, to be bound by the
terms and provisions of this Agreement) that, to the extent and in the
manner hereinafter set forth in this Section 2, all Affiliate Liabilities,
the payment of the principal of and interest thereon and any Lien or
security interest therefor are hereby expressly made subordinate and
subject in right of payment as provided in this Section 2 to the prior
payment in full of all Senior Obligations and any Lien or security interest
on any property securing the Senior Obligations.
(b) No payment of any principal of, interest on, or of any other
amount with respect to, any Affiliate Liabilities shall be paid other than
in a manner consistent with the customary practices of Parent and its
Subsidiaries, as the case may be, with respect to other intercompany
indebtedness.
2.2 PAYMENT OVER OF PROCEEDS UPON BANKRUPTCY. In the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to any Signatory Affiliate or to its
properties or assets, or (b) any liquidation, dissolution or other
winding-up of any Signatory Affiliate, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any assignment
for the benefit of creditors or any other marshaling of assets or
liabilities of any Signatory Affiliate, then and in any such event the
holders of Senior Obligations shall be entitled to receive payment in full
of all amounts due on or in respect of Senior Obligations, in cash or in
any other manner acceptable to the holders of Senior Obligations, before
any GCI Lender is entitled to receive any payment or distribution of any
kind or character on account of principal of or interest on any Affiliate
Liabilities of such Signatory Affiliate.
2.3 SUSPENSION OF PAYMENT WHEN SENIOR OBLIGATIONS IN DEFAULT. (a)
Unless SECTION 2.2 shall be applicable, upon (i) the occurrence of a
default in the payment when due of all or any portion of the Senior
Obligations (whether at the stated maturity thereof, or upon acceleration,
or otherwise), or (ii) receipt by a Signatory Affiliate of written notice
from Agent, Trustee or any Lender, of the occurrence of any Lease Default
or Lease Event of Default in respect of the Senior Obligations other than a
default specified in the foregoing CLAUSE (I), then no payment or
distribution of any assets of such Signatory Affiliate of any kind or
character shall be made by such Signatory Affiliate on account of principal
of or interest on any Affiliate Liabilities unless and until such Lease
Default or Lease Event of Default shall have been cured or waived or shall
have ceased to exist or such Senior Obligations shall have been
indefeasibly paid in full in cash, after which such Signatory Affiliate
shall resume making any and all required payments in respect of the
Affiliate Liabilities of such Signatory Affiliate, including any missed
payments.
2.4 PAYMENTS TO BE HELD IN TRUST. In the event that any GCI Lender
shall receive any payment or distribution of assets of any GCI Lender of
any kind or character in respect of principal of and interest on the
Affiliate Liabilities in contravention of SECTION 2.2 or SECTION 2.3, then
and in such event such payment or distribution shall be returned by such
GCI Lender to the paying Signatory Affiliate, unless otherwise provided in
the Indenture Subordination. GCI shall not, and shall not permit its
Subsidiaries, to receive any payments in violation of this Agreement.
3. WAIVER. Each GCI Lender hereby waives presentment, demand for
payment, notice of protest and all other demands and notices in connection
with the delivery, acceptance, performance or enforcement hereof.
4. NO DISPOSITION. No GCI Lender will sell, assign, pledge, encumber
or otherwise dispose of any of the Affiliate Liabilities owed to it unless
such sale, assignment, pledge, encumbrance or disposition is made expressly
subject to this Agreement.
5. SUCCESSORS. This Agreement is being entered into for the benefit
of, and shall be binding upon and inure to the benefit of the parties
hereto, Agents, Trustee, the Lenders and their respective successors and
assigns. This Agreement shall remain in full force and effect so long as
any Senior Obligations remain outstanding.
6. NOTICES; AMENDMENTS. All notices pursuant to this Agreement shall
be addressed and delivered in the manner provided in the Participation
Agreement. No amendment, waiver or modification of any term of this
Agreement shall be effective unless made in accordance with the
Participation Agreement.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles of such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
STRATOSPHERE GAMING CORP.
By: /s/ THOMAS A. LETTERO
Thomas A. Lettero
Title: Vice President-Administration
Chief Financial Officer
STRATOSPHERE CORPORATION
By:/s/ THOMAS A. LETTERO
Thomas A. Lettero
Title: Vice President-Administration
Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ TIMOTHY COPE
Timothy Cope
Title:Chief Finnacial Officer
Address: 13705 First Avenue North
Plymouth, MN 55441
Attention: Timothy J. Cope
Telecopier: (612) 449-9353
FIRST SECURITY TRUST COMPANY OF
NEVADA, not in its individual
capacity, but solely as Trustee
By:
Title: Trust Officer
BA LEASING & CAPITAL CORPORATION,
not individually, but solely
as Agent for the Lessor
By:
Title: Vice President
[EXECUTION COPY]
LANDLORD WAIVER AND CONSENT
First Security Trust Company of Nevada,
not in its individual capacity,
but solely as Trustee,
530 Las Vegas Boulevard South
Las Vegas, Nevada 89101
Attention: Corporate Trust Department
Ladies and Gentlemen:
Reference is made to that certain Lease Agreement, dated as of April 29,
1996 (the "LEASE"), between Stratosphere Gaming Corp., a Nevada corporation
("LESSEE"), and First Security Trust Company of Nevada, not in its individual
capacity, but solely as trustee ("TRUSTEE").
Lessee is the lessee under a Facility Lease Agreement, dated as of April
29, 1996 (the "FACILITY LEASE AGREEMENT"), between the Lessee and the
undersigned covering the premises located at 2000 Las Vegas Boulevard South, Las
Vegas, Nevada 89104 and described more fully in the Facility Lease Agreement
(the "PREMISES"). The undersigned is the sole owner of the Premises.
Pursuant to the terms of the Lease, the Lessee desires to lease certain
items of equipment and other personal property (the "EQUIPMENT") from the
Trustee to be installed on the Premises and, in connection therewith, shall
grant to the Trustee a security interest and lien in all of the Equipment
installed on the Premises. In order to enforce certain remedies under the Lease,
the Trustee seeks to insure that it will be able to gain access to the Equipment
installed on the Premises and, among other things, the books and records of the
Lessee relating thereto (collectively, the "COLLATERAL") and to remove the
Equipment therefrom.
To induce the Trustee to enter into the Lease and related security
arrangements, and for other good and valuable consideration, the undersigned
hereby agrees that until the obligations under the Lease and the other Operative
Documents (as defined in the Lease) have been indefeasibly paid in full:
(a) it will not assert against any of the Collateral any statutory or
possessory liens, including, without limitation, rights to levy or
distraint for rent, all of which it hereby waives;
(b) it will not terminate the Facility Lease Agreement without
the express written consent of the Required Lenders (as defined in the
Lease);
(c) none of the Collateral located on the Premises shall be
deemed to be fixtures;
(d) it will notify the Trustee if the Lessee defaults on its
obligations to the undersigned under the Facility Lease Agreement and allow
the Trustee thirty (30) days from its receipt of notice in which to cure or
cause the Lessee to cure any such defaults;
(e) if, for any reasons whatsoever, the undersigned either deems
itself entitled to redeem or to take possession of the Premises during the
term of the Lease or intends to sell or otherwise transfer all or any part
of its interests in the Premises, the undersigned will notify the Trustee
thirty (30) days before taking such action; and
(f) if the Lessee defaults on its obligations under the Lease and as a
result, the Trustee undertakes to enforce its security interest in the
Collateral, the undersigned will permit the Trustee to enter upon the
Premises for a period forty-five (45) days after the Trustee declares the
default under the Lease and gives written notice to the undersigned with
respect thereto. Trustee's right of entry shall not be conditioned upon the
Lessee's payment of rent and other amounts due and owing under the Facility
Lease Agreement. The undersigned agrees that, at the Trustee's option, the
Trustee may remove the Collateral from the Premises within such forty-five
(45) day period after the undersigned receives written notice of entry.
Trustee shall not be liable to the undersigned for any damages to the
Premises resulting from the removal of the Collateral, it being understood
that the undersigned's sole remedy for any such damages shall be against
the Lessee. The undersigned further agrees that it will not hinder the
Trustee's actions in enforcing its liens on the Collateral or the Lease and
the related documents.
Any notices required or desired to be given hereunder shall be directed to
the party to be notified at the address stated in the Lease.
The undersigned will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this waiver. The agreements contained herein
may not be modified or terminated orally and shall be binding upon the
successors, assigns and personal representatives of the undersigned, upon any
successor owner or transferee of the Premises, and upon any purchasers,
including any mortgage from the undersigned.
STRATOSPHERE CORPORATION
By: /s/ THOMAS A. LETTERO
Name: Thomas A. Lettero
Title: Vice President-Administration/
Chief Financial Officer
Date:
Accepted and Agreed to this 29th day of April, 1996.
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Trustee
By:
Title: Trust Officer
FACILITY LEASE AGREEMENT
THIS LEASE ("Lease") is made and entered into as of the 29th day of April,
1996, by and between STRATOSPHERE CORPORATION, a Delaware corporation
("LANDLORD"), and STRATOSPHERE GAMING CORP., a Nevada Corporation ("TENANT").
W I T N E S S E T H
WHEREAS, LANDLORD is the owner of that certain real property and the
buildings and improvements situated thereon commonly known as the Stratosphere
Tower Hotel & Casino, located at 2000 Las Vegas Boulevard So., Las Vegas, Clark
County, Nevada, legally described on Exhibit "A" attached hereto ("Leased
Premises"); and
WHEREAS, Landlord leased a portion of the second floor of the base building
of the Leased Premises to Strato-Retail, LLC, pursuant to a Development and
Lease Agreement dated March 11, 1996 for the development and operation of retail
facilities ("Retail Leased Premises"). The Retail Leased Premises, which are
legally described on Exhibit "B" attached hereto, are specifically excluded from
this Lease.
WHEREAS, LANDLORD desires to lease and let to TENANT and TENANT desires to
take and lease from LANDLORD the Leased Premises excluding the Retail Leased
Premises for the operation of a casino and resort hotel, along with the
operation of restaurant, amusement, parking, and related facilities
(collectively, "Casino-Resort");
NOW, THEREFORE, it is hereby understood and agreed as follows:
SECTION 1
Demise
The above recitals are incorporated herein as if set forth in full.
LANDLORD hereby leases, demises and lets to TENANT, and TENANT hereby takes,
hires, and leases from LANDLORD, upon the following terms and conditions, the
Leased Premises for use as a Casino-Resort. It is hereby acknowledged by the
parties hereto that the lease of the Leased Premises is a lease for space only
and not a lease of any slot machines, other gaming equipment, or of any other
personal property. TENANT shall be acquiring and/or leasing all gaming and other
equipment and personal property to be used in the operation of the TENANT's
business on the Leased Premises. Except as expressly provided herein, TENANT
shall operate the Casino-Resort as it determines, in its sole discretion,
without approval by LANDLORD.
SECTION 2
Term
The term of this Lease shall be for a period of ten (10) years, commencing
on April 29, 1996, and ending on April 28, 2006; provided, however, that should
the LANDLORD ever elect to sell or otherwise transfer the Leased Premises,
LANDLORD shall have the right to terminate this Lease upon the close of escrow
for the sale or other transfer of the Leased Premises.
SECTION 3
Rent
TENANT agrees to pay LANDLORD annual rental of $1.00, payable the first day
of each lease year during the term hereof.
SECTION 4
Use of Leased Premises
4.01 The Leased Premises are leased to TENANT for its exclusive use as a
Casino-Resort and TENANT shall not permit the Leased Premises to be used for any
other purpose whatsoever. TENANT agrees throughout the term of this Lease to
have in effect all required governmental licenses, permits, and approvals
necessary to allow for the foregoing use of the Leased Premises by TENANT as
herein set forth.
4.02 TENANT shall, by entering upon and occupying the Leased Premises, be
deemed to have accepted the Leased Premises in their existing condition, and
TENANT hereby releases LANDLORD, its directors, officers, employees and agents
from any liability or loss caused by any latent or patent defects therein.
4.03 TENANT shall (a) keep and maintain the Leased Premises in good order,
condition and repairs (excluding any replacement and restoration), (b) provide
all precautions for safety and protection of persons and property, (c) keep the
Leased Premises free from waste, and (d) upon termination of this Lease return
the Leased Premises to as good a condition as at the commencement of this Lease,
reasonable wear and tear excepted. The expense for any replacements for the
Leased Premises, including furniture, fixtures, and equipment items located
therein, shall be paid for by the TENANT, unless caused by the negligence or
willful misconduct of LANDLORD, LANDLORD's employees, or LANDLORD's agents.
4.04 TENANT shall comply with all governmental rules, regulations,
ordinances, statutes and laws pertaining to the Leased Premises or the business
of gaming, including the rules and regulations of the Nevada Gaming Commission
and the Nevada State Gaming Control Board, the applicable orders and regulations
of the Insurance Services Office, or any other body exercising similar
functions, and all covenants, conditions and restrictions pertaining to the
Leased Premises or TENANT's use thereof.
4.05 TENANT shall not permit anything to be done or kept upon the Leased
Premises that will interfere with the rights of LANDLORD, nor shall TENANT
commit or permit any nuisance or any illegal act in, upon, or about the Leased
Premises.
4.06 TENANT shall operate the business of a Casino-Resort in the Leased
Premises open to the public twenty-four (24) hours a day, seven days a week,
including all holidays. Said Casino-Resort shall be operated in a reasonable
manner so as to reflect favorably upon the LANDLORD.
SECTION 5
Improvements
TENANT shall not make any additions, alterations, improvements or changes
nor install any fixtures, signs or billboards in, upon or to the Leased Premises
without the prior written consent of LANDLORD.
SECTION 6
Utilities
TENANT shall pay for all charges for water, electricity, gas, garbage
service, and other services or utilities used in, upon, about or in connection
with the Leased Premises by TENANT.
SECTION 7
Taxes
TENANT shall pay or cause to be paid all real estate taxes, assessments and
other governmental levies, personal property taxes, and charges that are
assessed against the Leased Premises and any and all improvements and property
thereon, inclusive of the gaming equipment, and shall indemnify and hold
LANDLORD and the Leased Premises harmless from any liability therefor, together
with any interest, penalties or other sums imposed in connection therewith.
SECTION 8
Insurance
8.01 TENANT shall, at all times during the term hereof, at its sole cost
and expense, procure and maintain in full force and effect a policy of
comprehensive public liability insurance issued by an insurance carrier approved
by LANDLORD, with policy limits approved by LANDLORD, insuring against loss,
damage or liability for injury or death to persons and loss or damage to
property occurring from any cause whatsoever in connection with the Leased
Premises or TENANT's use thereof. TENANT and LANDLORD shall be named as insured
parties under such policies of insurance (and, at LANDLORD's option, any other
persons, firms or corporations designated by LANDLORD shall be named as insured
parties, additional insureds or loss payees as designated by LANDLORD, under
such policies of insurance).
8.02 TENANT, at all times during the term hereof, at its sole cost and
expense, shall maintain in full force and effect a policy or policies insuring
against loss or damage by fire and against loss or damage by other risks now or
hereafter embraced by an extended coverage policy insuring the Leased Premises
in an amount equal to one hundred percent (100%) of the current replacement
value thereof. LANDLORD, TENANT, and to the extent required, any mortgagee of
LANDLORD shall be named additional insureds or loss payees, as their respective
interests appear. TENANT shall, at all times during the term hereof, at its sole
cost and expense, procure and maintain in full force and effect policies of
rental insurance and business interruption insurance in an amount approved by
LANDLORD.
8.03 A certificate issued by the insurance carrier for each policy of
insurance required to be maintained by TENANT hereunder together with a copy of
each such policy and evidence of payment of all premiums shall be delivered to
LANDLORD and all other named insureds on or before the commencement date hereof
and thereafter, as to policy renewals, within thirty (30) days prior to the
expiration of the terms of each such policy. Each of said certificates of
insurance and each such policy of insurance required to be maintained by TENANT
hereunder shall contain an endorsement or provision requiring not less than
thirty (30) days written notice by certified mail to LANDLORD and all other
named insureds prior to the cancellation, diminution in the perils insured
against, or reduction of the amount of coverage of the particular policy in
question.
8.04 TENANT shall not use or occupy, or permit the Leased Premises to be
used or occupied, in a manner which will increase the rates of fire or any other
insurance for the Leased Premises. TENANT shall also not use or occupy, or
permit the Leased Premises to be used or occupied, in a manner which will make
void or voidable any insurance then in force with respect thereto, or which will
make it impossible to obtain fire or other insurance with respect thereto.
SECTION 9
Liens
TENANT shall defend, indemnify, and hold LANDLORD, the Leased Premises, and
the leasehold created hereby free, clear, and harmless from any claims, liens,
charges, encumbrances, litigation and judgements arising directly or indirectly
out of any use, occupancy or activity of TENANT, its directors, officers,
employees, and agents, or out of any work performed, materials furnished, or
obligations incurred by TENANT in, upon or otherwise in connection with the
Leased Premises. TENANT shall give LANDLORD written notice at least ten (10)
business days prior to the commencement of any work on the Leased Premises to
afford LANDLORD the opportunity of filing appropriate notices of
non-responsibility. TENANT shall, at its sole cost and expense, within fifteen
(15) days after filing of any lien, charge or encumbrance of record, obtain the
discharge and release thereof. Nothing contained herein shall prevent LANDLORD,
at the cost and for the account of TENANT, from obtaining said discharge and
release in the event TENANT fails or refuses to do the same within said fifteen
(15) day period.
SECTION 10
Subordination
TENANT agrees, upon request of LANDLORD, to subordinate this Lease and its
rights hereunder to the lien of any mortgage, deed of trust or other
encumbrance, whether created before or after the date of the Lease, together
with any renewals, extensions or replacements thereof, placed, charged or
enforced against the Leased Premises, or any portion thereof, or any property of
which the Leased Premises is a part, and to execute and deliver at any time, and
from time to time, upon demand by LANDLORD, such documents as may be required to
effectuate such subordination. In the event any proceedings are brought for the
foreclosure of the Leased Premises or in the event of the excise of the power of
sale under any deed of trust covering the Leased Premises, TENANT shall attorn
to the purchaser upon any such foreclosure or sale and recognize such purchaser
as LANDLORD under this Lease.
SECTION 11
Right of Access
11.01 LANDLORD and its authorized representatives may enter the Leased
Premises at any reasonable time for the purpose of (a) posting or keeping posted
thereon such notices as LANDLORD may deem necessary or appropriate for
protection of LANDLORD or the Leased Premises, (b) inspecting the Leased
Premises, (c) showing the Leased Premises to prospective tenants, purchasers or
others who may have an interest or prospective interest therein, (d) making
repairs to the Leased Premises and performing any work therein or thereon which
LANDLORD may elect to make hereunder, or which may be necessary to comply with
any rules, regulations, ordinances, statutes, laws or requirements of any public
authority or any applicable standards that may, from time to time, be
established by the Insurance Services Office or any similar body, or which
LANDLORD may deem necessary or appropriate to prevent waste, loss, damage or
deterioration to or in connection with the Leased Premises, or (e) performing
any other lawful act. Nothing contained herein shall impose or be deemed to
impose any duty on the part of LANDLORD to do any work or repair, maintenance,
reconstruction or restoration which under any provision of this Lease is
required to be done by TENANT, and the performance thereof by LANDLORD shall not
constitute a waiver of TENANT's default in failing to do the same.
SECTION 12
Default
12.01 TENANT's compliance with each and every covenant and obligation
hereof on its part to be performed is a condition precedent to each and every
covenant and obligation of LANDLORD.
12.02 Upon the occurrence of any of the following events (each of which is
herein called an "Event of Default"), TENANT shall be in default under this
Lease, and LANDLORD shall have all the rights and remedies provided in this
Section or elsewhere herein:
(a) TENANT shall default in the performance of any term or condition
of this Lease and such default continues for thirty (30) days after written
notice thereof from LANDLORD to TENANT (said thirty (30) day period to run
concurrently and not consecutively with the time periods set forth in Nev.
Rev. Stat. Ch.40, concerning service of a notice to quit or pay rent);or
(b) TENANT shall vacate or abandon the Leased Premises during the term
of this Lease; or
(c) TENANT shall voluntarily suspend transaction of a substantial
portion of its business, or shall be unable to meet its debts as they
mature.
(d) Any necessary gaming license, permit, or approval under which
TENANT operates the Casino-Resort or any part thereof is revoked or
suspended.
12.03 If an event of Default shall occur, in addition to any other rights
or remedies provided for herein or at law or in equity, LANDLORD may, at its
sole option:
(a) Declare the term of this Lease ended and re-enter the Leased
Premises and take possession thereof, and terminate all of the rights of
TENANT in and to the Leased Premises; or
(b) Re-enter the Leased Premises and occupy the same, or any portion
thereof, for or on account for TENANT as hereinafter provided, without
declaring the term of this Lease ended. In addition to entering upon the
Leased Premises, LANDLORD may remove all persons from the Leased Premises
and may, but shall not be obligated to, remove all property therefrom and
may, but shall not be obligated, to enforce any rights LANDLORD may have
against said property or store the same in any public or private warehouse
of elsewhere at the cost and for the account of TENANT or the owner or
owners thereof.
12.04 In any action brought by any party hereto to enforce any of its
rights arising from this Lease, the prevailing party or parties shall be
entitled to receive their costs and expenses, including attorneys' fees.
12.05 The waiver by LANDLORD of any breach of any of the terms or
conditions hereof by TENANT shall not be a waiver of any preceding or subsequent
breach of the same or any other term or condition contained herein. This section
may not be waived.
SECTION 13
Quiet Possession
TENANT, upon paying the rentals and other payments herein required from
TENANT and upon TENANT's performance of all of the terms and conditions of this
Lease, may quietly have, hold and enjoy the Leased Premises during the term of
this Lease without any disturbance from LANDLORD or from any other person
claiming through LANDLORD, subject, however, to the rights of any mortgagees,
holders of easements, encumbrances or liens and other persons whose rights have
been filed for record in the county in which the Leased Premises is located and
appertaining to the Leased Premises.
SECTION 14
Transfer and Assignment by Landlord and Tenant
14.01 In the event of any sale or exchange of the Leased Premises by
LANDLORD, or any foreclosure or any sale under any Deed of Trust, both Parties
shall be and are hereby relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease, arising out
of any act, occurrence or omission relating to the Leased Premises occurring
after the consummation of such sale or exchange.
14.02 TENANT shall not assign, mortgage, pledge, hypothecate or encumber
this Lease nor the leasehold estate hereby created or any interest herein or
subject the Leased Premises or any portion thereof, or license the use of all or
any portion of the Leased Premises without the prior written consent of
LANDLORD. In the absence of an express agreement in writing to the contrary,
executed by LANDLORD, no assignment, mortgage, pledge, hypothecation,
encumbrance, subletting or license hereof or hereunder shall act as a release of
TENANT from any of the terms, covenants and conditions of this Lease on the part
of TENANT to be kept and performed.
SECTION 15
Certificates
15.01 From time to time, upon the written request of LANDLORD to TENANT,
TENANT shall execute and deliver to LANDLORD a certificate addressed to LANDLORD
and any mortgagee or purchaser of LANDLORD or any proposed mortgagee or
purchaser of LANDLORD stating (i) that, if true, the Lease is in full force and
effect having not been extended, modified or terminated except by instruments
specifically set forth and referenced in such certificate, (ii) that, if true,
LANDLORD is not in default with respect to any material terms or conditions of
the Lease or so state such default(s), (iii) that TENANT has not prepaid any
rents except to the extent set forth in such certificate, (iv) the amount of
deposits made by TENANT pursuant to such Lease and (v) the date set forth for
termination of the Lease, unless termination is brought about prior to the
stated expiration date thereof.
15.02 Although TENANT's consent is not required for any sale or mortgage of
the Leased Premises by LANDLORD, TENANT shall at LANDLORD's written request
execute any instruments consenting to such mortgage or transfer by LANDLORD.
SECTION 16
Service of Notices
16.01 Any and all notices, consents and demands by or from LANDLORD to
TENANT, or by or from TENANT shall be validly given if (i) by personal delivery
with acknowledged receipt thereof, deposited in the United States mail, express,
certified or registered, postage prepaid, return receipt requested or (ii)
deposited with Federal Express or similar courier providing written proof of
delivery.
16.02 Any notice or demand to LANDLORD shall be addressed to the LANDLORD,
2000 Las Vegas Boulevard So., Las Vegas, Nevada 89104, to the attention of
General Counsel.
16.03 Any notice or demand to TENANT shall be addressed to TENANT, 2000 Las
Vegas Boulevard So., Las Vegas, Nevada 89104, to the attention of General
Counsel.
16.04 Any party hereto may change its address for the purpose of receiving
notices, consents or demands as herein provided by written notice given in the
manner aforesaid to the other party hereto, which notice of change of address
shall not become effective, however, until the actual receipt thereof by the
other party.
SECTION 17
Miscellaneous Provisions
17.01 The various rights, options, elections and remedies of LANDLORD and
TENANT contained in this Lease shall be cumulative and no one of them shall be
construed as exclusively of any other, or of any right, priority or remedy
allowed or provided for by law and not expressly waived in this Lease.
17.02 The terms and conditions of this Lease shall apply to, bind and inure
to the benefit of the heirs, executors, administrators, legal representatives,
successors, and permitted assigns of LANDLORD and TENANT, respectively.
17.03 Time is of the essence of this Lease and all of the terms and
conditions hereof.
17.04 This Lease shall be construed and enforced in accordance with the
laws of the State of Nevada.
17.05 Nothing herein contained shall be construed as constituting LANDLORD
and TENANT as co-partners, or as creating a joint venture or the relationship of
principal and agent or employer and employee, nor any relationship other than
the relationship of landlord and tenant.
17.06 The captions appearing at the commencement of the articles of this
Lease are descriptive and for convenience of reference only, and shall in no way
define, limit or describe the scope or intent of the provisions of this Lease.
17.07 If any term, provision, covenant or condition of this Lease, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, that provision shall be deemed severable and all
provisions, covenants, and conditions of this Lease, and all applications
thereof, not held to be invalid, void or unenforceable, shall continue in full
force and effect and shall in no way be affected, impaired or invalidated
thereby.
17.08 This Lease sets forth the entire understanding and agreement between
the parties hereto and supersedes all previous communications, negotiations, and
agreements, whether oral or written, with respect to the subject matter hereof.
No addition to or modification of this Lease shall be binding on either party
unless made in writing.
17.09 In the event and to the extent that any provision of this Lease
conflicts with Landlord's obligations under that certain Indenture dated March
9, 1995 or any other financing agreements, the provisions of the Indenture
and/or other financing agreements shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.
"LANDLORD" "TENANT"
STRATOSPHERE CORPORATION, STRATOSPHERE GAMING CORP.,
a Delaware corporation a Nevada corporation
By:/s/ Andrew S. Blumen By:/s/ Thomas A. Lettero
Name:Andrew S. Blumen Name:Thomas A. Lettero
Title:Executive Vice President Title:Treasurer
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on the 29th day of April, 1996,
by Andrew S. Blumen as Executive Vice President of Stratosphere Corporation.
/s/ Tracy Pilkington
Notary Public
(My commission expires Feb. 24, 1997)
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on the 29th day of April, 1996,
by Thomas A. Lettero as Treasurer of Stratosphere Gaming Corp.
/s/ Tracy Pilkington
Notary Public
(My commission expires Feb. 24, 1997)
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