<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 25, 1996
------------------------
STATION CASINOS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEVADA 000-21640 88-0136443
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification
No.)
</TABLE>
<TABLE>
<S> <C>
2411 WEST SAHARA AVENUE
LAS VEGAS, NEVADA
(Address of principal executive 89102
offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (702) 367-2411
N/A
(Former name or former address, if changed since last report)
The Exhibit Index may be found on Page 3.
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<PAGE>
ITEM 5. OTHER EVENTS.
On September 25, 1996, the Registrant's subsidiary, Sunset Station, Inc., a
Nevada corporation ("SUNSET STATION"), entered into the Construction/Term Loan
Agreement ("SUNSET LOAN AGREEMENT"), with Bank of America National Trust and
Savings Association, Bank of Scotland, Societe Generale and each of the other
Lenders party to such agreement, pursuant to which Sunset Station has received a
commitment for $110 million to finance the remaining development and
construction costs of Sunset Station. A complete copy of the Sunset Loan
Agreement is attached as an exhibit to this Form 8-K.
The loan under the Sunset Loan Agreement is evidenced by a first mortgage
term note in the amount of $110 million (the "NOTE"). The loan evidenced by the
Note is non-recourse to the Registrant, except as to certain construction
matters pursuant to the Completion Guarantee dated as of September 25, 1996 (the
"COMPLETION GUARANTEE"), executed by the Registrant on behalf of Sunset Station.
The Note is payable in full on September 30, 2000 and carries an interest rate
of 375 basis points over the Eurodollar Rate (as defined in the Sunset Loan
Agreement). The Note is secured by substantially all of the assets of Sunset
Station and an assignment of the lease on a portion of the real property on
which the Sunset Station Hotel & Casino will be constructed as well as a
leasehold deed of trust with respect to a sublease of such portion from the
Registrant to Sunset Station and a deed of trust with respect to the remainder
of such property which is owned by Sunset Station. A complete copy of the
Completion Guarantee is attached as an exhibit to this Form 8-K.
The Registrant has also entered into a $40 million operating lease for
furniture, fixtures and equipment (the "EQUIPMENT") to be re-leased to, and
ultimately, utilized at, Sunset Station under the Participation Agreement, dated
as of September 25, 1996 (the "OPERATING LEASE") between the Registrant and
First Security Trust Company of Nevada. The Operating Lease expires on October
31, 2000 and carries a lease rate of 225 basis points over the Eurodollar Rate.
The Registrant will sublease such Equipment to Sunset Station pursuant to an
operating lease with financial terms substantially similar to the Operating
Lease (the "SUBLEASE AGREEMENT"). In the event that Sunset Station elects to
purchase the Equipment, the Registrant has provided a funding commitment up to
the amount necessary for such purchase pursuant to the Supplemental Loan
Agreement dated as of September 25, 1996 (the "SUPPLEMENTAL LOAN AGREEMENT"). A
complete copy of the Operating Lease and a copy of the Sublease Agreement are
attached as an exhibit to this Form 8-K.
In connection with the Operating Lease, the Registrant also entered into a
Participation Agreement, dated as of September 25, 1996 (the "PARTICIPATION
AGREEMENT") with the Trustee, as lessor under the Operating Lease, and holders
of beneficial interests in the Lessor Trust (the "HOLDERS"). Pursuant to the
Participation Agreement, the Holders will advance funds to the Trustee for the
purchase by the Trustee of, or to reimburse the Registrant for its purchase of,
such Equipment, which will then be leased to the Registrant, and in turn
subleased to Sunset Station under the Sublease Agreement. Pursuant to the
Participation Agreement, the Registrant also agreed to indemnify the Lessor and
the Holders against certain liabilities. A complete copy of the Participation
Agreement is attached as an exhibit to this Form 8-K.
In addition, pursuant to the Supplemental Loan Agreement, the Registrant
provided a funding commitment to Sunset Station of up to an additional $25
million upon which Sunset Station is required to draw in the event of the
failure of certain financial covenants under the Sunset Loan Agreement. The
Supplemental Loan Agreement expires on September 30, 2000. Sunset Station will
pay interest at a rate per annum equal to the interest rate then in effect for
three month "Eurodollar Loans" under the Registrant's Amended and Restated
Reducing Revolving Loan Agreement (the "REGISTRANT'S REVOLVER"). Interest due
under the Supplemental Loan Agreement will be added to the principal of the
loans made under the Supplemental Loan Agreement on each interest accrual date.
Loans under the additional $25 million funding commitment may be drawn down
beginning on the last day of the first full calendar quarter ending after the
Sunset Station Hotel & Casino opens for business in the amount of up to $10
million during the first year after such date, up to $10 million during the
second year after such date and up to $5 million during the third year after
such date. The funding commitments under the
1
<PAGE>
Supplemental Loan Agreement generally are subject to limitations imposed by the
Registrant's $110 million 9 5/8% Senior Subordinated Notes due 2003, $83 million
9 5/8% Senior Subordinated Notes due 2003, $198 million 10 1/8% Senior
Subordinated Notes due 2006 and the Registrant's Revolver.
The Registrant also entered into a Trust Agreement for the purpose of
establishing First Security Trust Company of Nevada as Trustee of the Lessor
Trust under which the Holders' beneficial interest in the Operating Lease
exists.
Sunset Station also entered into a Standard Form of Agreement Between Owner
and Contractor ("CONSTRUCTION CONTRACT") with J.A. Tiberti Construction Company,
Inc., dated as of November 1, 1995 with a guaranteed maximum price of $121
million with respect to all phases of construction of the Sunset Station Hotel &
Casino. A complete copy of the Construction Contract is attached as an exhibit
to this Form 8-K.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STATION CASINOS, INC.
a Nevada corporation
By: /s/ GLENN C. CHRISTENSON
-----------------------------------------
Glenn C. Christenson
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER AND TREASURER
Date: October 18, 1996
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER EXHIBIT DESCRIPTION PAGE NUMBER
- --------- ------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
10.1 Construction/Term Loan Agreement dated as of September 25, 1996 among Sunset Station
and Bank of America National Trust and Savings Association, Bank of Scotland, Societe
Generale and each of the other Lenders that are party to such agreement.
10.2 Completion Guarantee dated as of September 25, 1996, executed by the Registrant.
10.3 Supplemental Loan Agreement dated as of September 25, 1996 between the Registrant and
Sunset Station.
10.4 Participation Agreement dated as of September 25, 1996 among the Registrant, as
Lessee, and First Security Trust Company of Nevada, as Lessor and Trustee, and the
other Persons that are parties to such agreement.
10.5 Lease Agreement dated as of September 25, 1996 between First Security Trust Company
of Nevada as Trustee and Lessor and the Registrant, as Lessee.
10.6 Sublease Agreement dated as of September 25, 1996 between the Registrant, as
Sublessor and Sunset Station as Sublessee.
10.7 Sunset Station 1996 Trust Agreement dated as of September 25, 1996 between the
Registrant, as Grantor, and First Security Trust Company of Nevada, as Trustee.
10.8 Standard Form of Agreement Between Owner and Contractor, dated as of November 1, 1995
between Sunset Station and J.A. Tiberti Construction Company, Inc.
</TABLE>
4
<PAGE>
CONSTRUCTION/TERM LOAN AGREEMENT
Dated as of September 25, 1996
among
SUNSET STATION, INC.
THE LENDERS HEREIN NAMED
BANK OF SCOTLAND
and
SOCIETE GENERALE
as Co-Agents
and
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Managing Agent
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . 33
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . 33
1.4 Rounding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1.5 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . 34
1.6 References to "Borrower and its Subsidiaries". . . . . . . . . . 34
1.7 Miscellaneous Terms. . . . . . . . . . . . . . . . . . . . . . . 34
Article 2 LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.1 Loans-General. . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.2 Automatic Reduction of Commitment. . . . . . . . . . . . . . . . 36
2.3 Voluntary Reduction of Commitment. . . . . . . . . . . . . . . . 36
2.4 Managing Agent's Right to Assume Funds Available for
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.5 Collateral and Guaranty. . . . . . . . . . . . . . . . . . . . . 37
2.6 Lender's Acknowledgement . . . . . . . . . . . . . . . . . . . . 37
Article 3 PAYMENTS AND FEES . . . . . . . . . . . . . . . . . . . . . . . . 38
3.1 Principal and Interest . . . . . . . . . . . . . . . . . . . . . 38
3.2 Arrangement Fee. . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3 Upfront Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.4 Commitment Fees. . . . . . . . . . . . . . . . . . . . . . . . . 41
3.5 Prepayment Fee . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.6 Managing Agent Fees. . . . . . . . . . . . . . . . . . . . . . . 41
3.7 Co-Agent Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.8 Increased Commitment Costs . . . . . . . . . . . . . . . . . . . 42
3.9 Eurodollar Costs and Related Matters . . . . . . . . . . . . . . 42
3.10 Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.11 Computation of Interest and Fees. . . . . . . . . . . . . . . . 47
3.12 Non-Banking Days. . . . . . . . . . . . . . . . . . . . . . . . 47
3.13 Manner and Treatment of Payments. . . . . . . . . . . . . . . . 47
3.14 Funding Sources . . . . . . . . . . . . . . . . . . . . . . . . 49
3.15 Failure to Charge Not Subsequent Waiver . . . . . . . . . . . . 49
3.16 Managing Agent's Right to Assume Payments Will be Made by
Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.17 Fee Determination Detail. . . . . . . . . . . . . . . . . . . . 49
3.18 Survivability . . . . . . . . . . . . . . . . . . . . . . . . . 50
Article 4 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 51
4.1 Existence and Qualification; Power; Compliance With Laws . . . . 51
4.2 Authority; Compliance With Other Agreements and Instruments
and Government Regulations . . . . . . . . . . . . . . . . . . . 51
4.3 No Governmental Approvals Required . . . . . . . . . . . . . . . 52
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 53
4.6 No Other Liabilities; No Material Adverse Changes. . . . . . . . 54
4.7 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . 54
4.8 Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . . 54
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<PAGE>
4.9 Public Utility Holding Company Act . . . . . . . . . . . . . . . 54
4.10 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.11 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . 55
4.12 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.14 Regulations G, T, U and X; Investment Company Act . . . . . . . 56
4.15 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.16 Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.17 Projections . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.18 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . 56
4.19 Gaming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.20 Security Interests. . . . . . . . . . . . . . . . . . . . . . . 57
Article 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
REQUIREMENTS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.1 Payment of Taxes and Other Potential Liens . . . . . . . . . . . 58
5.2 Preservation of Existence. . . . . . . . . . . . . . . . . . . . 58
5.3 Maintenance of Properties. . . . . . . . . . . . . . . . . . . . 58
5.4 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . 58
5.5 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 59
5.6 Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . 59
5.7 Keeping of Records and Books of Account. . . . . . . . . . . . . 59
5.8 Compliance With Agreements . . . . . . . . . . . . . . . . . . . 59
5.9 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 59
5.10 New Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 59
5.11 Hazardous Materials Laws. . . . . . . . . . . . . . . . . . . . 60
5.12 Gaming Licenses . . . . . . . . . . . . . . . . . . . . . . . . 60
5.13 Supplemental Credit Facility. . . . . . . . . . . . . . . . . . 60
Article 6 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 62
6.1 Payment of Subordinated Obligations. . . . . . . . . . . . . . . 62
6.2 Disposition of Property. . . . . . . . . . . . . . . . . . . . . 62
6.3 Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.4 Hostile Acquisitions . . . . . . . . . . . . . . . . . . . . . . 63
6.5 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.6 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.7 Change in Nature of Business . . . . . . . . . . . . . . . . . . 63
6.8 Liens and Negative Pledges . . . . . . . . . . . . . . . . . . . 63
6.9 Indebtedness and Guaranty Obligations. . . . . . . . . . . . . . 64
6.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 64
6.11 Senior Funded Debt Ratio. . . . . . . . . . . . . . . . . . . . 64
6.12 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . 65
6.13 Effective Net Worth . . . . . . . . . . . . . . . . . . . . . . 65
6.14 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . 65
6.15 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.16 Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.17 Operating Leases. . . . . . . . . . . . . . . . . . . . . . . . 66
6.18 Subsidiary Indebtedness . . . . . . . . . . . . . . . . . . . . 67
6.19 Management Fees . . . . . . . . . . . . . . . . . . . . . . . . 67
6.20 Amendments to Equipment Sublease. . . . . . . . . . . . . . . . 67
6.21 Supplemental Loan Agreement . . . . . . . . . . . . . . . . . . 67
Article 7 CONSTRUCTION PERIOD COVENANTS . . . . . . . . . . . . . . . . . . 68
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<PAGE>
7.1 Construction of Project. . . . . . . . . . . . . . . . . . . . . 68
7.2 Amendments to Plans and Budgets. . . . . . . . . . . . . . . . . 68
7.3 Timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.4 Construction Requirements. . . . . . . . . . . . . . . . . . . . 68
7.5 Construction Services Group. . . . . . . . . . . . . . . . . . . 68
7.6 Notice of Changes. . . . . . . . . . . . . . . . . . . . . . . . 68
7.7 Construction Progress Reports. . . . . . . . . . . . . . . . . . 69
7.8 Construction Information . . . . . . . . . . . . . . . . . . . . 69
7.9 Construction, Permits, Licenses and Approvals. . . . . . . . . . 69
7.10 Purchase of Materials . . . . . . . . . . . . . . . . . . . . . 69
7.11 Purchase of Offsite Materials . . . . . . . . . . . . . . . . . 69
7.12 Site Visits . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.13 Protection Against Lien Claims. . . . . . . . . . . . . . . . . 70
7.14 Completion Certificates . . . . . . . . . . . . . . . . . . . . 70
7.15 Completion Survey . . . . . . . . . . . . . . . . . . . . . . . 70
Article 8 INFORMATION AND REPORTING REQUIREMENTS. . . . . . . . . . . . . . 71
8.1 Financial and Business Information . . . . . . . . . . . . . . . 71
8.2 Compliance Certificates. . . . . . . . . . . . . . . . . . . . . 75
Article 9 CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.1 Initial Advances . . . . . . . . . . . . . . . . . . . . . . . . 76
9.2 Initial Advances - Further Conditions. . . . . . . . . . . . . . 80
9.3 Advances - Special Condition . . . . . . . . . . . . . . . . . . 81
9.4 Any Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Article 10 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT . . . . . . 83
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 83
10.2 Remedies Upon Event of Default. . . . . . . . . . . . . . . . . 86
Article 11 THE MANAGING AGENT . . . . . . . . . . . . . . . . . . . . . . . 90
11.1 Appointment and Authorization . . . . . . . . . . . . . . . . . 90
11.2 Managing Agent and Affiliates . . . . . . . . . . . . . . . . . 90
11.3 Proportionate Interest in any Collateral. . . . . . . . . . . . 90
11.4 Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . 91
11.5 Action by Managing Agent. . . . . . . . . . . . . . . . . . . . 91
11.6 Liability of Managing Agent . . . . . . . . . . . . . . . . . . 92
11.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 93
11.8 Successor Managing Agent. . . . . . . . . . . . . . . . . . . . 94
11.9 Foreclosure on Collateral . . . . . . . . . . . . . . . . . . . 95
11.10 No Obligations of Borrower . . . . . . . . . . . . . . . . . . 95
Article 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.1 Cumulative Remedies; No Waiver. . . . . . . . . . . . . . . . . 96
12.2 Amendments; Consents. . . . . . . . . . . . . . . . . . . . . . 96
12.3 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . 97
12.4 Nature of Lenders' Obligations. . . . . . . . . . . . . . . . . 98
12.5 Survival of Representations and Warranties. . . . . . . . . . . 99
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
12.7 Execution of Loan Documents . . . . . . . . . . . . . . . . . . 99
12.8 Binding Effect; Assignment. . . . . . . . . . . . . . . . . . . 100
12.9 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . 103
12.10 Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . 103
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12.11 Indemnity by Borrower. . . . . . . . . . . . . . . . . . . . . 104
12.12 Nonliability of the Lenders. . . . . . . . . . . . . . . . . . 105
12.13 No Third Parties Benefited . . . . . . . . . . . . . . . . . . 106
12.14 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 106
12.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 107
12.16 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . 107
12.17 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 107
12.18 Severability of Provisions . . . . . . . . . . . . . . . . . . 108
12.19 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
12.20 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . 108
12.21 Foreign Lenders and Participants . . . . . . . . . . . . . . . 108
12.22 Hazardous Material Indemnity . . . . . . . . . . . . . . . . . 109
12.23 Gaming Boards. . . . . . . . . . . . . . . . . . . . . . . . . 110
12.24 Waiver of Right to Trial by Jury . . . . . . . . . . . . . . . 110
12.25 Purported Oral Amendments. . . . . . . . . . . . . . . . . . . 110
Exhibits
- --------
A - Architect's Certificate and Consent
B - Collateral Assignment
C - Commitment Assignment and Acceptance
D - Completion Guaranty
E - Compliance Certificate
F - Contractor's Certificate and Consent
G - Deed of Trust
H - Intercreditor Agreement
I - Landlord Consent and Agreement
J - Note
K-1 - Opinion of Counsel
K-2 Opinion of Counsel
L - Pledge Agreement
M - Request for Loan
N - Security Agreement
O - Subsidiary Guaranty
Schedules
- ---------
1.1 Lender Commitments
4.3 Governmental Approvals
4.4 Subsidiaries
4.7 Existing Liens, Negative Pledges and Rights of Others
4.8 Trademarks and Trade Names
4.10 Material Litigation
4.18 Environmental Matters
6.9 Existing Indebtedness
6.15 Existing Investments
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<PAGE>
CONSTRUCTION/TERM LOAN AGREEMENT
Dated as of September 25, 1996
This CONSTRUCTION/TERM LOAN AGREEMENT ("Agreement") is entered into
by and among Sunset Station, Inc., a Nevada corporation ("Borrower"), each
lender whose name is set forth on the signature pages of this Agreement and each
lender which may hereafter become a party to this Agreement pursuant to
Section 12.8 (collectively, the "Lenders" and individually, a "Lender"), Bank of
Scotland and Societe Generale as Co-Agents, and Bank of America National Trust
and Savings Association, as Managing Agent.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"ACQUISITION" means any transaction, or any series of related
transactions, by which Borrower and/or any of its Subsidiaries directly
or indirectly acquires any ongoing business or all or substantially all
of the assets of any firm, corporation or division thereof constituting
an ongoing business, whether through purchase of capital stock, assets,
merger or otherwise.
"ADJUSTED ANNUALIZED EBITDA" means, with respect to any fiscal
period, Annualized EBITDA for that fiscal period PLUS (a) any Cash Equity
Contributions (OTHER THAN Cash Equity Contributions required pursuant to
the Completion Guaranty or which are a Qualified Capital Source) made to
Borrower during that fiscal period PLUS (b) any Supplemental Loans made
to Borrower pursuant to Section 2.01(a) of the Supplemental Loan
Agreement during that fiscal period.
"ADVANCE" means any advance made or to be made by any Lender to
Borrower as provided in ARTICLE 2.
"AFFILIATE" means, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled
by, such Person. As used in this definition, "control" (and the
correlative terms, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise); PROVIDED that, in any event, any Person that owns, directly
or indirectly, 10% or more of the securities having ordinary voting power
for the election of directors or other governing body of a corporation
that has more than 100
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record holders of such securities, or 10% or more of the partnership or
other ownership interests of any other Person that has more than 100
record holders of such interests, will be deemed to be an Affiliate of
such corporation, partnership or other Person.
"AGREEMENT" means this Construction/Term Loan Agreement, either as
originally executed or as it may from time to time be supplemented,
modified, amended, restated or extended.
"ALTERNATE BASE RATE" means, as of any date of determination, the
rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to the HIGHER OF (a) the Reference Rate in effect on such date and
(b) the Federal Funds Rate in effect on such date plus 1/2 of 1%
(50 basis points).
"ALTERNATE BASE RATE ADVANCE" means, with respect to any Lender,
(a) the portion of an Alternate Base Rate Loan that is equal to such
Lender's Pro Rata Share of such Alternate Base Rate Loan and (b) the
portion of a Eurodollar Rate Loan to which Section 3.9(c) applies that is
equal to such Lender's Pro Rata Share of such Eurodollar Rate Loan.
"ALTERNATE BASE RATE LOAN" means a Loan made hereunder that is an
Alternate Base Rate Loan in accordance with ARTICLE 2.
"ALTERNATE BASE RATE MARGIN" means, for any Alternate Base Rate
Loan, the number of basis points which, when added to the Alternate Base
Rate as of the date such Loan was made as or converted into an Alternate
Base Rate Loan, would have resulted in an interest rate equal to the SUM
OF the Eurodollar Rate that would have applied on that date for a
Eurodollar Rate Loan with a three month Interest Period plus 3 3/4% (375
basis points).
"AMORTIZATION AMOUNT" means, with respect to each Amortization
Date, the amount set forth below opposite that Amortization Date:
AMORTIZATION DATE AMOUNT
Initial Amortization Date and each $1,750,000
of the next three (3) Amortization
Dates
Each of the next four (4) $2,250,000
Amortization Dates
Each of the next two (2) $2,000,000
Amortization Dates
"AMORTIZATION DATE" means the Initial Amortization Date and the last
day of each Eurodollar Period ending nearest to each June 30,
September 30, December 31 and March 31 thereafter.
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"ANNUALIZED EBITDA" means, as of the last day of each Fiscal Quarter
ending after the Completion Date, EBITDA for the fiscal period consisting
of that Fiscal Quarter and the three immediately preceding Fiscal
Quarters, ADJUSTED, with respect to any such fiscal period in which the
Project is open for business for at least one (1) full Fiscal Quarter but
less than four (4) full Fiscal Quarters, by such amount as is necessary
to reflect the annualization of EBITDA using the following conventions:
(i) if the Project has been open for business for less than one (1) full
Fiscal Quarter, no annualization adjustment shall be made, (ii) if the
Project has been open for business for one (1) full Fiscal Quarter,
EBITDA for that Fiscal Quarter shall be multiplied by four, (iii) if the
Project has been open for business two (2) full Fiscal Quarters, EBITDA
for those Fiscal Quarters shall be multiplied by two and (iv) if the
Project has been open for business for three (3) full Fiscal Quarters,
EBITDA for those Fiscal Quarters shall be multiplied by four
thirds (4/3).
"ARCHITECT" means Morris & Brown Architects, or any other architect
selected by Borrower and approved by the Managing Agent (which approval
shall not be unreasonably withheld).
"ARCHITECT'S CERTIFICATE AND CONSENT" means a written certificate
and consent executed by the Architect substantially in the form of
EXHIBIT A.
"ARCHITECT CONTRACTS" means the contract between the Architect and
Borrower dated as of September 17th, 1996 and any other contract between
the Architect and Borrower approved by the Managing Agent relating to the
design and construction of the Project and the preparation of the
Construction Plans, together with all amendments thereto.
"ARRANGER" means Bank of America National Trust and Savings
Association.
"AVAILABILITY TERMINATION DATE" means the EARLIER OF (a) the date
that is ninety (90) days after the Completion Date or (b) December 31,
1997.
"BANKING DAY" means any Monday, Tuesday, Wednesday, Thursday or
Friday, OTHER THAN a day on which banks are authorized or required to be
closed in California, Nevada or New York.
"BORROWER" has the meaning set forth in the introduction to this
Agreement.
"CAPITAL EXPENDITURE" means any expenditure that is treated as a
capital expenditure under Generally Accepted Accounting Principles,
INCLUDING any amount which is required to be treated as an asset subject
to a Capital Lease Obligation and including interest required by
Generally Accepted Accounting Principles to be capitalized with respect
to such an expenditure.
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"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, is classified as a capital
lease.
"CASH" means, when used in connection with any Person, all monetary
and non-monetary items owned by that Person that are treated as cash in
accordance with Generally Accepted Accounting Principles, consistently
applied.
"CASH EQUITY CONTRIBUTIONS" means contributions made by Parent to
the equity capital of Borrower that (a) are made in the form of Cash or
Cash Equivalents, (b) do not bear any specified or determinable dividend
rate and (c) are not redeemable prior to the date that is one year after
the Maturity Date.
"CASH EQUIVALENTS" means, when used in connection with any Person,
that Person's Investments in:
(a) Government Securities due within one year after the date
of the making of the Investment;
(b) readily marketable direct obligations of any State of the
United States of America or any political subdivision of any such
State or any public agency or instrumentality thereof given on the
date of such Investment a credit rating of at least Aa by Moody's
Investors Service, Inc. or AA by Standard & Poor's Rating Group (a
division of McGraw-Hill, Inc.) in each case due within one year from
the making of the Investment;
(c) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by any Lender or
by any bank incorporated under the Laws of the United States of
America, any State thereof or the District of Columbia and having on
the date of such Investment combined capital, surplus and undivided
profits of at least $250,000,000, or total assets of at least
$5,000,000,000, in each case due within one year after the date of
the making of the Investment;
(d) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by any branch or
office located in the United States of America of a bank
incorporated under the Laws of any jurisdiction outside the United
States of America having on the date of such Investment combined
capital, surplus and undivided profits of at least $500,000,000, or
total assets of at least $15,000,000,000, in each case due within
one year after the date of the making of the Investment;
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(e) repurchase agreements covering Government Securities
executed by a broker or dealer registered under Section 15(b) of the
Securities Exchange Act of 1934, as amended, having on the date of
the Investment capital of at least $50,000,000, due within 90 days
after the date of the making of the Investment; PROVIDED that the
maker of the Investment receives written confirmation of the
transfer to it of record ownership of the Government Securities on
the books of a "primary dealer" in such Government Securities or on
the books of such registered broker or dealer, as soon as
practicable after the making of the Investment;
(f) readily marketable commercial paper or other debt
securities issued by corporations doing business in and incorporated
under the Laws of the United States of America or any State thereof
or of any corporation that is the holding company for a bank
described in clause (c) or (d) above given on the date of such
Investment a credit rating of at least P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Rating Group (a division
of McGraw-Hill, Inc.), in each case due within one year after the
date of the making of the Investment;
(g) "money market preferred stock" issued by a corporation
incorporated under the Laws of the United States of America or any
State thereof (i) given on the date of such Investment a credit
rating of at least Aa by Moody's Investors Service, Inc. and AA by
Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.), in
each case having an investment period not exceeding 50 days or
(ii) to the extent that investors therein have the benefit of a
standby letter of credit issued by a Lender or a bank described in
clauses (c) or (d) above; PROVIDED that (y) the amount of all such
Investments issued by the same issuer does not exceed $5,000,000 and
(z) the aggregate amount of all such Investments does not exceed
$15,000,000;
(h) a readily redeemable "money market mutual fund" sponsored
by a bank described in clause (c) or (d) hereof, or a registered
broker or dealer described in clause (e) hereof, that has and
maintains an investment policy limiting its investments primarily to
instruments of the types described in clauses (a) through (g) hereof
and given on the date of such Investment a credit rating of at least
Aa by Moody's Investors Service, Inc. and AA by Standard & Poor's
Rating Group (a division of McGraw-Hill, Inc.); and
(i) corporate notes or bonds having an original term to
maturity of not more than one year issued by a corporation
incorporated under the Laws of the United States of America or any
State thereof, or a participation interest therein; PROVIDED that
(i) any commercial paper issued by such corporation is given on the
date of such Investment a credit
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rating of at least Aa by Moody's Investors Service, Inc. and AA by
Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.),
(ii) the amount of all such Investments issued by the same issuer
does not exceed $5,000,000 and (iii) the aggregate amount of all
such Investments does not exceed $15,000,000.
"CASH INTEREST EXPENSE" means Interest Expense that is paid, or is
currently payable, in Cash.
"CASH TAXES" means, with respect to any fiscal period, taxes on or
measured by the income of Borrower for that fiscal period, to the extent
paid, or currently payable, in Cash with respect to that fiscal period.
"CERTIFICATE" means a certificate signed by a Senior Officer or
Responsible Official (as applicable) of the Person providing the
certificate.
"CHANGE OF OWNERSHIP" means any transfer of any equity ownership
interest in Borrower (or the issuance by Borrower of any equity ownership
interest in Borrower) to any Person OTHER THAN Parent.
"CLOSING DATE" means the time and Banking Day on which the
conditions set forth in Section 9.1 are satisfied or waived. The
Managing Agent shall notify Borrower and the Lenders of the date that is
the Closing Date.
"CO-AGENTS" means Bank of Scotland and Societe Generale. The
Co-Agents shall have no rights, duties or responsibilities under the Loan
Documents beyond those of a Lender.
"CODE" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"COLLATERAL" means all of the collateral covered by the Collateral
Documents.
"COLLATERAL ASSIGNMENT" means the collateral assignment of the
Architect Contracts, the Construction Contracts and the Construction
Plans to be executed and delivered by Borrower in the form of EXHIBIT B,
either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"COLLATERAL DOCUMENTS" means, collectively, the Security Agreement,
the Collateral Assignment, the Pledge Agreement, the Deed of Trust and
any other security agreement, pledge agreement, deed of trust, mortgage
or other collateral security agreement hereafter executed and delivered
by Borrower, any of its Subsidiaries or Parent to secure the Obligations.
"COMMITMENT" means, subject to Sections 2.4 and 2.5,
$110,000,000.00. As of the Closing Date, the respective Pro Rata
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Shares of the Lenders with respect to the Commitment are set forth in
SCHEDULE 1.1.
"COMMITMENT ASSIGNMENT AND ACCEPTANCE" means a commitment assignment
and acceptance substantially in the form of EXHIBIT C.
"COMPLETION DATE" means the date upon which the Project is open for
business to the general public with (a) at least 95% of the hotel rooms
provided for in the Construction Plans ready for occupancy, (b) at least
95% of the square footage of casino space provided for in the
Construction Plans ready for gaming and (c) substantially all other
amenities of the Project substantially complete.
"COMPLETION GUARANTY" means the completion guaranty to be executed
and delivered by Parent in the form of EXHIBIT D, either as originally
executed or as it may from time to time be supplemented, modified,
amended, extended or supplanted.
"COMPLIANCE CERTIFICATE" means a certificate in the form of EXHIBIT
E, properly completed and signed by a Senior Officer of Borrower.
"CONSTRUCTION BUDGET" means the itemized schedule delivered by
Borrower to the Managing Agent on or before the Closing Date setting
forth on a line item basis, to the reasonable satisfaction of the
Managing Agent and the Lenders, all of the anticipated costs (INCLUDING
financing expenses and Pre-Opening Expenses) of construction of the
Project and the acquisition of the Leased Equipment.
"CONSTRUCTION CONTRACTS" means that certain Building Contract dated
November 1, 1996 between Borrower and the Contractor and any other
contract between the Contractor and Borrower relating to the construction
of the Project (subject to ARTICLE 7), together with all amendments
thereto.
"CONSTRUCTION PERIOD" means the period commencing on the Closing
Date and ending on the Completion Date.
"CONSTRUCTION PLANS" means all drawings, plans and specifications
relating to the Project prepared by or for Parent or Borrower, as the
same may be amended or supplemented from time to time, and, if required,
submitted to and approved by the Clark County Building Department, all of
which plans and specifications describe and set forth the plans and
specifications for the construction of the Project and the labor and
materials necessary for the construction thereof.
"CONSTRUCTION TIMETABLE" means the detailed timetable for the
construction of the Project in accordance with the Construction Plans and
Construction Budget.
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"CONTRACTOR" means Tiberti Construction Company, and/or any other
general contractor selected by Borrower and approved by the Managing
Agent (which approval shall not be unreasonably withheld).
"CONTRACTOR'S CERTIFICATE AND CONSENT" means a written certificate
and consent executed by the Contractor substantially in the form of
EXHIBIT F.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of
any outstanding security issued by that Person or of any material
agreement, instrument or undertaking to which that Person is a party or
by which it or any of its Property is bound.
"CSG" means Bank of America Construction Services Group.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States
of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws
from time to time in effect affecting the rights of creditors generally.
"DEED OF TRUST" means the deed of trust to be executed and delivered
by Borrower covering the Project Property in the form of EXHIBIT G,
either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"DEFAULT" means any event that, with the giving of any applicable
notice or passage of time specified in Section 10.1, or both, would be an
Event of Default.
"DEFAULT RATE" means the interest rate prescribed in Section 3.10.
"DESIGNATED DEPOSIT ACCOUNT" means a deposit account to be
maintained by Borrower with Bank of America National Trust and Savings
Association or one of its Affiliates, as from time to time designated by
Borrower by written notification to the Managing Agent.
"DESIGNATED EURODOLLAR MARKET" means, with respect to any Eurodollar
Rate Loan, (a) the London Eurodollar Market, (b) if prime banks in the
London Eurodollar Market are at the relevant time not accepting deposits
of Dollars or if the Managing Agent determines in good faith that the
London Eurodollar Market does not represent at the relevant time the
effective pricing to the Lenders for deposits of Dollars in the London
Eurodollar Market, the Cayman Islands Eurodollar Market or (c) if prime
banks in both the London and Cayman Islands Eurodollar Markets are at the
relevant time not accepting deposits of Dollars or if the Managing Agent
determines in good faith that neither the London nor the Cayman Islands
Eurodollar Market represents at the relevant time the effective pricing
to the Lenders for deposits of Dollars in such Euro
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dollar Market, such other Eurodollar Market as may from time to time be
selected by the Managing Agent with the approval of Borrower and the
Requisite Lenders.
"DISPOSITION" means the voluntary sale, transfer or other
disposition of any asset of Borrower or any of its Subsidiaries OTHER
THAN (a) Cash, Cash Equivalents, inventory or other assets sold, leased
or otherwise disposed of in the ordinary course of business of Borrower
or any of its Subsidiaries and (b) equipment sold or otherwise disposed
of where substantially similar equipment in replacement thereof has
theretofore been acquired, or thereafter within 90 days is acquired, by
Borrower or any of its Subsidiaries, or where Borrower or the Subsidiary
determine in good faith that the failure to replace such equipment will
not be detrimental to the business of Borrower or any of its
Subsidiaries.
"DISQUALIFIED STOCK" means any capital stock, warrants, options or
other rights to acquire capital stock (but excluding any debt security
which is convertible, or exchangeable, for capital stock), which, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is one year
following the Maturity Date; PROVIDED that the aforementioned interests
shall not be Disqualified Stock if they are redeemable prior to the date
that is one year following the Maturity Date only if the board of
directors of Parent determines in its judgment that as a result of a
holder or beneficial owner owning such interests (i) Borrower has lost or
may lose any license or franchise from any Gaming Board held by Borrower
or any Subsidiary of Borrower necessary to conduct any portion of the
business of Borrower or (ii) any Gaming Board has taken or may take
action to materially restrict or impair the operations of Borrower, which
license, franchise or action is conditioned upon some or all of the
holders or beneficial owners of such interests being licensed or found
qualified or suitable to own such interests.
"DISTRIBUTION" means, with respect to any shares of capital stock or
any warrant or option to purchase an equity security or other equity
security issued by a Person, (a) the retirement, redemption, purchase or
other acquisition for Cash or for Property by such Person of any such
security, (b) the declaration or (without duplication) payment by such
Person of any dividend in Cash or in Property on or with respect to any
such security, (c) any Investment by such Person in the holder of 5% or
more of any such security if a purpose of such Investment is to avoid
characterization of the transaction as a Distribution and (d) any other
payment in Cash or Property by such Person constituting a distribution
under applicable Laws with respect to such security.
"DOLLARS" or "$" means United States dollars.
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"EBITDA" means, with respect to any fiscal period, the SUM OF
(a) the Net Income of Borrower and its Subsidiaries for that period, PLUS
(b) any non-operating non-recurring loss (INCLUDING any loss resulting
from Pre-Opening Expenses) reflected in such Net Income, MINUS (c) any
non-operating non-recurring gain reflected in such Net Income, PLUS
(d) Interest Expense for that period, PLUS (e) the aggregate amount of
federal and state taxes on or measured by income of Borrower and its
Subsidiaries for that period (whether or not payable during that period)
PLUS (f) depreciation, amortization and all other non-cash expenses
(INCLUDING any non-cash Management Fees) of Borrower and its Subsidiaries
for that period, in each case as determined in accordance with Generally
Accepted Accounting Principles.
"EFFECTED CURE" means the receipt by Borrower of a Cash Equity
Contribution or Supplemental Loan (or any combination of both) in an
amount (a) in the case of a failure to comply with Section 6.11, which,
when included in the calculation of the denominator of the Senior Funded
Debt Ratio, would result in compliance with such Section, (b) in the case
of a failure to comply with Section 6.12, which, when included in the
calculation of the numerator of the Fixed Charge Coverage Ratio, would
result in compliance with such Section and (c) in the case of a failure
to comply with Section 6.13, which, when included in the calculation of
Effective Net Worth, would result in compliance with such Section. An
Effected Cure received by Borrower not later than the date that is 45
days after the end of the Fiscal Quarter as of which such failure to
comply existed shall be deemed to have been effected as of the end of
such Fiscal Quarter.
"EFFECTIVE NET WORTH" means, as of any date of determination, the
SUM OF (a) the Stockholders' Equity of Borrower on that date, PLUS
(b) the amount (not in excess of $7,000,000) of Pre-Opening Expenses
expended by Borrower through that date PLUS (c) the outstanding principal
amount of all outstanding Supplemental Loans on that date.
"ELIGIBLE ASSIGNEE" means (a) another Lender, (b) with respect to
any Lender, any Affiliate of that Lender, (c) any commercial bank having
a combined capital and surplus of $100,000,000 or more, (d) any
(i) savings bank, savings and loan association or similar financial
institution or (ii) insurance company engaged in the business of writing
insurance which, in either case (A) has a net worth of $200,000,000 or
more, (B) is engaged in the business of lending money and extending
credit under credit facilities substantially similar to those extended
under this Agreement and (C) is operationally and procedurally able to
meet the obligations of a Lender hereunder to the same degree as a
commercial bank and (e) any other financial institution (INCLUDING a
mutual fund or other fund) having total assets of $250,000,000 or more
which meets the requirements set forth in subclauses (B) and (C) of
clause (d) above; PROVIDED that (I) each Eligible Assignee must either
(a) be organized under the Laws of the United States of America, any
State thereof or the District of Columbia or (b) be organized under the
Laws of the
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Cayman Islands or any country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of such
a country, and (i) act hereunder through a branch, agency or funding
office located in the United States of America and (ii) be exempt from
withholding of tax on interest and deliver the documents related thereto
pursuant to Section 12.21 and (II) to the extent required under
applicable Gaming Laws, each Eligible Assignee must be registered with,
approved by, or not disapproved by (whichever may be required under
applicable Gaming Laws), all applicable Gaming Boards.
"EQUIPMENT LEASE" means the equipment lease dated as of the Closing
Date between the Equipment Lessors and Parent (as lessee and as sublessor
under the Equipment Sublease) covering the Leased Equipment.
"EQUIPMENT SUBLEASE" means the equipment sublease dated as of the
Closing Date between Parent and Borrower covering the Leased Equipment.
"EQUIPMENT LESSORS" means, collectively, the Lessor under the
Equipment Lease and the Holders under the related Participation
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and any regulations issued pursuant thereto, as amended or replaced and
as in effect from time to time.
"ERISA AFFILIATE" means each Person (whether or not incorporated)
which is required to be aggregated with Borrower pursuant to Section 414
of the Code.
"EURODOLLAR BANKING DAY" means any Banking Day on which dealings in
Dollar deposits are conducted by and among banks in the Designated
Eurodollar Market.
"EURODOLLAR LENDING OFFICE" means, as to each Lender, its office or
branch so designated by written notice to Borrower and the Managing Agent
as its Eurodollar Lending Office. If no Eurodollar Lending Office is
designated by a Lender, its Eurodollar Lending Office shall be its office
at its address for purposes of notices hereunder.
"EURODOLLAR MARKET" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"EURODOLLAR OBLIGATIONS" means eurocurrency liabilities, as defined
in Regulation D or any comparable regulation of any Governmental Agency
having jurisdiction over any Lender.
"EURODOLLAR PERIOD" means, as to each Eurodollar Rate Loan, the
three (3) month period commencing on the related Eurodollar Period
Commencement Date, PROVIDED that:
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(a) On and after July 1, 2000, Borrower may by written notice
to the Managing Agent, delivered at least three (3) Eurodollar
Banking Days prior to the end of an expiring Eurodollar Period,
designate Eurodollar Periods of one (1) or two (2) months for all or
a portion of any Eurodollar Rate Loan expiring on or after that
date;
(b) Borrower may at any time after the Permitted Refi Date
deliver to the Managing Agent written notice of its good faith
intention to refinance the Indebtedness outstanding under this
Agreement within the period ending on the last day of the Eurodollar
Period that is then approximately three months from such date and,
on and after such date and for so long as Borrower continues to hold
such good faith intention, Borrower may by written notice to the
Managing Agent designate Eurodollar Periods of one (1) or two (2)
months for all or any part of any Eurodollar Rate Loan expiring
during such period;
(c) Any Eurodollar Period that would otherwise end on a day
that is not a Eurodollar Banking Day shall be extended to the next
succeeding Eurodollar Banking Day unless such Eurodollar Banking Day
falls in another calendar month, in which case such Eurodollar
Period shall end on the next preceding Eurodollar Banking Day; and
(d) No Eurodollar Period shall extend beyond the Maturity
Date.
"EURODOLLAR PERIOD COMMENCEMENT DATE" means (a) in the case of a
Eurodollar Rate Loan into which an Alternate Base Rate Loan is converted
pursuant to Section 3.1(b), the Eurodollar Banking Day nearest to the
first day of the calendar month following the calendar month in which
such Alternate Base Rate Loan was made (or, if there is no such nearest
Eurodollar Banking Day, then the last Eurodollar Banking Day in the
calendar month in which such Alternate Base Rate Loan was made);
PROVIDED, however, that (i) if such Eurodollar Banking Day is not at
least three (3) Eurodollar Banking Days after the date such Alternate
Base Rate Loan was made, then the Eurodollar Period Commencement Date
shall be the first Eurodollar Banking Day that is at least three (3)
Eurodollar Banking Days after the date such Alternate Base Rate Loan was
made and (ii) in any event, if such Eurodollar Banking Day does not
coincide with the last day of the Eurodollar Period for another
Eurodollar Rate Loan (if any) expiring on or about the first day of such
calendar month, then the Eurodollar Commencement Date shall be the last
day of the Eurodollar Period for such expiring other Eurodollar Rate Loan
and (b) in the case of a Eurodollar Rate Loan into which an expiring
Eurodollar Rate Loan is converted pursuant to Section 3.1(c), the last
day of the Eurodollar Period for that expiring Eurodollar Rate Loan.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate Loan,
the interest rate per annum (rounded upward, if necessary, to the next
1/100 of 1%) at which deposits in Dollars are offered by
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Bank of America, N.T. & S.A., to prime banks in the Designated Eurodollar
Market at or about 11:00 a.m. local time in the Designated Eurodollar
Market, two (2) Eurodollar Banking Days before the first day of the
applicable Eurodollar Period in an aggregate amount approximately equal
to the amount of the Advance made by Bank of America, N.T.&S.A. with
respect to such Eurodollar Rate Loan and for a period of time comparable
to the number of days in the applicable Eurodollar Period.
"EURODOLLAR RATE ADVANCE" means, with respect to any Lender, the
portion of a Eurodollar Rate Loan that is equal to such Lender's Pro Rata
Share of such Eurodollar Rate Loan.
"EURODOLLAR RATE LOAN" means a Loan made hereunder that is a
Eurodollar Rate Loan in accordance with ARTICLE 2.
"EVENT OF DEFAULT" shall have the meaning provided in Section 10.1.
"EXCESS CASH FLOW" means, as of the last day of any Fiscal Year
ending after the Completion Date, Adjusted Annualized EBITDA for that
Fiscal Year MINUS the SUM OF (a) Cash Interest Expense for that Fiscal
Year, PLUS (b) Cash Taxes for that Fiscal Year, PLUS (c) the aggregate of
(i) all principal payments on the Notes during that Fiscal Year required
by Section 3.1(e)(ii) and (ii) all voluntary principal prepayments on the
Notes to the extent that such prepayment reduced or eliminated the amount
of any subsequent principal payment on the Notes which would otherwise be
required by Section 3.1(e)(ii) during that Fiscal Year, PLUS (d) the
aggregate of any other scheduled payments or mandatory prepayments of
Senior Funded Debt of Borrower during that Fiscal Year PLUS (e) the
aggregate of all Maintenance Capital Expenditures made by Borrower during
that Fiscal Year and permitted by Section 6.14.
"FEDERAL FUNDS RATE" means, as of any date of determination, the
rate set forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such date opposite the
caption "Federal Funds (Effective)". If for any relevant date such rate
is not yet published in H.15(519), the rate for such date will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for
such date under the caption "Federal Funds Effective Rate". If on any
relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such
date will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time)
on that date by each of three leading brokers of Federal funds
transactions in New York City selected by the Managing Agent. For
purposes of this Agreement, any change in the Alternate
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Base Rate due to a change in the Federal Funds Rate shall be effective as
of the opening of business on the effective date of such change.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as it may be amended from time to time.
"FISCAL QUARTER" means the fiscal quarter of Borrower consisting of
the three calendar month periods ending on each March 31, June 30,
September 30 and December 31.
"FISCAL YEAR" means the fiscal year of Borrower ending on each
March 31.
"FIXED CHARGE COVERAGE RATIO" means, as of the last day of any
Fiscal Quarter ending after the Completion Date, the RATIO OF (a) the
RESULT OBTAINED by subtracting (i) Adjusted Annualized EBITDA for the
fiscal period consisting of that Fiscal Quarter and the three immediately
preceding Fiscal Quarters MINUS (ii) Cash Taxes for that fiscal period TO
(b) the SUM OF (i) Interest Charges for that fiscal period, PLUS (ii) the
aggregate of (A) all principal payments on the Notes made during that
fiscal period required by Section 3.1(e)(ii) and (B) all voluntary
principal prepayments on the Notes made during such fiscal period to the
extent that such prepayment reduced or eliminated the amount of a
subsequent principal payment on the Notes which would otherwise be
required by Section 3.1(e)(ii) during that fiscal period, PLUS (iii) the
aggregate of any other scheduled payments or mandatory prepayments of
Senior Funded Debt of Borrower during that fiscal period PLUS (iv) all
Maintenance Capital Expenditures during that fiscal period.
"GAMING BOARD" means, collectively, (a) the Nevada Gaming
Commission, (b) the Nevada State Gaming Control Board and (c) any other
Governmental Agency that holds regulatory, licensing or permit authority
over gambling, gaming or casino activities conducted by Borrower and its
Subsidiaries within its jurisdiction.
"GAMING LAWS" means all Laws pursuant to which any Gaming Board
possesses regulatory, licensing or permit authority over gambling, gaming
or casino activities conducted by Borrower and its Subsidiaries within
its jurisdiction.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, as of any date of
determination, accounting principles (a) set forth as generally accepted
in then currently effective Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (b) set forth
as generally accepted in then currently effective Statements of the
Financial Accounting Standards Board or (c) that are then approved by
such other entity as may be approved by a significant segment of the
accounting profession in the United States of America. The term
"CONSISTENTLY APPLIED," as used in connection therewith, means that the
accounting principles applied
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are consistent in all material respects with those applied at prior dates
or for prior periods.
"GOVERNMENT SECURITIES" means readily marketable (a) direct full
faith and credit obligations of the United States of America or
obligations guaranteed by the full faith and credit of the United States
of America and (b) obligations of an agency or instrumentality of, or
corporation owned, controlled or sponsored by, the United States of
America that are generally considered in the securities industry to be
implicit obligations of the United States of America.
"GOVERNMENTAL AGENCY" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body (INCLUDING
any Gaming Board) or (c) any court or administrative tribunal of
competent jurisdiction.
"GUARANTY OBLIGATION" means, as to any Person (without duplication),
any (a) guarantee by that Person of Indebtedness of, or other obligation
performable by, any other Person or (b) assurance given by that Person to
an obligee of any other Person with respect to the performance of an
obligation by, or the financial condition of, such other Person, whether
direct, indirect or contingent, INCLUDING any purchase or repurchase
agreement covering such obligation or any collateral security therefor,
any agreement to provide funds (by means of loans, capital contributions
or otherwise) to such other Person, any agreement to support the solvency
or level of any balance sheet or income or cash flow statement item of
such other Person or any "keep-well" or other arrangement of whatever
nature given for the purpose of assuring or holding harmless such obligee
against loss with respect to any obligation of such other Person;
PROVIDED, HOWEVER, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guaranty Obligation of
Indebtedness shall be deemed to be an amount equal to the stated or
determinable amount of the related Indebtedness (unless the Guaranty
Obligation is limited by its terms to a lesser amount, in which case to
the extent of such amount) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
Person in good faith. The amount of any other Guaranty Obligation shall
be deemed to be zero unless and until the amount thereof has been (or in
accordance with Financial Accounting Standards Board Statement No. 5
should be) quantified and reflected or disclosed in the consolidated
financial statements (or notes thereto) of Borrower and its Subsidiaries.
"HAZARDOUS MATERIALS" means substances defined as "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
or as "hazardous", "toxic" or "pollutant" substances or as "solid waste"
pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act,
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42 U.S.C. Section 6901, et seq., or as "friable asbestos" pursuant to the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq. or any other
applicable Hazardous Materials Law, in each case as such Laws are amended
from time to time.
"HAZARDOUS MATERIALS LAWS" means all Laws governing the treatment,
transportation or disposal of Hazardous Materials applicable to any of
the Real Property.
"INDEBTEDNESS" means, as to any Person (without duplication),
(a) indebtedness of such Person for borrowed money or for the deferred
purchase price of Property (excluding trade and other accounts payable in
the ordinary course of business in accordance with ordinary trade terms),
INCLUDING any Guaranty Obligation for any such indebtedness,
(b) indebtedness of such Person of the nature described in clause (a)
that is non-recourse to the credit of such Person but is secured by
assets of such Person, to the extent of the fair market value of such
assets as determined in good faith by such Person, (c) Capital Lease
Obligations of such Person, (d) indebtedness of such Person arising under
bankers' acceptance facilities or under facilities for the discount of
accounts receivable of such Person, (e) any direct or contingent
obligations of such Person under letters of credit issued for the account
of such Person and (f) any net obligations of such Person under Swap
Agreements; PROVIDED that in no event shall the obligations of a Person
under an operating lease (as such term is defined under Generally
Accepted Accounting Principles) be deemed Indebtedness of that Person.
Borrower and the Lenders acknowledge that the Equipment Sublease is an
operating lease and not Indebtedness.
"INITIAL AMORTIZATION DATE" means the last day of the Eurodollar
Period ending nearest to March 31, 1998.
"INTANGIBLE ASSETS" means assets that are considered intangible
assets under Generally Accepted Accounting Principles, INCLUDING customer
lists, goodwill, copyrights, trade names, trademarks and patents.
"INTERCREDITOR AGREEMENT" means an intercreditor agreement between
the Managing Agent (on behalf of the Lenders) and the Equipment Lessors
in the form of EXHIBIT H.
"INTEREST CHARGES" means, as of the last day of any fiscal period,
the SUM OF (a) Cash Interest Expense for that fiscal period, PLUS (b) all
interest currently payable in Cash incurred during that fiscal period
which is capitalized under Generally Accepted Accounting Principles.
"INTEREST DIFFERENTIAL" means, with respect to any prepayment of a
Eurodollar Rate Loan on a day other than the last day of the applicable
Interest Period (a) the Eurodollar Rate payable with respect to the
Eurodollar Rate Loan MINUS (b) the Eurodollar Rate on, or as near as
practicable to, the date of the prepayment for a
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Eurodollar Rate Loan with an Interest Period commencing on such date and
ending on the last day of the Interest Period of the Eurodollar Rate Loan
so prepaid.
"INTEREST EXPENSE" means, as of the last day of any fiscal period,
the SUM OF (a) all interest, fees, charges and related expenses paid or
payable (without duplication) for that fiscal period by Borrower and its
Subsidiaries to a lender in connection with borrowed money (INCLUDING any
obligations for fees, charges and related expenses payable to the issuer
of any letter of credit) or the deferred purchase price of assets that
are considered "interest expense" under Generally Accepted Accounting
Principles, PLUS (b) the portion of rent paid or payable (without
duplication) for that fiscal period by Borrower and its Subsidiaries
under Capital Lease Obligations that should be treated as interest in
accordance with Financial Accounting Standards Board Statement No. 13.
"INTEREST PERIOD" means, with respect to any Eurodollar Rate Loan,
the related Eurodollar Period.
"INVESTMENT" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means
of a loan, advance creating a debt, capital contribution, guaranty or
other debt or equity participation or interest in any other Person,
INCLUDING any partnership and joint venture interests of such Person.
The amount of any Investment shall be the amount actually invested (MINUS
any return of capital with respect to such Investment which has actually
been received in Cash or Cash Equivalents or has been converted into Cash
or Cash Equivalents), without adjustment for subsequent increases or
decreases in the value of such Investment. An Investment in a Person
consisting of the guaranty of an obligation of such Person shall not be
deemed outstanding following the termination or expiration of such
guaranty. Swap Agreements shall not be deemed Investments.
"LANDLORD CONSENT AND AGREEMENT" means a Landlord consent and
agreement executed by the lessors under the Realty Lease substantially in
the form of EXHIBIT I.
"LAWS" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"LEASED EQUIPMENT" means such items of equipment located on or
included within the Project as are designated by Borrower and acceptable
to the Equipment Lessors for inclusion under the Equipment Lease;
PROVIDED that the aggregate cost thereof to the Equipment Lessors does
not exceed $40,000,000.
"LENDER" is defined in the preamble to this Agreement.
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"LICENSE REVOCATION" means (a) the revocation, involuntary failure
to renew or suspension of any casino, gambling or gaming license issued
by any Gaming Board covering any casino or gaming facility of Borrower,
(b) the appointment by any Gaming Board of a receiver, supervisor or
similar official with respect to any such gaming facility or (c) the
involuntary closure of any such casino or gaming facility pursuant to an
order of any Gaming Board.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge
of any kind, whether voluntarily incurred or arising by operation of Law
or otherwise, affecting any Property, INCLUDING any currently effective
agreement to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a security
interest, and/or the filing of or currently effective agreement to give
any financing statement (OTHER THAN a precautionary financing statement
with respect to a lease that is not in the nature of a security interest)
under the Uniform Commercial Code or comparable Law of any jurisdiction
with respect to any Property.
"LOAN" means the aggregate of the Advances made at any one time by
the Lenders pursuant to ARTICLE 2.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Collateral Documents, the Completion Guaranty, the Subsidiary Guaranty,
any Secured Swap Agreement and any other agreements of any type or nature
hereafter executed and delivered by Borrower, any of its Subsidiaries or
Parent to the Managing Agent or to any Lender in any way relating to or
in furtherance of this Agreement, in each case either as originally
executed or as the same may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
"MAINTENANCE CAPITAL EXPENDITURE" means a Capital Expenditure for
the maintenance, repair, restoration or refurbishment of the Project
following the Availability Termination Date, EXCLUDING any Capital
Expenditure which materially adds to or further improves the Project.
"MANAGING AGENT" means Bank of America National Trust and Savings
Association, when acting in its capacity as the Managing Agent under any
of the Loan Documents, or any successor Managing Agent.
"MANAGING AGENT'S OFFICE" means the Managing Agent's address as set
forth on the signature pages of this Agreement, or such other address as
the Managing Agent hereafter may designate by written notice to Borrower
and the Lenders.
"MANAGEMENT FEE" means (a) a fee paid or accrued to any Person for
management, auditing or other administrative services provided to
Borrower, however denominated, and (b) reimbursement to any Person
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for any expenditure made by that Person for the benefit of Borrower which
expenditure was not solely and directly for the benefit of Borrower.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G or U.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events
which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any Loan
Document (other than as a result of any action or inaction of the
Managing Agent or any Lender), (b) is or could reasonably be expected to
be material and adverse to the business or condition (financial or
otherwise) of Borrower and its Subsidiaries, taken as a whole or
(c) materially impairs or could reasonably be expected to materially
impair the ability of Borrower to perform the Obligations.
"MATURITY DATE" means September 30, 2000.
"MULTIEMPLOYER PLAN" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA to which Borrower or any of its
ERISA Affiliates contribute or are obligated to contribute.
"NEGATIVE PLEDGE" means a Contractual Obligation that contains a
covenant binding on Borrower or any of its Subsidiaries that prohibits
Liens on any of its or their Property, OTHER THAN (a) any such covenant
contained in a Contractual Obligation granting a Lien permitted under
Section 6.8 which affects only the Property that is the subject of such
permitted Lien and (b) any such covenant that does not apply to Liens
securing the Obligations.
"NET CASH PROCEEDS" means, with respect to a Disposition, (a) the
Cash proceeds of such Disposition received by Borrower net of (i) the
expenses incurred by Borrower in connection therewith, (ii) the amount of
any Indebtedness secured by a Lien on the Property which is the subject
thereof which Borrower is required to discharge and (iii) the reasonably
estimated income, capital gains and other taxes payable by Borrower in
connection therewith and (b) all Cash proceeds and collections of Cash
received by Borrower with respect to any promissory note or non-Cash
Property received by Borrower upon such Disposition.
"NET INCOME" means, with respect to any fiscal period, the
consolidated net income of Borrower and its Subsidiaries for that period,
determined in accordance with Generally Accepted Accounting Principles,
consistently applied.
"NOTE" means the promissory note made by Borrower to a Lender
evidencing the Advances under that Lender's Pro Rata Share of the
Commitment, substantially in the form of EXHIBIT J, either as
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originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or supplanted.
"OBLIGATIONS" means, collectively, the Obligations of Borrower and
the Obligations of Parent.
"OBLIGATIONS OF BORROWER" means all present and future obligations
of every kind or nature of Borrower at any time and from time to time
owed to the Managing Agent or the Lenders or any one or more of them,
under any one or more of the Loan Documents, whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, INCLUDING obligations of performance as well as
obligations of payment, and INCLUDING interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or against
Borrower.
"OBLIGATIONS OF PARENT" means all present and future obligations of
every kind or nature of Parent under the Completion Guaranty, whether due
or to become due, matured or unmatured, liquidated or unliquidated, or
contingent or noncontingent, INCLUDING obligations of performance as well
as payment.
"OPINIONS OF COUNSEL" means the favorable written legal opinions of
(a) Milbank, Tweed, Hadley & McCloy, special counsel to Borrower, and
(b) Schreck, Jones, Bernhard, Woloson & Godfrey, special Nevada counsel
to Borrower, substantially in the form of EXHIBITS K-1 and K-2,
respectively, together with copies of all factual certificates and legal
opinions delivered to such counsel in connection with such opinion upon
which such counsel has relied.
"PARENT" means Station Casinos, Inc.
"PARENT BANK CREDIT FACILITY" means the credit facility extended to
certain of the Subsidiaries of Parent pursuant to that certain Amended
and Restated Reducing Revolving Loan Agreement dated as of March 19,
1996, as the same may hereafter be amended, refinanced or replaced.
"PARENT CHANGE OF CONTROL" means (a) any transaction or series of
related transactions in which any Unrelated Person or two or more
Unrelated Persons acting in concert acquire beneficial ownership (within
the meaning of Rule 13d-3(a)(1) under the Securities Exchange Act of
1934, as amended), directly or indirectly, of 40% or more of the
outstanding Common Stock and at such time the Existing Equity Holders
together shall fail to beneficially own, directly or indirectly, at least
the same percentage of Common Stock as is beneficially owned by such
Unrelated Person, (b) Parent consolidates with or merges into another
Person or conveys, transfers or leases its properties and assets
substantially as an entirety to any Person or any Person consolidates
with or merges into Parent, in either event pursuant to a transaction in
which the outstanding Common Stock is changed into or exchanged for cash,
securities or other property, with the effect that any Unrelated Person
(OTHER THAN the Existing
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Equity Holders) becomes the beneficial owner, directly or indirectly, of
40% or more of Common Stock and at such times the Existing Equity Holders
together shall fail to beneficially own, directly or indirectly, at least
the same percentage of Common Stock as is beneficially owned by such
Unrelated person or (c) during any period of 24 consecutive months,
individuals who at the beginning of such period constituted the board of
directors of Parent (together with any new or replacement directors whose
election by the board of directors, or whose nomination for election, was
approved by a vote of at least a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for reelection was previously so approved) cease for
any reason to constitute a majority of the directors then in office. For
purposes of the foregoing, the term "UNRELATED PERSON" means any Person
OTHER THAN (i) a Subsidiary of Parent, (ii) an employee stock ownership
plan or other employee benefit plan covering the employees of Parent and
its Subsidiaries or (iii) any of the Existing Equity Holders, the term
"EXISTING EQUITY HOLDERS" means Frank J. Fertitta III, Blake L. Sartini,
Delise F. Sartini, Lorenzo J. Fertitta, Glenn C. Christenson, Joseph F.
Canfora and Scott M. Nielson and their executors, administrators or the
legal representatives of their estates, their heirs, distributees and
beneficiaries, any trust as to which any of the foregoing is a settlor or
co-settlor and any corporation, partnership or other entity which is an
Affiliate of any of the foregoing, and any lineal descendants of such
Persons, but only to the extent that the beneficial ownership of Common
Stock held by such lineal descendants was directly received (by gift, trust
or sale) from any such Person and the term "COMMON STOCK" means the voting
common stock of Parent.
"PARTY" means any Person other than the Managing Agent and the
Lenders, which now or hereafter is a party to any of the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereof established under ERISA.
"PENSION PLAN" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), OTHER THAN a Multiemployer Plan,
which is subject to Title IV of ERISA and is maintained by Borrower or any
of its ERISA Affiliates or to which Borrower or any of its ERISA Affiliates
contributes or has an obligation to contribute.
"PERMITTED ENCUMBRANCES" means:
(a) inchoate Liens incident to construction on or maintenance of
Property; or Liens incident to construction on or maintenance of
Property now or hereafter filed of record for which adequate reserves
have been set aside (or deposits made pursuant to applicable Law) and
which are being contested in good faith by appropriate proceedings and
have not proceeded to judgment, PROVIDED that, by reason of nonpayment
of the
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obligations secured by such Liens, no such Property is subject to a
material impending risk of loss or forfeiture;
(b) Liens for taxes and assessments on Property which are not
yet past due; or Liens for taxes and assessments on Property for which
adequate reserves have been set aside and are being contested in good
faith by appropriate proceedings and have not proceeded to judgment,
PROVIDED that, by reason of nonpayment of the obligations secured by
such Liens, no such Property is subject to a material impending risk
of loss or forfeiture;
(c) minor defects and irregularities in title to any Property
which in the aggregate do not materially impair the fair market value
or use of the Property for the purposes for which it is or may
reasonably be expected to be held;
(d) easements, exceptions, reservations, or other agreements for
the purpose of pipelines, conduits, cables, wire communication lines,
power lines and substations, streets, trails, walkways, drainage,
irrigation, water, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, coal, or other minerals, and other like purposes
affecting Property which in the aggregate do not materially burden or
impair the fair market value or use of such Property for the purposes
for which it is or may reasonably be expected to be held;
(e) easements, exceptions, reservations, or other agreements for
the purpose of facilitating the joint or common use of Property in or
adjacent to a shopping center or similar project affecting Property
which in the aggregate do not materially burden or impair the fair
market value or use of such Property for the purposes for which it is
or may reasonably be expected to be held;
(f) rights reserved to or vested in any Governmental Agency to
control or regulate, or obligations or duties to any Governmental
Agency with respect to, the use of any Property;
(g) rights reserved to or vested in any Governmental Agency to
control or regulate, or obligations or duties to any Governmental
Agency with respect to, any right, power, franchise, grant, license,
or permit;
(h) present or future zoning laws and ordinances or other laws
and ordinances restricting the occupancy, use, or enjoyment of
Property;
(i) statutory Liens, other than those described in clauses (a)
or (b) above, arising in the ordinary course of business with respect
to obligations which are not delinquent or are being contested in good
faith, PROVIDED that, if
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delinquent, adequate reserves have been set aside with respect thereto
and, by reason of nonpayment, no Property is subject to a material
impending risk of loss or forfeiture;
(j) covenants, conditions, and restrictions affecting the use of
Property which in the aggregate do not materially impair the fair
market value or use of the Property for the purposes for which it is
or may reasonably be expected to be held;
(k) rights of tenants under leases and rental agreements
covering Property entered into in the ordinary course of business of
the Person owning such Property; PROVIDED that if such Property is
covered by the Deed of Trust, such lease or rental agreement is junior
and subordinate to the Deed of Trust by operation of law or contract;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation,
including Liens of judgments thereunder which are not currently
dischargeable;
(m) Liens consisting of pledges or deposits of Property to
secure performance in connection with operating leases made in the
ordinary course of business, PROVIDED the aggregate value of all such
pledges and deposits in connection with any such lease does not at any
time exceed 20% of the annual fixed rentals payable under such lease;
(n) Liens consisting of deposits of Property to secure bids made
with respect to, or performance of, contracts (OTHER THAN contracts
creating or evidencing an extension of credit to the depositor);
(o) Liens consisting of any right of offset, or statutory
bankers' lien, on bank deposit accounts maintained in the ordinary
course of business so long as such bank deposit accounts are not
established or maintained for the purpose of providing such right of
offset or bankers' lien;
(p) Liens consisting of deposits of Property to secure statutory
obligations of Borrower or a Subsidiary of Borrower;
(q) Liens consisting of deposits of Property to secure (or in
lieu of) surety, appeal or customs bonds;
(r) Liens created by or resulting from any litigation or legal
proceeding in the ordinary course of its business which is currently
being contested in good faith by appropriate proceedings, PROVIDED
that such Lien is junior to the Lien of the Collateral Documents,
adequate reserves have been set aside and no material Property is
subject to a material impending risk of loss or forfeiture; and
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(s) other non-consensual Liens incurred in the ordinary course
of business but not in connection with the incurrence of any
Indebtedness, which do not in the aggregate, when taken together with
all other Liens, materially impair the fair market value or use of the
Property for the purposes for which it is or may reasonably be
expected to be held.
"PERMITTED REFI DATE" means the date that is fifteen (15) months after
the Closing Date.
"PERMITTED RIGHT OF OTHERS" means a Right of Others consisting of
(a) an interest (other than a legal or equitable co-ownership interest, an
option or right to acquire a legal or equitable co-ownership interest and
any interest of a ground lessor under a ground lease), that does not
materially impair the fair market value or use of Property for the purposes
for which it is or may reasonably be expected to be held, (b) an option or
right to acquire a Lien that would be a Permitted Encumbrance, (c) the
subordination of a lease or sublease in favor of a financing entity and
(d) a license, or similar right, of or to Intangible Assets granted in the
ordinary course of business.
"PERSON" means any individual or entity, INCLUDING a trustee,
corporation, limited liability company, general partnership, limited
partnership, limited liability partnership, joint stock company, trust,
estate, unincorporated organization, business association, firm, joint
venture, Governmental Agency, or other entity.
"PLEDGE AGREEMENT" means the pledge agreement to be executed and
delivered by Parent in the form of EXHIBIT L, either as originally executed
or as it may from time to time be supplemented, modified, amended, extended
or supplanted.
"PLEDGED COLLATERAL" means the certificates evidencing 100% of the
capital stock of Borrower.
"PRE-OPENING EXPENSES" means, with respect to any fiscal period, the
amount of expenses (OTHER THAN Interest Expense) classified as "pre-opening
expenses" on the applicable financial statements of Borrower for such
period, prepared in accordance with Generally Accepted Accounting
Principles consistently applied.
"PROJECT" means the hotel/casino known as the "Sunset Station Hotel
and Casino" to be constructed on the Project Property, consisting generally
of an approximately 500 room hotel and an approximately 80,000 square foot
casino.
"PROJECT PROPERTY" means the real property located in Henderson,
Nevada on which the Project is to be constructed, comprised of
approximately (i) 51.4 acres of fee simple real property owned by Borrower
and (ii) 47.6 acres of an adjacent leasehold estate in real property leased
by Borrower under the Realty Lease, and all
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existing and future improvements thereto and all related appurtenances.
"PROJECTIONS" means the financial projections contained in the
Confidential Memorandum distributed by or on behalf of Borrower to the
Lenders on or about July 3, 1996.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PRO RATA SHARE" means, with respect to each Lender, the percentage of
the Commitment set forth opposite the name of that Lender on SCHEDULE 1.1,
as such percentage may be increased or decreased pursuant to a Commitment
Assignment and Acceptance executed in accordance with Section 12.8.
"QUALIFIED CAPITAL SOURCE" means (a) Cash Equity Contributions that
are designated to fund a specific Capital Expenditure and that are not
included in an Effected Cure and (b) Net Cash Proceeds from Dispositions
permitted by Section 6.2(A) up to $6,000,000 in the aggregate.
"QUARTERLY PAYMENT DATE" means each September 30, December 31,
March 31 and June 30.
"REAL PROPERTY" means, as of any date of determination, all real
Property then or theretofore owned, leased or occupied by Borrower or any
of its Subsidiaries.
"REALTY LEASE" means that certain Ground Lease dated as of June 17,
1994 between Navillus Investment Co. and certain associated Persons, as
lessors, and Parent, as lessee, covering the portion of the Project
Property described in clause (b) of the definition of such term, as
assigned to and assumed by Borrower pursuant to that certain Assignment and
Assumption dated as of July 30, 1996.
"REFERENCE RATE" means the rate of interest publicly announced from
time to time by Bank of America, N.T. & S.A. in San Francisco, California
as its "reference rate." It is a rate set by Bank of America, N.T. & S.A.
based upon various factors including its costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate. Any change in the Reference Rate announced by Bank of America,
N.T. & S.A. shall take effect at the opening of business on the day
specified in the public announcement of such change.
"REGULATION D" means Regulation D, as at any time amended, of the
Board of Governors of the Federal Reserve System, or any other regulation
in substance substituted therefor.
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"REGULATIONS G, T, U AND X" means Regulations G, T, U and X, as at any
time amended, of the Board of Governors of the Federal Reserve System, or
any other regulations in substance substituted therefor.
"REQUEST FOR LOAN" means a written request for a Loan substantially in
the form of EXHIBIT M, signed by a Responsible Official of Borrower, on
behalf of Borrower, and properly completed to provide all information
required to be included therein.
"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"REQUISITE LENDERS" means (a) as of any date of determination if the
Commitment is then in effect, Lenders having in the aggregate 66-2/3% or
more of the Commitment then in effect and (b) as of any date of
determination if the Commitment has then been terminated and there is then
any Indebtedness evidenced by the Notes, Lenders holding Notes evidencing
in the aggregate 66-2/3% or more of the aggregate Indebtedness then
evidenced by the Notes.
"RESPONSIBLE OFFICIAL" means (a) when used with reference to a Person
other than an individual, any officer or manager of such Person, general
partner of such Person, officer of a corporate or limited liability company
general partner of such Person, officer of a corporate or limited liability
company general partner of a partnership that is a general partner of such
Person, or any other responsible official thereof duly acting on behalf
thereof, and (b) when used with reference to a Person who is an individual,
such Person. The Lenders shall be entitled to conclusively rely upon any
document or certificate that is signed or executed by a Responsible
Official of Borrower or any of its Subsidiaries (or, in the case of the
Completion Guaranty, of Parent) as having been authorized by all necessary
corporate, limited liability company, partnership and/or other action on
the part of Borrower or such Subsidiary (or, in the case of the Completion
Guaranty, of Parent); provided that such Responsible Official has been
designated as a Responsible Official for purposes of this Agreement (or, in
the case of Parent, the Completion Guaranty) in a written notice signed by
a Senior Officer and delivered to the Managing Agent, which notice has not
been cancelled or superseded.
"RIGHT OF OTHERS" means, as to any Property in which a Person has an
interest, any legal or equitable right, title or interest (other than a
Lien) held by any other Person in that Property, and any option or right
held by any other Person to acquire any such right, title or interest in
that Property, INCLUDING any option or right to acquire a Lien; PROVIDED,
however, that (a) any covenant restricting the use or disposition of
Property of such Person contained in any Contractual Obligation of such
Person and (b) any
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provision contained in a contract creating a right of payment or
performance in favor of a Person that conditions, limits, restricts,
diminishes, transfers or terminates such right, shall not be deemed to
constitute a Right of Others.
"SECURED SWAP AGREEMENT" means a Swap Agreement between Borrower and a
Lender (or an Affiliate of a Lender) that is secured by a Lien on the
Collateral that complies with the applicable provisions of Section 11.3.
"SECURITY AGREEMENT" means the security agreement to be executed and
delivered by Borrower and each of its Subsidiaries, in the form of
EXHIBIT N, either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"SENIOR FUNDED DEBT" means, as of any date of determination (without
duplication), the SUM OF (a) all principal Indebtedness of Borrower and its
Subsidiaries for borrowed money (INCLUDING debt securities issued by
Borrower), on that date PLUS (b) the aggregate amount of the principal
portion of all Capital Lease Obligations of Borrower and its Subsidiaries
on that date, EXCLUDING any of the foregoing that is subordinated by its
terms in right of payment to the payment of other Indebtedness of Borrower
and its Subsidiaries.
"SENIOR FUNDED DEBT RATIO" means, as of the last day of each Fiscal
Quarter ending after the Completion Date, the RATIO OF (a) Senior Funded
Debt as of that date TO (b) Adjusted Annualized EBITDA as of that date.
"SENIOR OFFICER" means the (a) chief executive officer, (b) president,
(c) executive vice president, (d) senior vice president, (e) chief
financial officer or (f) treasurer of Borrower.
"SPECIAL EURODOLLAR CIRCUMSTANCE" means the application or adoption
after the Closing Date of any Law or interpretation, or any change therein
or thereof, or any change in the interpretation or administration thereof
by any Governmental Agency, central bank or comparable authority charged
with the interpretation or administration thereof, or compliance by any
Lender or its Eurodollar Lending Office with any request or directive
(whether or not having the force of Law) of any such Governmental Agency,
central bank or comparable authority.
"STOCKHOLDERS' EQUITY" means, as of any date of determination and with
respect to any Person, the consolidated stockholders' equity of the Person
as of that date determined in accordance with Generally Accepted Accounting
Principles; PROVIDED that there shall be excluded from Stockholders' Equity
any amount attributable to Disqualified Stock.
"SUBORDINATED OBLIGATIONS" means (a) any Supplemental Loans, (b) any
obligation of Borrower or any of its Subsidiaries to pay any
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Management Fee to Parent or any Affiliate of Parent, (c) any other
obligation of Borrower or any of its Subsidiaries to Parent (OTHER THAN the
Equipment Sublease) or any Affiliate of Parent and (d) any obligation of
Borrower or any of its Subsidiaries to any other Person that is
subordinated by its terms in right of payment to the Obligations or to all
Indebtedness of Borrower or its Subsidiary.
"SUBSIDIARY" means, as of any date of determination and with respect
to any Person, any corporation, limited liability company or partnership
(whether or not, in either case, characterized as such or as a "joint
venture"), whether now existing or hereafter organized or acquired: (a) in
the case of a corporation or limited liability company, of which a majority
of the securities having ordinary voting power for the election of
directors or other governing body (other than securities having such power
only by reason of the happening of a contingency) are at the time
beneficially owned by such Person and/or one or more Subsidiaries of such
Person, or (b) in the case of a partnership, of which a majority of the
partnership or other ownership interests are at the time beneficially owned
by such Person and/or one or more of its Subsidiaries.
"SUBSIDIARY GUARANTY" means the continuing guaranty of the Obligations
to be executed and delivered by each Subsidiary of Borrower, in the form of
EXHIBIT O, either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"SUPERMAJORITY LENDERS" means (a) as of any date of determination if
the Commitment is then in effect, Lenders having in the aggregate 85% or
more of the Commitment then in effect and (b) as of any date of
determination if the Commitment has then been terminated and there is then
any Indebtedness evidenced by the Notes, Lenders holding Notes evidencing
in the aggregate 85% or more of the aggregate Indebtedness then evidenced
by the Notes.
"SUPPLEMENTAL CREDIT FACILITY" means the $25,000,000 credit facility
extended by Parent to Borrower pursuant to the Supplemental Loan Agreement.
"SUPPLEMENTAL LOANS" means the subordinated loans advanced by Parent
to Borrower pursuant to the Supplemental Credit Facility.
"SUPPLEMENTAL LOAN AGREEMENT" means the Loan Agreement dated as of
September 20, 1996 between Parent and Borrower.
"SWAP AGREEMENT" means a written agreement between Borrower and one or
more financial institutions providing for "swap", "cap", "collar" or other
interest rate protection with respect to any Indebtedness.
"TITLE COMPANY" means Nevada Title Company or such other title
insurance company as is reasonably acceptable to the Managing Agent.
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"TO THE BEST KNOWLEDGE OF" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation
described therein is known by the Person (or, in the case of a Person other
than a natural Person, known by a Responsible Official of that Person)
making the representation, warranty or other statement, or with the
exercise of reasonable due diligence under the circumstances (in accordance
with the standard of what a reasonable Person in similar circumstances
would have done) would have been known by the Person (or, in the case of a
Person other than a natural Person, would have been known by a Responsible
Official of that Person).
"TOTAL INCURRED PROJECT COST" means, as of any date of determination,
the total cost of the Project (INCLUDING the cost of all Property
contributed by Parent, the cost of the Leased Equipment, financing costs
and Pre-Opening Expenses) incurred or accrued as of that date based on
customary methods used by CSG for estimating percentage completion of
construction projects; PROVIDED, however, that so long as there is no Event
of Default (as such term is defined in the Equipment Lease) under the
Equipment Lease, the maximum cost of the Leased Equipment pursuant to the
Equipment Lease shall be assumed to have been incurred as of such date.
"TYPE", when used with respect to any Loan or Advance, means the
designation of whether such Loan or Advance is an Alternate Base Rate Loan
or Advance, or a Eurodollar Rate Loan or Advance.
1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
Generally Accepted Accounting Principles applied on a consistent basis, EXCEPT
as otherwise specifically prescribed herein. In the event that Generally
Accepted Accounting Principles change during the term of this Agreement such
that the covenants contained in Sections 6.11 through 6.13 would then be
calculated in a different manner or with different components, (a) Borrower and
the Lenders agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in Generally Accepted Accounting Principles and (b) until such changes
are so agreed upon Borrower shall be deemed to be in compliance with the
covenants contained in the aforesaid Sections if and to the extent that Borrower
would have been in compliance therewith under Generally Accepted Accounting
Principles as in effect immediately prior to such change, and shall have the
obligation to deliver a reconciliation with respect to each of the materials
described in ARTICLE 8 to the Managing Agent and the Lenders, on the dates
therein specified, reflecting the differences between financial data presented
in a manner which conforms with Generally Accepted Accounting Principles as in
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effect immediately prior to such change and the financial data presented in
accordance with the new Generally Accepted Accounting Principles taking into
account such change.
1.4 ROUNDING. Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.6 REFERENCES TO "BORROWER AND ITS SUBSIDIARIES". Any reference
herein to "Borrower and its Subsidiaries" or the like shall refer solely to
Borrower during such times, if any, as Borrower shall have no Subsidiaries.
1.7 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.
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Article 2
LOANS
2.1 LOANS-GENERAL.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date through
the Availability Termination Date, each Lender shall, pro rata according to
that Lender's Pro Rata Share of the then applicable Commitment, make
Advances to Borrower under the Commitment in such amounts as Borrower may
request that do not result in the aggregate principal amount outstanding
under the Notes exceeding the then applicable Commitment. Borrower may
borrow, but may not repay and reborrow under the Commitment.
(b) Subject to the next sentence, each Loan shall be made
pursuant to a Request for Loan which shall specify the requested (i) date
of such Loan and (ii) amount of such Loan and which shall be received by
the Managing Agent, at the Managing Agent's Office, not later than
9:00 a.m. California time on the date (which must be a Banking Day) of the
requested Loan. Unless the Managing Agent has notified, in its sole and
absolute discretion, Borrower to the contrary, a Loan may be requested by
telephone by a Responsible Official of Borrower, in which case Borrower
shall confirm such request by promptly delivering a Request for Loan in
person or by telecopier conforming to the preceding sentence to the
Managing Agent. Managing Agent shall incur no liability whatsoever
hereunder in acting upon any telephonic request for Loan purportedly made
by a Responsible Official of Borrower, and Borrower hereby agrees to
indemnify the Managing Agent from any loss, cost, expense or liability as a
result of so acting.
(c) Promptly following receipt of a Request for Loan, the
Managing Agent shall notify each Lender by telephone or telecopier (and if
by telephone, promptly confirmed by telecopier) of the date and amount of
the Loan, and that Lender's Pro Rata Share of the Loan. Not later than
11:00 a.m., California time, on the date specified for the Loan (which must
be a Banking Day), each Lender shall make its Pro Rata Share of the Loan in
immediately available funds available to the Managing Agent at the Managing
Agent's Office. Upon satisfaction or waiver of the applicable conditions
set forth in ARTICLE 9, all Advances shall be credited on that date in
immediately available funds to the Designated Deposit Account.
(d) Unless the Requisite Lenders otherwise consent, (i) each
Loan shall be not less than $7,500,000 (EXCEPT when such Loan is for the
unused balance of the Commitment) and (ii) no more than two (2) Loans may
be requested in any calendar month, EXCEPT, in each case, for a Loan made
to satisfy Borrower's obligations under Section 2.4.
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(e) The Advances made by each Lender shall be evidenced by that
Lender's Note.
(f) A Request for Loan shall be irrevocable upon the Managing
Agent's first notification thereof.
2.2 AUTOMATIC REDUCTION OF COMMITMENT. On the Availability
Termination Date, the Commitment shall automatically be reduced to an amount
equal to the aggregate principal Indebtedness evidenced by the Notes.
2.3 VOLUNTARY REDUCTION OF COMMITMENT. Borrower shall have the
right, at any time and from time to time, without penalty or charge, upon at
least three (3) Banking Days' prior written notice by a Responsible Official of
Borrower to the Managing Agent, voluntarily to reduce, permanently and
irrevocably, in aggregate principal amounts in an integral multiple of
$1,000,000 but not less than $5,000,000, or to terminate, all or a portion of
the then undisbursed portion of the Commitment. The Managing Agent shall
promptly notify the Lenders of any reduction or termination of the Commitment
under this Section.
2.4 MANAGING AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE FOR ADVANCES.
Unless the Managing Agent shall have been notified by any Lender no later than
10:00 a.m. on the Banking Day of the proposed funding by the Managing Agent of
any Loan that such Lender does not intend to make available to the Managing
Agent such Lender's portion of the total amount of such Loan, the Managing Agent
may assume that such Lender has made such amount available to the Managing Agent
on the date of the Loan and the Managing Agent may, in reliance upon such
assumption, make available to Borrower a corresponding amount. If the Managing
Agent has made funds available to Borrower based on such assumption and such
corresponding amount is not in fact made available to the Managing Agent by such
Lender, the Managing Agent shall be entitled to recover such corresponding
amount on demand from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Managing Agent's demand therefor, the
Managing Agent promptly shall notify Borrower and Borrower shall pay such
corresponding amount to the Managing Agent. The Managing Agent also shall be
entitled to recover from such Lender interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Managing Agent to Borrower to the date such corresponding amount is
recovered by the Managing Agent, at a rate per annum equal to the daily Federal
Funds Rate. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its share of the Commitment or to prejudice any rights
which the Managing Agent or Borrower may have against any Lender as a result of
any default by such Lender hereunder.
2.5 COLLATERAL AND GUARANTY. The Obligations shall be secured by the
Collateral pursuant to the Collateral Documents, be from time to time guaranteed
by the Subsidiaries of Borrower (if any) pursuant to the Subsidiary Guaranty and
enjoy the benefits of the Completion Guaranty.
2.6 LENDER'S ACKNOWLEDGEMENT. Each Lender hereby acknowledges that
it shall not have in respect of all or any part of the Obligations any
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recourse to the assets or stock of Parent or any Subsidiary of Parent (OTHER
THAN Borrower and its Subsidiaries), EXCEPT such recourse as arises pursuant to
the Completion Guaranty, the Pledge Agreement or the rights of Borrower under
any agreement or instrument included in the Collateral.
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Article 3
PAYMENTS AND FEES
3.1 PRINCIPAL AND INTEREST.
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date thereof until payment in
full is made and shall accrue and be payable at the rates set forth or
provided for herein before and after Default, before and after maturity,
before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law, with interest on overdue interest
at the Default Rate to the fullest extent permitted by applicable Laws.
(b) Each Loan shall be an Alternate Base Rate Loan from the date
when made to the next following Eurodollar Period Commencement Date, at
which time it shall automatically convert into a Eurodollar Rate Loan.
Interest accrued on all Alternate Base Rate Loans on each Quarterly Payment
Date shall be due and payable on that day. EXCEPT as otherwise provided in
Sections 3.1(d) and 3.10, the unpaid principal amount of any Alternate Base
Rate Loan shall bear interest at a fluctuating rate per annum equal to the
Alternate Base Rate PLUS the Alternate Base Rate Margin. Each change in
the interest rate under this Section 3.1(b) due to a change in the
Alternate Base Rate shall take effect simultaneously with the corresponding
change in the Alternate Base Rate. The Managing Agent shall notify the
Lenders in writing of the making of (or conversion into) each Alternate
Base Rate Loan and the Alternate Base Rate and Alternate Base Rate Margin
applicable thereto.
(c) The Eurodollar Rate Loan into which each Alternate Base Rate
Loan is converted pursuant to Section 3.1(b) shall automatically convert at
the end of its Eurodollar Period into another Eurodollar Rate Loan (subject
to any reduction in the amount thereof to reflect payment of an
Amortization Amount or the mandatory prepayment required pursuant to
Section 3.1(f)); PROVIDED that any Eurodollar Rate Loan expiring on or
after July 1, 2000 or after the date upon which Borrower has delivered the
written notice referred to in clause (b) of the definition of Eurodollar
Period for which Borrower has not designated a Eurodollar Period of one (1)
or two (2) months shall automatically convert at the end of its Eurodollar
Period into an Alternate Base Rate Loan; and PROVIDED FURTHER that upon
delivery by Borrower of written notice to the Managing Agent that Borrower
no longer holds the intention referred to in such clause (b), such
Alternate Base Rate Loan shall, at the option of Borrower, be converted
into a Eurodollar Rate Loan or Eurodollar Rate Loans of one, two and/or
three month Eurodollar Periods so as (and on such dates as) to permit the
outstanding Loans to be Eurodollar Rate Loans of such Eurodollar Periods
and commencing on such Eurodollar Period Commencement Dates as would have
existed if the initial conversions as a result of the delivery of the
written notice specified in such clause (b) had never been made. Interest
accrued
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on each Eurodollar Rate Loan shall be due and payable on the last day of
the related Eurodollar Period. EXCEPT as otherwise provided in
Sections 3.1(d) and 3.10, the unpaid principal amount of each Eurodollar
Rate Loan shall bear interest at a rate per annum equal to the Eurodollar
Rate for that Eurodollar Rate Loan PLUS 3 3/4% (375 basis points). The
Managing Agent shall notify the Lenders and Borrower in writing of the
conversion of each Loan into a Eurodollar Rate Loan, the date of such
conversion and the Eurodollar Rate applicable thereto, which notification
shall be delivered two (2) Eurodollar Banking Days prior to the date of
such conversion.
(d) The interest rate payable on all Loans pursuant to
Sections 3.1(b) or 3.1(c) shall be increased by 2% (200 basis points) per
annum as of the last day of any Fiscal Quarter if on such date Borrower was
not in compliance with Sections 6.11, 6.12 or 6.13 and shall continue at
such increased interest rate until the EARLIER OF (i) the date upon which
an Effected Cure is made or deemed made with respect to such Section or
Sections or (ii) the last day of the first following Fiscal Quarter as of
which Borrower is in compliance with all such Sections. Nothing in this
Section 3.1(d) shall imply a waiver of the Event of Default resulting from
any failure to comply with any of such Sections prior to the making of an
Effected Cure and the Lenders expressly reserve their rights to exercise
any of the remedies referred to in Section 10.2 during the existence of
such an Event of Default.
(e) If not sooner paid, the principal Indebtedness evidenced by
the Notes shall be payable as follows:
(i) the amount, if any, by which the outstanding principal Indebtedness
evidenced by the Notes at any time exceeds the then applicable Commitment, shall
be payable immediately;
(ii) each Amortization Amount shall be payable on the related Amortization Date;
and
(iii) the outstanding principal Indebtedness evidenced by the Notes shall in any
event be payable in full on the Maturity Date.
(f) The Notes shall be prepaid on the last day of the Eurodollar
Period ending nearest to July 31, 1998 (and on the last day of the
Eurodollar Period ending nearest to each subsequent July 31) by an amount
equal to the SUM OF (i) 75% of the first $4,000,000 of any Excess Cash Flow
for the Fiscal Year ended March 31, 1998 (or, as applicable, the Fiscal
Year then most recently ended) PLUS (ii) 25% of any Excess Cash Flow for
such Fiscal Year in excess of $4,000,000; PROVIDED that (i) any voluntary
prepayment made pursuant to Section 3.1(g) during the twelve month period
ending on such July 31 shall be credited against the prepayment required
under this Section 3.1(f) and (ii) the amount of any prepayment required
under this Section 3.1(f) shall be rounded to the nearest $100,000. Such
prepayments shall be applied, first, to the principal amount due on the
Maturity Date and thereafter to Amortization Amounts in reverse order of
maturity.
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(g) The Notes may, at any time after the Permitted Refi Date and
from time to time, voluntarily be prepaid in whole or in part without
premium or penalty, EXCEPT that with respect to any voluntary prepayment
under this Section (i) any partial prepayment shall be not less than
$1,750,000, (ii) the Managing Agent shall have received written notice of
any prepayment by 9:00 a.m. California time three (3) Banking Days before
the date of prepayment, which notice shall identify the date and amount of
the prepayment and the Loan(s) being prepaid, (iii) each prepayment of
principal on any Eurodollar Rate Loan shall be accompanied by payment of
interest accrued to the date of payment on the amount of principal paid and
(iv) any payment or prepayment of all or any part of any Eurodollar Rate
Loan on a day other than the last day of the applicable Interest Period
shall be subject to Section 3.9(e). Promptly following receipt of a notice
of prepayment under clause (ii) above, the Managing Agent shall notify each
Lender by telephone or telecopier (and if by telephone, promptly confirmed
by telecopier) of the date and amount thereof.
3.2 ARRANGEMENT FEE. On the Closing Date, Borrower shall pay to the
Arranger an arrangement fee in the amount heretofore agreed upon by letter
agreement between Borrower and the Arranger. Such arrangement fee is for the
services of the Arranger in arranging the credit facilities under this Agreement
and is fully earned when paid. The arrangement fee paid to the Arranger is
solely for its own account and is nonrefundable.
3.3 UPFRONT FEES. On the Closing Date, Borrower shall pay to the
Managing Agent, for the accounts of the Lenders, according to the level of their
respective Pro Rata Share of the Commitment, upfront fees equal to the number of
basis points set forth below opposite the level of the Pro Rata Share of the
Commitment held by such Lender:
Pro Rata Share of
Commitment Basis Points
----------------- ------------
$25,000,000 or greater 150
$15,000,000 to $24,999,999 125
$10,000,000 to $14,999,999 100
Less than $10,000,000 75
Such upfront fees are for the credit facilities committed by each Lender under
this Agreement and are fully earned when paid. The upfront fees paid to each
Lender are solely for its own account and are nonrefundable.
3.4 COMMITMENT FEES. From the Closing Date through the Availability
Termination Date, Borrower shall pay to the Managing Agent, for the accounts of
the Lenders pro rata according to their Pro Rata Share of the Commitment, a
commitment fee equal to 3/8 of 1% (37.5 basis points) per annum TIMES the
average daily amount by which the Commitment exceeds the aggregate principal
amount outstanding under the Notes. The commitment
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fee shall be payable quarterly in arrears on each Quarterly Payment Date and on
the Availability Termination Date.
3.5 PREPAYMENT FEE. If, prior to the Permitted Refi Date, Borrower
makes any prepayment of any Loan (OTHER THAN a mandatory prepayment under
Section 3.1(f), a prepayment resulting from the application of casualty
insurance or eminent domain proceeds pursuant to any of the Collateral Documents
or a prepayment pursuant to Section 6.2(a)(iv)), concurrently with such
prepayment Borrower shall pay to the Managing Agent, for the ratable accounts of
the Lenders pro rata according to their Pro Rata Share of the Commitment, a
prepayment fee equal to 1% (100 basis points) of the amount so prepaid.
3.6 MANAGING AGENT FEES. Borrower shall pay to the Managing Agent an
agency fee in such amounts and at such times as heretofore agreed upon by letter
agreement between Borrower and the Managing Agent. The agency fee is for the
services to be performed by the Managing Agent in acting as Managing Agent and
is fully earned on the date paid. The agency fee paid to the Managing Agent is
solely for its own account and is nonrefundable.
3.7 CO-AGENT FEES. Borrower shall pay to each of the Co-Agents a co-
agency fee in such amount and at such times as heretofore agreed upon by letter
agreement between Borrower, the Managing Agent and each of the Co-Agents. The
co-agency fee is for the services performed by each of the Co-Agents in acting
as a Co-Agent and is fully earned on the date paid. The co-agency fee paid to
each of the Co-Agents is solely for its own account and is non-refundable.
3.8 INCREASED COMMITMENT COSTS. If any Lender shall determine in
good faith that the introduction after the Closing Date of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change therein
or any change in the interpretation or administration thereof by any central
bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its Eurodollar Lending
Office) or any corporation controlling the Lender, with any request, guideline
or directive regarding capital adequacy (whether or not having the force of Law)
of any such central bank or other authority not imposed as a result of such
Lender's or such corporation's failure to comply with any other Laws, 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 in good faith that the
amount of such capital is increased, or the rate of return on capital is
reduced, as a consequence of its obligations under this Agreement, then, within
ten (10) Banking Days after demand of such Lender, Borrower shall pay to such
Lender, from time to time as specified in good faith by such Lender, additional
amounts sufficient to compensate such Lender in light of such circumstances, to
the extent reasonably allocable to such obligations under this Agreement,
PROVIDED that Borrower shall not be obligated to pay any such amount which arose
prior to the date which is ninety (90) days preceding the date of such demand or
is attributable to periods prior to
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the date which is ninety (90) days preceding the date of such demand. Each
Lender's determination of such amounts shall be conclusive in the absence of
manifest error.
3.9 EURODOLLAR COSTS AND RELATED MATTERS.
(a) In the event that any Governmental Agency imposes on any
Lender any reserve or comparable requirement (INCLUDING any emergency,
supplemental or other reserve) with respect to the Eurodollar Obligations
of that Lender, Borrower shall pay that Lender within five (5) Banking Days
after demand all amounts necessary to compensate such Lender (determined as
though such Lender's Eurodollar Lending Office had funded 100% of its
Eurodollar Rate Advance in the Designated Eurodollar Market) in respect of
the imposition of such reserve requirements (PROVIDED, that Borrower shall
not be obligated to pay any such amount which arose prior to the date which
is ninety (90) days preceding the date of such demand or is attributable to
periods prior to the date which is ninety (90) days preceding the date of
such demand). The Lender's determination of such amount shall be
conclusive in the absence of manifest error.
(b) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance:
(1) shall subject any Lender or its Eurodollar Lending Office to
any tax, duty or other charge or cost with respect to any Eurodollar
Rate Advance, its Note evidencing Eurodollar Rate Advances or its
obligation to make Eurodollar Rate Advances, or shall change the basis
of taxation of payments to any Lender attributable to the principal of
or interest on any Eurodollar Rate Advance or any other amounts due
under this Agreement in respect of any Eurodollar Rate Advance, its
Note evidencing Eurodollar Rate Advances or its obligation to make
Eurodollar Rate Advances (PROVIDED, that Borrower shall not be
obligated to pay any such amount which arose prior to the date which
is ninety (90) days preceding the date of such demand or is
attributable to periods prior to the date which is ninety (90) days
preceding the date of such demand), EXCLUDING (i) taxes imposed on or
measured in whole or in part by its overall net income by (A) any
jurisdiction (or political subdivision thereof) in which it is
organized or maintains its principal office or Eurodollar Lending
Office or (B) any jurisdiction (or political subdivision thereof) in
which it is "doing business" and (ii) any withholding taxes or other
taxes based on gross income imposed by the United States of America
for any period with respect to which it has failed to provide Borrower
with the appropriate form or forms required by Section 12.21, to the
extent such forms are then available under applicable Laws;
(2) shall impose, modify or deem applicable any reserve not
applicable or deemed applicable on the date hereof (INCLUDING any
reserve imposed by the Board of Governors of the
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Federal Reserve System, special deposit, capital or similar
requirements against assets of, deposits with or for the account of,
or credit extended by, any Lender or its Eurodollar Lending Office);
or
(3) shall impose on any Lender or its Eurodollar Lending Office
or the Designated Eurodollar Market any other condition affecting any
Eurodollar Rate Advance, its Note evidencing Eurodollar Rate Advances,
its obligation to make Eurodollar Rate Advances or this Agreement, or
shall otherwise affect any of the same;
and the result of any of the foregoing, as determined in good faith by such
Lender, increases the cost to such Lender or its Eurodollar Lending Office
of making or maintaining any Eurodollar Rate Advance or in respect of any
Eurodollar Rate Advance, its Note evidencing Eurodollar Rate Advances or
its obligation to make Eurodollar Rate Advances or reduces the amount of
any sum received or receivable by such Lender or its Eurodollar Lending
Office with respect to any Eurodollar Rate Advance, its Note evidencing
Eurodollar Rate Advances or its obligation to make Eurodollar Rate Advances
(assuming such Lender's Eurodollar Lending Office had funded 100% of its
Eurodollar Rate Advance in the Designated Eurodollar Market), then, within
five (5) Banking Days after demand by such Lender (with a copy to the
Managing Agent), Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender for such increased cost or
reduction (determined as though such Lender's Eurodollar Lending Office had
funded 100% of its Eurodollar Rate Advance in the Designated Eurodollar
Market). A statement of any Lender claiming compensation under this
subsection shall be conclusive in the absence of manifest error.
(c) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance shall, in the good faith opinion of any
Lender, make it unlawful or impossible for such Lender or its Eurodollar
Lending Office to make, maintain or fund its portion of any Eurodollar Rate
Loan, or materially restrict the authority of such Lender to purchase or
sell, or to take deposits of, Dollars in the Designated Eurodollar Market,
or to determine or charge interest rates based upon the Eurodollar Rate,
and such Lender shall so notify the Managing Agent, then such Lender's
obligation to make Eurodollar Rate Advances shall be suspended for the
duration of such illegality or impossibility and the Managing Agent
forthwith shall give notice thereof to the other Lenders and Borrower.
Upon receipt of such notice, the outstanding principal amount of such
Lender's Eurodollar Rate Advances, together with accrued interest thereon,
automatically shall be converted to Alternate Base Rate Advances on either
(1) the last day of the Eurodollar Period(s) applicable to such Eurodollar
Rate Advances if such Lender may lawfully continue to maintain and fund
such Eurodollar Rate Advances to such day(s) or (2) immediately if such
Lender may not lawfully continue to fund and maintain such Eurodollar Rate
Advances to such day(s), PROVIDED that in such event the conversion shall
not be
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subject to payment of a prepayment fee under clause (e) of this Section.
Each Lender agrees to endeavor promptly to notify Borrower of any event of
which it has actual knowledge, occurring after the Closing Date, which will
cause that Lender to notify the Managing Agent under this Section, and
agrees to designate a different Eurodollar Lending Office if such
designation will avoid the need for such notice and will not, in the good
faith judgment of such Lender, otherwise be materially disadvantageous to
such Lender. In the event that any Lender is unable, for the reasons set
forth above, to make, maintain or fund its portion of any Eurodollar Rate
Loan, such Lender shall fund such amount as an Alternate Base Rate Advance
for the same period of time, and such amount shall be treated in all
respects as an Alternate Base Rate Advance. Any Lender whose obligation to
make Eurodollar Rate Advances has been suspended under this Section shall
promptly notify the Managing Agent and Borrower of the cessation of the
Special Eurodollar Circumstance which gave rise to such suspension.
(d) If, with respect to any proposed Eurodollar Rate Loan:
(1) the Managing Agent reasonably determines that, by reason of
circumstances affecting the Designated Eurodollar Market generally
that are beyond the reasonable control of the Lenders, deposits in
Dollars (in the applicable amounts) are not being offered to any
Lender in the Designated Eurodollar Market for the applicable
Eurodollar Period; or
(2) the Requisite Lenders advise the Managing Agent that the
Eurodollar Rate as determined by the Managing Agent (i) does not
represent the effective pricing to such Lenders for deposits in
Dollars in the Designated Eurodollar Market in the relevant amount for
the applicable Eurodollar Period, or (ii) will not adequately and
fairly reflect the cost to such Lenders of making the applicable
Eurodollar Rate Advances;
then the Managing Agent forthwith shall give notice thereof to Borrower and
the Lenders, whereupon until the Managing Agent notifies Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligation of the Lenders to make any future Eurodollar Rate Advances shall
be suspended. Upon delivery by the Managing Agent to Borrower of notice
that the circumstances giving rise to such suspension no longer exist, any
Alternate Base Rate Loan into which a Eurodollar Rate Loan may have been
converted as a result of any such suspension shall be converted into a
Eurodollar Rate Loan or Eurodollar Rate Loans of one, two and/or three
month Eurodollar Periods so as (and on such dates as) to permit the
outstanding Loans to be Eurodollar Rate Loans of such Eurodollar Periods
and commencing on such Eurodollar Period Commencement Dates as would have
existed if such conversions had not occurred.
(e) Upon prepayment of any Eurodollar Rate Advance (OTHER THAN
as the result of a conversion required under clause (c)
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of this Section) on a day other than the last day in the applicable
Eurodollar Period (whether voluntarily, involuntarily, by reason of
acceleration, or otherwise), or upon the failure of Borrower to prepay a
Eurodollar Rate Loan on the date specified in a notice of prepayment
delivered to the Managing Agent pursuant to Section 3.1(g), Borrower shall
pay to the appropriate Lender within ten (10) Banking Days after demand a
prepayment fee or failure to prepay fee, as the case may be (determined as
though 100% of the Eurodollar Rate Advance had been funded in the
Designated Eurodollar Market), equal to the SUM OF:
(1) the principal amount of the Eurodollar Rate Advance prepaid
or not prepaid, as the case may be, TIMES the number of days from and
including the date of prepayment or failure to prepay, as applicable,
to but excluding the last day in the applicable Eurodollar Period,
DIVIDED BY 360, TIMES the applicable Interest Differential (PROVIDED
that the product of the foregoing formula must be a positive number);
PLUS
(2) all out-of-pocket expenses incurred by the Lender reasonably
attributable to such prepayment or failure to prepay.
Each Lender's determination of the amount of any prepayment fee or failure
to prepay fee payable under this Section shall be conclusive in the absence
of manifest error.
(f) Each Lender agrees to endeavor promptly to notify Borrower
of any event of which it has actual knowledge, occurring after the Closing
Date, which will entitle such Lender to compensation pursuant to clause (a)
or clause (b) of this Section, and agrees to designate a different
Eurodollar Lending Office if such designation will avoid the need for or
reduce the amount of such compensation and will not, in the good faith
judgment of such Lender, otherwise be materially disadvantageous to such
Lender. Any request for compensation by a Lender under this Section shall
set forth the basis upon which it has been determined that such an amount
is due from Borrower, a calculation of the amount due, and a certification
that the corresponding costs have been incurred by the Lender.
3.10 LATE PAYMENTS. If any installment of principal or interest or
any fee or cost or other amount payable under any Loan Document to the Managing
Agent or any Lender is not paid when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the SUM OF the average
interest rate otherwise payable on all Loans then outstanding hereunder PLUS 2%,
to the fullest extent permitted by applicable Laws. Accrued and unpaid interest
on past due amounts (INCLUDING interest on past due interest) shall be
compounded monthly, on the last day of each calendar month, to the fullest
extent permitted by applicable Laws.
3.11 COMPUTATION OF INTEREST AND FEES. Computation of interest and
fees under this Agreement shall be calculated on the basis of
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a year of 360 days and the actual number of days elapsed. Interest shall accrue
on each Loan for the day on which the Loan is made; interest shall not accrue on
a Loan, or any portion thereof, for the day on which the Loan or such portion is
paid. Any Loan that is repaid on the same day on which it is made shall bear
interest for one day. Notwithstanding anything in this Agreement to the
contrary, interest in excess of the maximum amount permitted by applicable Laws
shall not accrue or be payable hereunder or under the Notes, and any amount paid
as interest hereunder or under the Notes which would otherwise be in excess of
such maximum permitted amount shall instead be treated as a payment of
principal.
3.12 NON-BANKING DAYS. If any payment to be made by Borrower or any
other Party under any Loan Document shall come due on a day other than a Banking
Day, payment shall instead be considered due on the next succeeding Banking Day
and the extension of time shall be reflected in computing interest and fees.
3.13 MANNER AND TREATMENT OF PAYMENTS.
(a) Each payment hereunder (EXCEPT payments pursuant to
Sections 3.8, 3.9, 12.3, 12.11 and 12.22) or on the Notes or under any
other Loan Document shall be made to the Managing Agent, at the Managing
Agent's Office, for the account of each of the Lenders or the Managing
Agent, as the case may be, in immediately available funds not later than
11:00 a.m. California time, on the day such payment is due. All payments
received after such time, on any Banking Day, shall be deemed received on
the next succeeding Banking Day. The amount of all payments received by
the Managing Agent for the account of each Lender shall be immediately paid
by the Managing Agent to the applicable Lender in immediately available
funds and, if such payment was received by the Managing Agent by
11:00 a.m., California time, on a Banking Day and not so made available to
the account of a Lender on that Banking Day, the Managing Agent shall
reimburse that Lender for the cost to such Lender of funding the amount of
such payment at the Federal Funds Rate. All payments shall be made in
lawful money of the United States of America.
(b) Each payment or prepayment on account of any Loan shall be
applied pro rata according to the outstanding Advances made by each Lender
comprising such Loan.
(c) Each Lender shall use its best efforts to keep a record
(which may be in tangible or electronic or other intangible form) of
Advances made by it and payments received by it with respect to its Note
and, subject to Section 11.6(g), such record shall, as against Borrower, be
presumptive evidence of the amounts owing. Notwithstanding the foregoing
sentence, the failure by any Lender to keep such a record shall not affect
Borrower's obligation to pay the Obligations.
(d) Each payment of any amount payable by Borrower or any other
Party under this Agreement or any other Loan Document shall be made free
and clear of, and without reduction by reason of, any
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taxes, assessments or other charges imposed by any Governmental Agency,
central bank or comparable authority, EXCLUDING (i) taxes imposed on or
measured in whole or in part by its overall net income, by (A) any
jurisdiction (or political subdivision thereof) in which it is organized or
maintains its principal office or Eurodollar Lending Office or (B) any
jurisdiction (or political subdivision thereof) in which it is "doing
business" and (ii) any withholding taxes or other taxes based on gross
income imposed by the United States of America for any period with respect
to which it has failed to provide Borrower with the appropriate form or
forms required by Section 12.21, to the extent such forms are then
available under applicable Laws (all such non-excluded taxes, assessments
or other charges being hereinafter referred to as "Taxes"). To the extent
that Borrower is obligated by applicable Laws to make any deduction or
withholding on account of Taxes from any amount payable to any Lender under
this Agreement, Borrower shall (i) make such deduction or withholding and
pay the same to the relevant Governmental Agency and (ii) pay such
additional amount to that Lender as is necessary to result in that Lender's
receiving a net after-Tax amount equal to the amount to which that Lender
would have been entitled under this Agreement absent such deduction or
withholding. If and when receipt of such payment results in an excess
payment or credit to that Lender on account of such Taxes, that Lender
shall promptly refund such excess to Borrower.
3.14 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Advance (INCLUDING a Eurodollar
Rate Advance) in any particular place (INCLUDING the Designated Eurodollar
Market) or manner or to constitute a representation by any Lender that it has
obtained or will obtain the funds for any Loan or Advance in any particular
place or manner.
3.15 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by the
Managing Agent or any Lender not to require payment of any interest (INCLUDING
interest at the Default Rate), fee, cost or other amount payable under any Loan
Document, or to calculate any amount payable by a particular method, on any
occasion shall in no way limit or be deemed a waiver of the Managing Agent's or
such Lender's right to require full payment of any interest (INCLUDING interest
at the Default Rate), fee, cost or other amount payable under any Loan Document,
or to calculate an amount payable by another method that is not inconsistent
with this Agreement, on any other or subsequent occasion.
3.16 MANAGING AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY
BORROWER. Unless the Managing Agent shall have been notified by Borrower prior
to the date on which any payment to be made by Borrower hereunder is due that
Borrower does not intend to remit such payment, the Managing Agent may, in its
discretion, assume that Borrower has remitted such payment when so due and the
Managing Agent may, in its discretion and in reliance upon such assumption, make
available to each Lender on such payment date an amount equal to such Lender's
share of such assumed payment. If Borrower has not in fact remitted such
payment to the Managing Agent, each Lender shall forthwith on demand repay to
the Managing Agent the amount of such
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assumed payment made available to such Lender, together with interest thereon in
respect of each day from and including the date such amount was made available
by the Managing Agent to such Lender to the date such amount is repaid to the
Managing Agent at the Federal Funds Rate.
3.17 FEE DETERMINATION DETAIL. The Managing Agent, and any Lender,
shall provide reasonable detail to Borrower regarding the manner in which the
amount of any payment to the Managing Agent and the Lenders, or that Lender,
under ARTICLE 3 has been determined, concurrently with demand for such payment.
3.18 SURVIVABILITY. All of Borrower's obligations under Sections 3.8
and 3.9 shall survive for ninety (90) days following the date on which the
Commitment is terminated and all Loans hereunder are fully paid, and Borrower
shall remain obligated hereunder for all claims under such Sections made by any
Lender to Borrower prior to the expiration of such period.
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Article 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Lenders that:
4.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS.
Borrower and Parent are each a corporation duly formed, validly existing and in
good standing under the Laws of Nevada. Borrower and Parent are each duly
qualified or registered to transact business and is in good standing in each
other jurisdiction in which the conduct of its business or the ownership or
leasing of its Properties makes such qualification or registration necessary,
EXCEPT where the failure so to qualify or register and to be in good standing
would not constitute a Material Adverse Effect. Borrower and Parent each have
all requisite corporate or other organizational power and authority to conduct
its business, to own and lease its Properties and to execute and deliver each
Loan Document to which it is a Party and to perform its Obligations. The chief
executive offices of Borrower are located in Nevada. All outstanding shares of
capital stock of Borrower are duly authorized, validly issued, fully paid and
non-assessable and owned by Parent, and no holder thereof has any enforceable
right of rescission under any applicable state or federal securities Laws.
Borrower is in compliance with all Requirements of Laws applicable to its
business, has obtained all authorizations, consents, approvals, orders, licenses
and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business,
EXCEPT where the failure so to comply, file, register, qualify or obtain
exemptions does not constitute a Material Adverse Effect. The Lenders
acknowledge that Borrower is not required to hold any licenses under applicable
Gaming Laws until the Completion Date and will not apply for such licenses until
shortly prior to the Completion Date pursuant to Section 5.12.
4.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND
GOVERNMENT REGULATIONS. The execution, delivery and performance by Borrower and
Parent of the Loan Documents to which it is a Party have been duly authorized by
all necessary corporate or other organizational action, and do not and will not:
(a) Require any consent or approval not heretofore obtained of
any member, partner, director, stockholder, security holder or creditor of
such Party;
(b) Violate or conflict with any provision of such Party's
charter, articles of organization or incorporation, operating agreement or
bylaws, as applicable;
(c) Result in or require the creation or imposition of any Lien
or Right of Others upon or with respect to any Property now owned or leased
or hereafter acquired by such Party;
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(d) Violate any Requirement of Law applicable to such Party,
subject to obtaining the authorizations from, or filings with, the
Governmental Agencies described in SCHEDULE 4.3;
(e) Result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual Obligation
to which such Party is a party or by which such Party or any of its
Property is bound or affected;
and neither Borrower nor Parent is in violation of, or default under, any
Requirement of Law or Contractual Obligation, or any indenture, loan or credit
agreement described in Section 4.2(e), in any respect that constitutes a
Material Adverse Effect.
4.3 NO GOVERNMENTAL APPROVALS REQUIRED. EXCEPT as previously
obtained or made, no authorization, consent, approval, order, license or permit
from, or filing, registration or qualification with, any Governmental Agency is
or will be required to authorize or permit under applicable Laws the execution,
delivery or (EXCEPT as set forth in SCHEDULE 4.3) performance by Borrower and
its Subsidiaries or Parent of the Loan Documents to which it is a Party.
Borrower has no reason to believe that the authorizations from, or filings with,
any Governmental Agency described in SCHEDULE 4.3 will not be accomplished on or
before the dates specified in SCHEDULE 4.3.
4.4 SUBSIDIARIES.
(a) SCHEDULE 4.4 hereto correctly sets forth the names, form of
legal entity, number of shares of capital stock issued and outstanding,
number of shares owned by Borrower or a Subsidiary of Borrower (specifying
such owner) and jurisdictions of organization of all Subsidiaries of
Borrower. Except as described in SCHEDULE 4.4 or SCHEDULE 6.15, Borrower
does not own any capital stock, equity interest or debt security which is
convertible, or exchangeable, for capital stock or equity interests in any
Person. Unless otherwise indicated in SCHEDULE 4.4, all of the outstanding
shares of capital stock, or all of the units of equity interest, as the
case may be, of each Subsidiary are owned of record and beneficially by
Borrower, there are no outstanding options, warrants or other rights to
purchase capital stock of any such Subsidiary, and all such shares or
equity interests so owned are duly authorized, validly issued, fully paid
and non-assessable, and were issued in compliance with all applicable state
and federal securities and other Laws, and are free and clear of all Liens
and Rights of Others, EXCEPT for Permitted Encumbrances and Permitted
Rights of Others.
(b) Each Subsidiary of Borrower is a business entity duly
formed, validly existing and in good standing under the Laws of its
jurisdiction of organization, is duly qualified to do business as a foreign
organization and is in good standing as such in each jurisdiction in which
the conduct of its business or the ownership or leasing of its Properties
makes such qualification necessary (EXCEPT
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where the failure to be so duly qualified and in good standing does not
constitute a Material Adverse Effect), and has all requisite power and
authority to conduct its business and to own and lease its Properties.
(c) Each Subsidiary of Borrower is in compliance with all
Requirements of Law applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from,
and each such Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the foregoing from,
any Governmental Agency that are necessary for the transaction of its
business, EXCEPT where the failure to be in such compliance, obtain such
authorizations, consents, approvals, orders, licenses, and permits,
accomplish such filings, registrations, and qualifications, or obtain such
exemptions, does not constitute a Material Adverse Effect.
4.5 FINANCIAL STATEMENTS. Borrower has furnished to the Lenders
(a) the audited consolidated financial statements of Parent and its Subsidiaries
for the Fiscal Year ended March 31, 1996, (b) the unaudited consolidated
financial statements of Parent and its Subsidiaries for the Fiscal Quarter ended
June 30, 1996 and (c) the unaudited pro-forma balance sheet of Borrower as of
the Closing Date (giving effect to the transactions occurring on that date).
The financial statements described in clauses (a) and (b) fairly present in all
material respects the financial condition, results of operations and changes in
financial position of Parent, and the pro-forma balance sheet described in
clause (c) fairly presents the financial condition of Borrower, in each case as
of such dates and for such periods in conformity with Generally Accepted
Accounting Principles, consistently applied.
4.6 NO OTHER LIABILITIES; NO MATERIAL ADVERSE CHANGES. Borrower does
not have any material liability or material contingent liability required under
Generally Accepted Accounting Principles to be reflected or disclosed and not
reflected or disclosed in the balance sheet described in Section 4.5(c), other
than liabilities and contingent liabilities arising in the ordinary course of
business since the date of such balance sheet. As of the Closing Date, no
circumstance or event has occurred that constitutes a Material Adverse Effect
since June 30, 1996. As of any date subsequent to the Closing Date, no
circumstance or event has occurred that constitutes a Material Adverse Effect
since the Closing Date.
4.7 TITLE TO PROPERTY. Borrower has valid title to the Property
reflected in the balance sheet described in Section 4.5(c), other than items of
Property or exceptions to title which are in each case immaterial to Borrower,
and Property subsequently sold or disposed of in the ordinary course of
business, free and clear of all Liens and Rights of Others, OTHER THAN Permitted
Encumbrances, Permitted Rights of Others and Liens or Rights of Others described
in SCHEDULE 4.7 or permitted by Section 6.8.
4.8 INTANGIBLE ASSETS. Borrower owns, or possesses the right to use
pursuant to a written license agreement to the extent necessary in
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its business, all material trademarks, trade names, copyrights, patents,
patent rights and other Intangible Assets that are used in the conduct of its
business as now operated, and no such Intangible Asset, to the best knowledge
of Borrower, conflicts with the valid trademark, trade name, copyright,
patent, patent right or Intangible Asset of any other Person to the extent
that such conflict constitutes a Material Adverse Effect. SCHEDULE 4.8 sets
forth all trademarks, trade names and trade styles owned by Borrower or which
Borrower has the right to use and describes with particularity all written
license agreements pursuant to which Borrower has the right to use the same.
4.9 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Borrower nor any of
its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
4.10 LITIGATION. EXCEPT for (a) any matter fully covered as to
subject matter and amount (subject to applicable deductibles and retentions) by
insurance as to which the insurance carrier has been notified and has not
asserted lack of subject matter coverage or reserved its right to do so, (b) any
matter, or series of related matters, involving a claim against Borrower or any
of its Subsidiaries of less than $2,000,000, (c) matters of an administrative
nature not involving a claim or charge against Borrower or any of its
Subsidiaries and (d) matters set forth in SCHEDULE 4.10, there are no actions,
suits, proceedings or investigations pending as to which Borrower or any of its
Subsidiaries have been served or have received notice or, to the best knowledge
of Borrower, threatened against or affecting Borrower or any of its Subsidiaries
or any Property of any of them before any Governmental Agency.
4.11 BINDING OBLIGATIONS. Each of the Loan Documents to which
Borrower, any of its Subsidiaries or Parent is a Party will, when executed and
delivered by such Party, constitute the legal, valid and binding obligation of
such Party, enforceable against such Party in accordance with its terms, EXCEPT
as enforcement may be limited by Debtor Relief Laws, Gaming Laws or equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion.
4.12 NO DEFAULT. No event has occurred and is continuing that is a
Default or Event of Default.
4.13 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all material
respects with ERISA and any other applicable Laws to the extent
that noncompliance could reasonably be expected to have a Material
Adverse Effect;
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(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) that could reasonably be expected to have a Material
Adverse Effect;
(iii) no "reportable event" (as defined in Section
4043 of ERISA) has occurred that could reasonably be expected to
have a Material Adverse Effect; and
(iv) neither Borrower nor any of its ERISA
Affiliates has engaged in any non-exempt "prohibited transaction"
(as defined in Section 4975 of the Code) that could reasonably be
expected to have a Material Adverse Effect.
(b) Neither Borrower nor any of its ERISA Affiliates has
incurred or expects to incur any withdrawal liability to any Multiemployer
Plan that could reasonably be expected to have a Material Adverse Effect.
4.14 REGULATIONS G, T, U AND X; INVESTMENT COMPANY ACT. No part of
the proceeds of any Loan hereunder will be used to purchase or carry, or to
extend credit to others for the purpose of purchasing or carrying, any Margin
Stock in violation of Regulations G, T, U and X. Neither Borrower nor any of
its Subsidiaries is or is required to be registered as an "investment company"
under the Investment Company Act of 1940.
4.15 DISCLOSURE. No written statement made by a Senior Officer of
Borrower to the Managing Agent or any Lender in connection with this Agreement,
or in connection with any Loan, as of the date thereof contained any untrue
statement of a material fact or omitted a material fact necessary to make the
statement made not misleading in light of all the circumstances existing at the
date the statement was made.
4.16 TAX LIABILITY. Borrower and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Borrower or
its Subsidiaries, EXCEPT (a) such taxes, if any, as are being contested in good
faith by appropriate proceedings and as to which adequate reserves have been
established and maintained and (b) immaterial taxes so long as no material
Property of Borrower or any of its Subsidiaries is at impending risk of being
seized, levied upon or forfeited.
4.17 PROJECTIONS. As of the Closing Date, Borrower believes that the
assumptions set forth in the Projections are reasonable and consistent with each
other and with all facts known to Borrower, and that the Projections are
reasonably based on such assumptions. Nothing in this Section 4.17 shall be
construed as a representation or covenant that the Projections in fact will be
achieved.
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4.18 HAZARDOUS MATERIALS. Except as described in SCHEDULE 4.18, as
of the Closing Date (a) neither Borrower nor any of its Subsidiaries at any time
has disposed of, discharged, released or threatened the release of any Hazardous
Materials on, from or under the Real Property in violation of any Hazardous
Materials Law that would individually or in the aggregate constitute a Material
Adverse Effect, (b) to the best knowledge of Borrower, no condition exists that
violates any Hazardous Material Law affecting any Real Property except for such
violations that would not individually or in the aggregate have a Material
Adverse Effect, (c) no Real Property or any portion thereof is or has been
utilized by Borrower or any of its Subsidiaries as a site for the manufacture of
any Hazardous Materials and (d) to the extent that any Hazardous Materials are
used, generated or stored by Borrower or any of its Subsidiaries on any Real
Property, or transported to or from such Real Property by Borrower or any of its
Subsidiaries, such use, generation, storage and transportation are in compliance
with all Hazardous Materials Laws except for such non-compliance that would not
constitute a Material Adverse Effect or be materially adverse to the interests
of the Lenders.
4.19 GAMING LAWS. Borrower is in compliance with all Gaming Laws
except for such non-compliance that would not constitute a Material Adverse
Effect.
4.20 SECURITY INTERESTS. Upon the execution and delivery of the
Security Agreement, the Security Agreement will create a valid first priority
security interest in the Collateral described therein securing the Obligations
(subject only to Permitted Encumbrances, Permitted Rights of Others and matters
disclosed in SCHEDULE 4.7 and to such qualifications and exceptions as are
contained in the Uniform Commercial Code with respect to the priority of
security interests perfected by means other than the filing of a financing
statement or with respect to the creation of security interests in Property to
which Article 9 of the Uniform Commercial Code does not apply) and all action
necessary to perfect the security interest so created, OTHER THAN filing of the
UCC-1 financing statements delivered to the Managing Agent pursuant to
Section 9.1 with the appropriate Governmental Agency, have been taken and
completed. Upon the execution and delivery of the Collateral Assignment, the
Collateral Assignment will create a valid first priority security interest in
the Collateral described therein securing the Obligations and all action
necessary to perfect the security interest so created, OTHER THAN filing of the
UCC-1 financing statements delivered to the Managing Agent pursuant to
Section 9.1 with the appropriate Governmental Agency, have been taken and
completed. Upon the execution and delivery of the Pledge Agreement, the Pledge
Agreement will create a valid first priority security interest in the Pledged
Collateral and upon delivery of the Pledged Collateral to the Managing Agent (or
its designee) in the State of Nevada all action necessary to perfect the
security interest so created has been taken and completed. Upon the execution
and delivery of the Deed of Trust, such Deed of Trust will create a valid Lien
in the Collateral described therein securing the Obligations, OTHER THAN those
arising under Sections 4.18, 5.11 and 12.22, (subject only to Permitted
Encumbrances, Permitted Rights of Others and matters described in SCHEDULE 4.7),
and all action necessary to perfect the Lien so created,
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OTHER than recordation or filing thereof with the appropriate Governmental
Agencies,will have been taken and completed.
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Article 5
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
So long as any Advance remains unpaid or any other Obligation remains
unpaid, or any portion of the Commitment remains in force, Borrower shall, and
shall cause each of its Subsidiaries to, unless the Managing Agent (with the
written approval of the Requisite Lenders) otherwise consents:
5.1 PAYMENT OF TAXES AND OTHER POTENTIAL LIENS. Pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
any of them, upon their respective Property or any part thereof and upon their
respective income or profits or any part thereof, EXCEPT that Borrower and its
Subsidiaries shall not be required to pay or cause to be paid (a) any tax,
assessment, charge or levy that is not yet past due, or is being contested in
good faith by appropriate proceedings so long as the relevant entity has
established and maintains adequate reserves for the payment of the same or
(b) any immaterial tax so long as no material Property of Borrower or any of its
Subsidiaries is at impending risk of being seized, levied upon or forfeited.
5.2 PRESERVATION OF EXISTENCE. Preserve and maintain their
respective existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is necessary in view of their respective business or the ownership
or leasing of their respective Properties EXCEPT where the failure to so qualify
or remain qualified would not constitute a Material Adverse Effect.
5.3 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all of
their respective Properties in good order and condition, subject to wear and
tear in the ordinary course of business, and not permit any waste of their
respective Properties, EXCEPT that the failure to maintain, preserve and protect
a particular item of Property that is not of significant value, either
intrinsically or to the operations of Borrower and its Subsidiaries, taken as a
whole, shall not constitute a violation of this covenant.
5.4 MAINTENANCE OF INSURANCE. Maintain liability, casualty and other
insurance (subject to customary deductibles and retentions) with responsible
insurance companies in such amounts and against such risks as is carried by
responsible companies engaged in similar businesses and owning similar assets in
the general areas in which Borrower and its Subsidiaries operate and, in any
event, such insurance as is required under the Deed of Trust.
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5.5 COMPLIANCE WITH LAWS. Comply, within the time period, if any,
given for such compliance by the relevant Governmental Agency or Agencies with
enforcement authority, with all Requirements of Law noncompliance with which
constitutes a Material Adverse Effect, EXCEPT that Borrower and its Subsidiaries
need not comply with a Requirement of Law then being contested by any of them in
good faith by appropriate proceedings.
5.6 INSPECTION RIGHTS. Upon reasonable notice, at any time during
regular business hours and as often as reasonably requested (but not so as to
materially interfere with the business of Borrower or any of its Subsidiaries)
permit the Managing Agent or any Lender, or any authorized employee, agent or
representative thereof, to examine, audit and make copies and abstracts from the
records and books of account of, and to visit and inspect the Properties of,
Borrower and its Subsidiaries and to discuss the affairs, finances and accounts
of Borrower and its Subsidiaries with any of their officers, managers, key
employees or accountants.
5.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate records
and books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over Borrower or any of its Subsidiaries.
5.8 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply with all
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, whether such material
agreements, indentures, leases or instruments are with a Lender or another
Person, EXCEPT for any such Contractual Obligations (a) the performance of which
would cause a Default or (b) then being contested by any of them in good faith
by appropriate proceedings or if the failure to comply with such agreements,
indentures, leases or instruments does not constitute a Material Adverse Effect.
5.9 USE OF PROCEEDS. Use the proceeds of Loans solely for the
construction (INCLUDING financing expenses and Pre-Opening Expenses) and
furnishing of the Project.
5.10 NEW SUBSIDIARIES. Cause any Person which hereafter becomes a
Subsidiary of Borrower to execute and deliver to the Managing Agent the
Subsidiary Guaranty and an instrument of joinder of the Security Agreement, and
(subject to compliance with applicable Gaming Laws) deliver the certificates
evidencing all equity interests in such Subsidiary to the Managing Agent in
pledge pursuant to a pledge agreement substantially in the form of the Pledge
Agreement.
5.11 HAZARDOUS MATERIALS LAWS. Keep and maintain all Real Property
and each portion thereof in compliance with all applicable Hazardous Materials
Laws (except for such non-compliance that would not constitute a Material
Adverse Effect or be materially adverse to the interests of the Lenders) and
promptly notify the Managing Agent in writing (attaching a copy of any pertinent
written material) of (a) any and all
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material enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened in writing by a Governmental
Agency pursuant to any applicable Hazardous Materials Laws, (b) any and all
material claims made or threatened in writing by any Person against Borrower
relating to damage, contribution, cost recovery, compensation, loss or injury
resulting from any Hazardous Materials and (c) discovery by any Senior
Officer of Borrower of any material occurrence or condition on any real
Property adjoining or in the vicinity of such Real Property that could
reasonably be expected to cause such Real Property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or
use of such Real Property under any applicable Hazardous Materials Laws.
5.12 GAMING LICENSES. File applications with all relevant Gaming
Boards for all licenses, permits and approvals under applicable Gaming Laws
necessary to operate the Project at such date as Borrower deems appropriate in
the exercise of prudent business judgment to permit the Completion Date to occur
as scheduled, and diligently pursue such applications thereafter; PROVIDED that
the Lenders acknowledge that such Gaming Boards have the power to approve or
disapprove the pledge of the Pledged Collateral pursuant to the Pledge Agreement
and to condition approval of such pledge on revision to the form of the Pledge
Agreement.
5.13 SUPPLEMENTAL CREDIT FACILITY. (a) Promptly following its
awareness of a failure to comply with Sections 6.11, 6.12 or 6.13, make a
written request for a Supplemental Loan under Section 2.01(a) of the
Supplemental Loan Agreement in an amount equal to the lesser of (i) the amount
necessary to effect an Effected Cure with respect to such Section or (ii) the
maximum amount of Supplemental Loans which are then available to be made under
Section 2.01(a) of the Supplemental Loan Agreement, and concurrently provide a
copy of such written request to the Managing Agent.
(b) Promptly following its exercise of the early termination option
under Section 5.4 of the Equipment Sublease (which Borrower shall not exercise
unless Supplemental Loans in amounts sufficient for such exercise are available
under the Supplemental Credit Facility ), make a written request for a
Supplemental Loan under Section 2.01(b) of the Supplemental Loan Agreement in an
amount equal to the amount required to be paid under the Equipment Sublease in
connection with such exercise, and concurrently provide a copy of such written
request to the Managing Agent.
(c) Promptly following its exercise of the purchase option under
Section 5.3(a) of the Equipment Sublease, make a written request for a
Supplemental Loan under Section 2.01(c) of the Supplemental Loan Agreement in an
amount equal to the lesser of (i) the amount required to be paid under the
Sublease in connection with such exercise and (ii) the maximum amount of a
Supplemental Loan which is then available to be made under Section 2.01(c) of
the Supplemental Loan Agreement, and concurrently provide a copy of such written
request to the Managing Agent.
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Article 6
NEGATIVE COVENANTS
So long as any Advance remains unpaid or any other Obligation remains
unpaid, or any portion of the Commitment remains in force, Borrower shall not,
and shall not permit any of its Subsidiaries to, unless the Managing Agent (with
the written approval of the Requisite Lenders or, if required by Section 12.2,
of the Supermajority Lenders or all of the Lenders) otherwise consents:
6.1 PAYMENT OF SUBORDINATED OBLIGATIONS. Pay any (a) principal
(INCLUDING sinking fund payments) or any other amount (OTHER THAN scheduled
interest payments) with respect to any Subordinated Obligation, or purchase or
redeem (or offer to purchase or redeem) any Subordinated Obligation, or deposit
any monies, securities or other Property with any trustee or other Person to
provide assurance that the principal or any portion thereof of any Subordinated
Obligation will be paid when due or otherwise to provide for the defeasance of
any Subordinated Obligation or (b) scheduled interest on any Subordinated
Obligation EXCEPT interest consisting of additional units of such Subordinated
Obligation.
6.2 DISPOSITION OF PROPERTY. Make any Disposition of its Property,
whether now owned or hereafter acquired, EXCEPT (a) Disposition of a portion or
portions of the Project Property of up to approximately 25 acres in the
aggregate on which no Project improvements are planned to be constructed by
Borrower; PROVIDED that (i) such portion or portions has been properly
subdivided from the Project Property in compliance with all applicable Laws,
(ii) the transfer of such portion does not result in diminished public access to
the Project Property, (iii) the remaining portion of the Project Property is a
legally-transferable parcel in compliance with applicable Laws and (iv) the Net
Cash Proceeds in excess of $6,000,000 of such Disposition (or Dispositions in
the aggregate) are paid to the Managing Agent as a prepayment pursuant to
Section 3.1(G) (and, for this purpose, the limitations therein shall be
disregarded) on the last day of the next expiring Eurodollar Period and
(b) Dispositions of Property having an aggregate book value or fair market value
(whichever is greater) in any Fiscal Year not exceeding $1,000,000. Any
Property which is the subject of a Disposition permitted by this Section shall
be released from the Lien of the Collateral Documents upon request of Borrower.
6.3 MERGERS. Merge or consolidate with or into any Person, EXCEPT
mergers and consolidations of a Subsidiary of Borrower into Borrower.
6.4 HOSTILE ACQUISITIONS. Directly or indirectly use the proceeds of
any Loan in connection with the acquisition of part or all of a voting interest
of five percent (5%) or more in any corporation or other business entity if such
acquisition is opposed by the board of directors or management of such
corporation or business entity.
6.5 DISTRIBUTIONS. Make any Distribution, whether from capital,
income or otherwise, and whether in Cash or other Property, EXCEPT
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(a) Distributions by a Subsidiary of Borrower to Borrower, (b) Distributions
payable solely in the common stock of Borrower PROVIDED that the certificates
evidencing such common stock are concurrently delivered to the Managing Agent
as additional Pledged Collateral (subject to any necessary approval of a Gaming
Board) and (c) a Distribution made within thirty (30) days after the Closing
Date in an amount not greater than the amount (if any) by which the
Stockholders' Equity of Borrower on the Closing Date exceeded $52,000,000.
6.6 ERISA. (a) At any time, permit any Pension Plan to (i) engage in
any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code), (ii) fail to comply with ERISA or any other applicable Laws, (iii) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), or (iv) terminate in any manner, which, with respect to each event
listed above, could reasonably be expected to result in a Material Adverse
Effect, or (b) withdraw, completely or partially, from any Multiemployer Plan if
to do so could reasonably be expected to result in a Material Adverse Effect.
6.7 CHANGE IN NATURE OF BUSINESS. Make any material change in the
nature of the business of Borrower and its Subsidiaries, taken as a whole.
6.8 LIENS AND NEGATIVE PLEDGES. Create, incur, assume or suffer to
exist any Lien or Negative Pledge of any nature upon or with respect to any of
its Properties, or engage in any sale and leaseback transaction with respect to
any of its Properties, whether now owned or hereafter acquired, EXCEPT:
(a) Permitted Encumbrances;
(b) Liens and Negative Pledges arising under the Loan Documents;
(c) Liens and Negative Pledges existing on the Closing Date and
disclosed in SCHEDULE 4.7 and any renewals/extensions or amendments
thereof, PROVIDED that the obligations secured or benefited thereby are not
increased; and
(d) Liens and Negative Pledges arising under the Realty Lease
and the Equipment Lease.
6.9 INDEBTEDNESS AND GUARANTY OBLIGATIONS. Create, incur or assume
any Indebtedness or Guaranty Obligation EXCEPT:
(a) Indebtedness and Guaranty Obligations existing on the
Closing Date and disclosed in SCHEDULE 6.9, and refinancings, renewals,
extensions or amendments that do not increase the amount thereof;
(b) Indebtedness and Guaranty Obligations under the Loan
Documents;
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(c) Indebtedness consisting of Supplemental Loans owed to
Parent;
(d) Indebtedness owed to Borrower by a Subsidiary of Borrower,
Indebtedness owed to a wholly owned Subsidiary of Borrower by Borrower and
Guaranty Obligations with respect thereto;
(e) Indebtedness of Borrower consisting of one or more Swap
Agreements; PROVIDED, that the aggregate notional amount of Indebtedness
covered by all Secured Swap Agreements shall not exceed $50,000,000 and;
(f) Guaranty Obligations in support of the obligations of a
Subsidiary of Borrower that are not prohibited by Section 6.18.
6.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any
kind with any Affiliate of Borrower OTHER THAN (a) salary, bonus, employee stock
option and other compensation arrangements with directors, officers or managers
in the ordinary course of business, (b) transactions that are fully disclosed to
the board of directors of Borrower and expressly authorized by a resolution of
the board of directors of Borrower which is approved by a majority of the
directors not having an interest in the transaction, (c) the Equipment Sublease,
the Supplemental Loan Agreement, the Assignment and Assumption of the Realty
Lease and the Management Agreement referred to in Section 9.1(A)(29),
(d) transactions expressly permitted by this Agreement, (e) transactions between
or among Borrower and its Subsidiaries and (f) transactions on overall terms at
least as favorable to Borrower or its Subsidiaries as would be the case in an
arm's-length transaction between unrelated parties of equal bargaining power.
6.11 SENIOR FUNDED DEBT RATIO. Permit the Senior Funded Debt Ratio,
as of the last day of any Fiscal Quarter ending after the Completion Date, to be
greater than the ratio set forth below opposite such Fiscal Quarter:
FISCAL QUARTER RATIO
First and Second Fiscal Quarters
after Completion Date 4.50 to 1.00
Third and Fourth Fiscal Quarters
after Completion Date 4.25 to 1.00
Fifth and Sixth Fiscal Quarters
after Completion Date 4.00 to 1.00
Seventh and Eighth Fiscal Quarters
after Completion Date 3.75 to 1.00
Ninth Quarter after
Completion Date 3.50 to 1.00
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Each Fiscal Quarter
thereafter 3.25 to 1.00;
PROVIDED that (a) the initial partial Fiscal Quarter shall be disregarded for
this purpose and the First Fiscal Quarter after the Completion Date shall be the
first full such Fiscal Quarter and (b) if both the Parent Bank Credit Facility
and the Equipment Lease cease to be in effect at any time after the date that is
six (6) months after the Completion Date, the maximum Senior Funded Debt Ratio
under this Section 6.11 shall thereafter be 3.25 to 1.00 commencing with the
last day of the first Fiscal Quarter ending after the date of such cessation.
6.12 FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio, as of the last day of any Fiscal Quarter ending after the Completion
Date, to be less than 1.10 to 1.00; PROVIDED that the initial partial Fiscal
Quarter after the Completion Date shall be disregarded for this purpose.
6.13 EFFECTIVE NET WORTH. Permit Effective Net Worth, as of the last
day of any Fiscal Quarter ending after the Completion Date, to be less than the
SUM OF (a) $52,000,000 PLUS (b) 80% of Net Income for each Fiscal Quarter ending
after the Completion Date (with no deduction for any net loss incurred in any
such Fiscal Quarter) PLUS (c) 100% of any Cash Equity Contributions and
Supplemental Loans made after the Closing Date.
6.14 CAPITAL EXPENDITURES. Make, or become legally obligated to make,
any Capital Expenditure after the Completion Date OTHER THAN (a) Maintenance
Capital Expenditures and then only if, giving effect thereto, the aggregate
Maintenance Capital Expenditures made in that Fiscal Year would not exceed
$2,000,000, (b) Capital Expenditures made after the date that is three (3)
months after the Completion Date, PROVIDED that (i) such Capital Expenditures
are funded in their entirety by Qualified Capital Sources received subsequent to
the Closing Date, (ii) the aggregate such Capital Expenditures made during the
term of this Agreement for (A) (i) a parking garage and related amenities does
not exceed $20,000,000 or (ii) an additional hotel tower does not exceed
$30,000,000 and (B) any other single project or a series of related projects
does not exceed $5,000,000 or exceed $20,000,000 in the aggregate for all such
other projects and (c) Capital Expenditures consisting of the purchase of the
Leased Equipment pursuant to the terms of the Equipment Sublease and made out of
the proceeds of Supplemental Loans under Section 2.01(b) or (c) of the
Supplemental Credit Facility or Cash Equity Contributions, PROVIDED that such
proceeds or Cash Equity Contributions are sufficient for such purchase.
6.15 INVESTMENTS. Make or suffer to exist any Investment, OTHER
THAN:
(a) Investments in existence on the Closing Date and disclosed
on SCHEDULE 6.15;
(b) Investments consisting of Cash Equivalents;
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(c) Investments consisting of advances to officers, managers,
directors and employees of Borrower and its Subsidiaries for travel,
entertainment, relocation and analogous ordinary business purposes;
(d) Investments in wholly-owned Subsidiaries;
(e) Investments consisting of or evidencing the extension of
credit to customers or suppliers of Borrower and its Subsidiaries in the
ordinary course of business and any Investments received in satisfaction or
partial satisfaction thereof;
(f) Investments received in connection with the settlement of a
bona fide dispute with another Person; and
(g) Investments consisting of Guaranty Obligations permitted by
Section 6.9.
6.16 ACQUISITIONS. Make any Acquisition.
6.17 OPERATING LEASES. Enter, assume or otherwise incur any
obligation as lessee or sublessee under any operating lease (OTHER THAN the
Equipment Sublease and the Realty Lease) if to do so would result in the
aggregate obligation of Borrower and its Subsidiaries to pay rent and other
monetary amounts under all operating leases (OTHER THAN the Equipment Sublease
and the Realty Lease) to exceed $5,000,000 in any Fiscal Year.
6.18 SUBSIDIARY INDEBTEDNESS. Permit (whether or not otherwise
permitted under Section 6.9) any Subsidiary to create, incur, assume or suffer
to exist any Indebtedness or Guaranty Obligation, EXCEPT (a) the Subsidiary
Guaranty or (b) Indebtedness owed to Borrower or another Subsidiary of Borrower.
6.19 MANAGEMENT FEES. Accrue, in any Fiscal Year, to Parent or any
Affiliate of Parent a Management Fee in excess of $600,000.
6.20 AMENDMENTS TO EQUIPMENT SUBLEASE. Amend, modify or waive any
term or provision of the Equipment Sublease or consent to its termination
(except termination in accordance with its terms), or exercise any election or
option (other than an option related to any such termination in accordance with
its terms) which it may have thereunder without the prior written consent of the
Supermajority Lenders.
6.21 SUPPLEMENTAL LOAN AGREEMENT. Amend, modify, or waive any term
or provision of the Supplemental Loan Agreement, or consent to its termination,
without the prior written consent of the Supermajority Lenders.
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Article 7
CONSTRUCTION PERIOD COVENANTS
Borrower shall, unless the Managing Agent (with the written approval
of the Requisite Lenders) otherwise consents, during the Construction Period:
7.1 CONSTRUCTION OF PROJECT. Proceed diligently and without
interruption (EXCEPT as may be caused by events outside the control of Borrower)
to construct and furnish the Project in accordance in all material respects with
the Construction Plans, the Construction Budget and the Construction Timetable,
and in any event cause the Completion Date to occur not later than December 31,
1997.
7.2 AMENDMENTS TO PLANS AND BUDGETS. Not make any change to the
Construction Plans or Construction Budget which (a) would allocate or require
the allocation of the $10,000,000 "contingency" line item in the Construction
Budget to a significant change in the Construction Plans or to any line item not
included in the Construction Budget as of the Closing Date, (b) would increase
the Construction Budget to more than $202,000,000 unless the excess amount is
funded in its entirety by Cash Equity Contributions made subsequent to the
Closing Date or (c) would increase the Construction Budget in any event to more
than $207,000,000.
7.3 TIMETABLE. Not make any change to the Construction Plans, the
Construction Budget or the Construction Timetable which would cause the
Completion Date to occur after September 30, 1997.
7.4 CONSTRUCTION REQUIREMENTS. Construct the Project in a good and
workmanlike manner in accordance with sound building practices and the
Construction Plans, and comply in all material respects with all existing Laws
and requirements of all Governmental Agencies having jurisdiction over the
Project and with all future Laws and requirements that become applicable to the
Project prior to the Completion Date.
7.5 CONSTRUCTION SERVICES GROUP. Engage CSG, at the expense of
Borrower, to monitor the construction of the Project and provide CSG with such
information and access to the Project and individuals employed by Borrower, the
Architect and the Contractor as it may reasonably request for that purpose.
7.6 NOTICE OF CHANGES. Promptly provide the Managing Agent and CSG
with copies of all changes to the Construction Plans, Construction Budget,
Construction Timetable, Construction Contracts and Architect Contracts, and with
an advance draft copy of any proposed such change that involves more than
$1,000,000.
7.7 CONSTRUCTION PROGRESS REPORTS. Assist and cooperate with CSG in
all respects reasonably requested by CSG in order to permit CSG to provide such
periodic construction progress reports to the Managing Agent and the Lenders as
may be reasonably requested by the Managing Agent.
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7.8 CONSTRUCTION INFORMATION. Promptly provide to the Managing Agent
and CSG such information and documents respecting the Project as either may
reasonably request from time to time, INCLUDING detailed identification of each
significant subcontractor or supplier to the Project and the nature and dollar
amount of the related subcontract or supply contract.
7.9 CONSTRUCTION, PERMITS, LICENSES AND APPROVALS. Properly obtain,
comply with and keep in effect all permits, licenses and approvals which are
customarily required to be obtained from Governmental Agencies in order to
construct and occupy the Project as of the then current stage of construction,
and deliver copies of all such permits, licenses and approvals to the Managing
Agent promptly following a request therefor.
7.10 PURCHASE OF MATERIALS. Not purchase or contract for any
materials, equipment, furnishings, fixtures or articles of personal property to
be placed or installed on the Project Property under any security agreement or
other agreement where the seller reserves or purports to reserve title or the
right of removal or repossession (EXCEPT for such reservations as may arise
solely by operation of Law), or the right to consider such materials personal
property after their incorporation in the work of construction except for the
Equipment Sublease or unless the Managing Agent in each instance has authorized
Borrower to do so in writing.
7.11 PURCHASE OF OFFSITE MATERIALS. Promptly notify the Managing
Agent if it purchases (and pays all or a portion of the purchase price therefor)
any construction materials for the Project that are not located on the Project
Property, or will not be delivered to the Project Property within fifteen (15)
days after purchase (describing such construction materials, the purchase price
therefor and the location thereof) and, if requested by the Managing Agent,
provide to the Managing Agent the written acknowledgement of the Person having
custody of such construction materials of the existence of the Lenders' Lien on
such construction materials and the right of the Managing Agent to have access
to and to remove such construction materials at reasonable times.
7.12 SITE VISITS. Permit the Managing Agent, or any Lender, at any
reasonable time to enter and visit the Project Property for the purposes of
performing an appraisal, observing the work of construction and examining all
materials, plans, specifications, working drawings and other matters relating to
the construction of the Project.
7.13 PROTECTION AGAINST LIEN CLAIMS. Promptly pay when due (subject
to applicable retentions) or otherwise discharge all claims and Liens for labor
done and materials and services furnished in connection with the construction of
the Project, EXCEPT for claims contested in good faith by appropriate
proceedings and without prejudice to the Construction Timetable, PROVIDED that
any such claims are covered by such payment bonds or title insurance policy
endorsements as may be requested by the Managing Agent.
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7.14 COMPLETION CERTIFICATES. Upon completion of the Project,
provide the Managing Agent with a written certificate executed by the Architect
and Contractor certifying that the Project has been completed in all material
respects in accordance with the Construction Plans and complies in all material
respects with all applicable zoning, building and land use Laws and that the
Project is ready to be opened for business and upon the occurrence of the
Completion Date provide the Managing Agent with a Certificate executed by a
Senior Officer to that effect.
7.15 COMPLETION SURVEY. As soon as practicable after completion of
the Project, provide the Managing Agent with an ALTA survey of the Project
Property that (a) demonstrates compliance of the Project in all material
respects with all applicable Laws and requirements of Governmental Agencies,
(b) sets forth all easements and licenses burdening the Project Property,
(c) reflects no encroachments onto the Project Property and no encroachments by
the Project onto adjoining real property and (d) certifies the legal description
of the Project Property to be the same as that set forth in the title insurance
policies referred to in Section 9.1(A)(15).
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Article 8
INFORMATION AND REPORTING REQUIREMENTS
8.1 FINANCIAL AND BUSINESS INFORMATION. So long as any Advance
remains unpaid or any other Obligation remains unpaid, or any portion of the
Commitment remains in force, Borrower shall, unless the Managing Agent (with the
written approval of the Requisite Lenders) otherwise consents, at Borrower's
sole expense, deliver to the Managing Agent for distribution by it to the
Lenders, a sufficient number of copies for all of the Lenders of the following:
(a) As soon as practicable, and in any event by the 20th day of
the next following month, a construction progress report as of the last day
of the preceding calendar month during the Construction Period in a form
reasonably acceptable to the Managing Agent, which report shall compare the
status of construction and amounts expended to the Construction Timetable
and the Construction Budget; PROVIDED that the construction progress
reports delivered by CSG pursuant to Section 7.7 shall satisfy the form of
this requirement unless the Managing Agent notifies Borrower to the
contrary;
(b) As soon as practicable, and in any event by the 30th day of
the next following month, financial statements of Borrower for the
preceding calendar month (commencing with the first full calendar month
after the Completion Date) in a form reasonably acceptable to the Managing
Agent, together with a written narrative statement discussing any
significant trends reflected therein signed by a Senior Officer of
Borrower;
(c) As soon as practicable, and in any event within 45 days
after the end of each Fiscal Quarter (OTHER THAN the fourth Fiscal Quarter
in any Fiscal Year), (i) the consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the consolidated
statement of operations for such Fiscal Quarter, and its statement of cash
flows for the portion of the Fiscal Year ended with such Fiscal Quarter and
(ii) if applicable and if requested by the Managing Agent, the
consolidating balance sheets and statements of operations as at and for the
portion of the Fiscal Year ended with such Fiscal Quarter, all in
reasonable detail. Such financial statements shall be certified by a
Senior Officer of Borrower as fairly presenting the financial condition,
results of operations and cash flows of Borrower and its Subsidiaries in
accordance with Generally Accepted Accounting Principles (OTHER THAN
footnote disclosures), consistently applied, as at such date and for such
periods, subject only to normal year-end accruals and audit adjustments;
(d) As soon as practicable, and in any event within 120 days
after the end of each Fiscal Year, (i) the consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such Fiscal Year and the
consolidated statements of operations,
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stockholders' equity and cash flows, in each case of Borrower
and its Subsidiaries for such Fiscal Year and (ii) if applicable
and if requested by the Managing Agent, consolidating balance
sheets and statements of operations, in each case as at the end of
and for the Fiscal Year, all in reasonable detail. Such financial
statements shall be prepared in accordance with Generally Accepted
Accounting Principles, consistently applied, and such consolidated balance
sheet and consolidated statements shall be accompanied by a report of one
of the six largest public accounting firms in the United States of America
or other independent public accountants of recognized standing selected by
Borrower and reasonably satisfactory to the Requisite Lenders, which report
shall be prepared in accordance with generally accepted auditing standards
as at such date, and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any other qualification or
exception determined by the Requisite Lenders in their good faith business
judgment to be adverse to the interests of the Lenders. Such accountants'
report shall be accompanied by a certificate stating that, in making the
examination pursuant to generally accepted auditing standards necessary for
the certification of such financial statements and such report, such
accountants have obtained no knowledge of any Default or, if, in the
opinion of such accountants, any such Default shall exist, stating the
nature and status of such Default, and stating that such accountants have
reviewed Borrower's financial calculations as at the end of such Fiscal
Year (which shall accompany such certificate) under Sections 6.11 through
6.14, have read such Sections (including the definitions of all defined
terms used therein) and that nothing has come to the attention of such
accountants in the course of such examination that would cause them to
believe that the same were not calculated by Borrower in the manner
prescribed by this Agreement;
(e) As soon as practicable, and in any event within 45 days
after the commencement of each Fiscal Year, a budget and projection by
Fiscal Quarter for that Fiscal Year and by Fiscal Year for the next four
succeeding Fiscal Years, INCLUDING for the first such Fiscal Year,
projected consolidated balance sheets, statements of operations and
statements of cash flow and, for the second and third such Fiscal Years,
projected consolidated condensed balance sheets and statements of
operations and cash flows, of Borrower and its Subsidiaries, all in
reasonable detail;
(f) Promptly after request by the Managing Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of Borrower by independent accountants in connection with the
accounts or books of Borrower or any of its Subsidiaries, or any audit of
any of them;
(g) Concurrently with delivery thereof to the banks under the
Parent Bank Credit Facility, copies of the quarterly and annual financial
statements of Parent furnished to such banks by Parent (or, if there is at
any time no Parent Bank Credit Facility, the financial statements required
to be delivered under the Parent
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Bank Credit Facility as it existed immediately prior to its ceasing to be
in effect); PROVIDED that the delivery of any such financial statements
to the agent under the Parent Bank Credit Facility shall satisfy the
requirement of this Section 8.1(G) as to any Lender that is also a bank
under that credit facility;
(h) Promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent
to the stockholders of Parent, and copies of all annual, regular, periodic
and special reports and registration statements which Parent may file or be
required to file with the Securities and Exchange Commission under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and
not otherwise required to be delivered to the Lenders pursuant to other
provisions of this Section;
(i) Promptly after request by the Managing Agent or any Lender,
copies of the Nevada "Regulation 6.090 Report" and "6-A Report" and copies
of any written communication to Parent or Borrower from any Gaming Board
advising it of a violation of or non-compliance with any Gaming Law by
Parent or Borrower;
(j) Promptly after request by the Managing Agent or any Lender,
copies of any other report or other document (except any such report or
document pertaining solely to personal matters respecting an individual)
that was filed by Borrower or any of its Subsidiaries with any Governmental
Agency;
(k) Promptly upon a Senior Officer of Borrower becoming aware,
and in any event within ten (10) Banking Days after the occurrence of any
(i) "reportable event" (as such term is defined in Section 4043 of ERISA)
or (ii) "prohibited transaction" (as such term is defined in Section 406
of ERISA or Section 4975 of the Code) in connection with any Pension Plan
or any trust created thereunder, telephonic notice specifying the nature
thereof, and, no more than five (5) Banking Days after such telephonic
notice, written notice again specifying the nature thereof and specifying
what action Borrower or any of its Subsidiaries is taking or proposes to
take with respect thereto, and, when known, any action taken by the
Internal Revenue Service with respect thereto;
(l) As soon as practicable, and in any event within
two (2) Banking Days after a Senior Officer of Borrower becomes aware of
the existence of any condition or event which constitutes a Default or
Event of Default, telephonic notice specifying the nature and period of
existence thereof, and, no more than two (2) Banking Days after such
telephonic notice, written notice again specifying the nature and period of
existence thereof and specifying what action Borrower or its Subsidiaries
are taking or propose to take with respect thereto;
(m) Promptly upon a Senior Officer of Borrower becoming aware
that (i) any Person has commenced a legal proceeding with
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respect to a claim against Borrower or any of its Subsidiaries that is
$2,000,000 or more in excess of the amount thereof that is fully covered
by insurance, (ii) any creditor under a credit agreement involving
Indebtedness of $2,000,000 or more or any lessor under a lease involving
aggregate remaining rent of $2,000,000 or more has asserted a default
thereunder on the part of Borrower or any of its Subsidiaries, (iii) any
Person has commenced a legal proceeding with respect to a claim against
Borrower or any of its Subsidiaries under a contract that is not a credit
agreement or material lease in excess of $2,000,000 or which otherwise may
reasonably be expected to result in a Material Adverse Effect, (iv) any
labor union has notified Borrower of its intent to strike Borrower or any
of its Subsidiaries on a date certain and such strike would involve more
than 100 employees of Borrower or its Subsidiaries, or (v) any Gaming Board
has indicated its intent to consider or act upon a License Revocation or a
fine or penalty of $1,000,000 or more with respect to Borrower or any of
its Subsidiaries, a written notice describing the pertinent facts relating
thereto and what action Borrower or its Subsidiaries are taking or propose
to take with respect thereto; and
(n) Such other data and information as from time to time may be
reasonably requested by the Managing Agent, any Lender (through the
Managing Agent) or the Requisite Lenders.
8.2 COMPLIANCE CERTIFICATES. So long as any Advance remains unpaid
or any other Obligation remains unpaid or unperformed, or any portion of the
Commitment remains outstanding, Borrower shall, at Borrower's sole expense,
deliver to the Managing Agent for distribution by it to the Lenders concurrently
with the financial statements required pursuant to Sections 8.1(C) and 8.1(D),
Compliance Certificates signed by a Senior Officer of Borrower.
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Article 9
CONDITIONS
9.1 INITIAL ADVANCES. The obligation of each Lender to make the
initial Advance to be made by it is subject to the following conditions
precedent, each of which shall be satisfied prior to the making of the initial
Advances (unless all of the Lenders, in their sole and absolute discretion,
shall agree otherwise):
(a) The Managing Agent shall have received all of the following,
each of which shall be originals unless otherwise specified, each properly
executed by a Responsible Official of each party thereto, each dated as of
the Closing Date and each in form and substance satisfactory to the
Managing Agent and its legal counsel (unless otherwise specified or, in the
case of the date of any of the following, unless the Managing Agent
otherwise agrees or directs):
(1) at least one (1) executed counterpart of this Agreement,
together with arrangements satisfactory to the Managing Agent for
additional executed counterparts, sufficient in number for
distribution to the Lenders and Borrower;
(2) Notes executed by Borrower in favor of each Lender, each in
a principal amount equal to that Lender's Pro Rata Share of the
Commitment;
(3) the Subsidiary Guaranty executed by each Subsidiary of
Borrower (if any are in existence on the Closing Date);
(4) the Security Agreement executed by Borrower and each
Subsidiary of Borrower (if any are in existence on the Closing Date);
(5) the Collateral Assignment executed by Borrower;
(6) such financing statements on Form UCC-1 executed by Borrower
and each Subsidiary of Borrower (if any are in existence on the
Closing Date) with respect to the Security Agreement and Collateral
Assignment as the Managing Agent may request;
(7) the Pledge Agreement executed by Parent together with the
Pledged Collateral accompanied by appropriate stock powers endorsed in
blank;
(8) such financing statements on Form UCC-1 executed by Parent
with respect to the Pledge Agreement as the Managing Agent may
request;
(9) the Completion Guaranty executed by Parent;
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(10) a copy of the Supplemental Loan Agreement executed by Parent
and Borrower in a form acceptable to the Lenders, together with a
Certificate of a Senior Officer of Borrower that the representations
of Parent therein are true and correct and that all conditions
precedent in Section 3.01 thereof to the obligations of Parent
thereunder have been satisfied;
(11) the Deed of Trust executed by Borrower;
(12) with respect to Parent, Borrower and each Subsidiary of
Borrower (if any are in existence on the Closing Date), such
documentation as the Managing Agent may require to establish the due
organization, valid existence and good standing of Parent, Borrower
and each such Subsidiary, its qualification to engage in business in
each material jurisdiction in which it is engaged in business or
required to be so qualified, its authority to execute, deliver and
perform any Loan Documents to which it is a Party, the identity,
authority and capacity of each Responsible Official thereof authorized
to act on its behalf, INCLUDING (if applicable) certified copies of
articles of incorporation or organization and amendments thereto,
bylaws or operating agreements and amendments thereto, certificates of
good standing and/or qualification to engage in business, tax
clearance certificates, certificates of corporate or other
organizational resolutions, incumbency certificates, Certificates of
Responsible Officials, and the like;
(13) the Opinions of Counsel;
(14) a preliminary written appraisal by a qualified independent
appraiser acceptable to the Managing Agent of the Project Property
that reflects an aggregate fair market value thereof (INCLUDING the
value of the Leased Equipment) on an as-built stabilized basis of not
less than $170,000,000;
(15) assurances from the Title Company that it is prepared to
issue its "LP-10" ALTA construction lenders title policy (or such
other lenders title policy determined by the Managing Agent to be the
equivalent thereof) insuring the Lien of the Deed of Trust in an
amount not less than the fair market value of the Project Property as
determined by the foregoing appraisal (PROVIDED, however, that the
title insurance amount shall not exceed the Commitment), subject only
to such exceptions as are reasonably acceptable to the Managing Agent,
with such title policy endorsements as the Managing Agent may
reasonably require and with such assurances as the Managing Agent may
reasonably require from title re-insurers acceptable to the Managing
Agent, TOGETHER WITH the written commitment of the Title Company to
issue on or before the Completion Date its replacement ALTA title
policy in the same form with such title policy endorsements as the
Managing Agent may reasonably require;
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(16) the Landlord Consent and Agreement executed by the lessors
under the Realty Lease;
(17) a "Phase I" environmental report with respect to the Project
Property prepared by a qualified independent environmental expert
acceptable to the Managing Agent, together with a Certificate of a
Senior Officer of Borrower to the effect that no event or circumstance
has occurred since the date thereof that would cause such report to be
inaccurate in any respect that is materially adverse to the interests
of the Lenders;
(18) a Certificate of insurance issued by Borrower's insurance
carrier or agent with respect to the insurance required to be
maintained pursuant to the Deed of Trust, together with lenders' loss
payable endorsements thereof on Form 438BFU or other form acceptable
to the Managing Agent;
(19) a Certificate of a Senior Officer of Borrower attaching the
Construction Plans, the Construction Budget and the Construction
Timetable, each of which shall be consistent in all material respects
with the representations respecting them previously made to the
Managing Agent and the Lenders;
(20) a letter from CSG stating that it has reviewed the
Construction Plans, the Construction Budget and the Construction
Timetable and believes them to be reasonable and feasible;
(21) a Certificate of a Senior Officer of Borrower attaching a
copy of the Equipment Lease and the Equipment Sublease, which shall be
satisfactory in form and substance to the Lenders;
(22) the Intercreditor Agreement executed by or on behalf of the
Equipment Lessors;
(23) a Certificate of a Senior Officer of Borrower attaching a
copy of the Architect Contracts;
(24) the Architect's Certificate and Consent executed by the
Architect;
(25) a Certificate of a Senior Officer of Borrower attaching a
copy of the Construction Contract;
(26) the Contractor's Certificate and Consent executed by the
Contractor;
(27) [Intentionally Deleted]
(28) a Certificate of a Senior Officer of Parent certifying that
performance of the Completion Guaranty and the
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Supplemental Loan Agreement will not violate any indenture, credit
agreement or other material agreement of Parent;
(29) a Certificate of a Senior Officer of Borrower certifying
that the attached copy of the Management Agreement dated as of
September 21, 1996 between Parent and Borrower is true copy, which
Management Agreement is in form and substance acceptable to the
Managing Agent;
(30) a Certificate of a Senior Officer of Borrower setting forth
all permits which it holds from Governmental Agencies with respect to
construction of the Project, together with a letter from CSG stating
that such permits are those customarily obtained at the then current
stage of construction and that, in its opinion, the remaining permits
will be obtained in due course without adversely affecting the
Construction Timetable;
(31) a Certificate signed by a Senior Officer of Borrower
certifying that the representation contained in Section 4.17 is true
and correct and that the conditions specified in Sections 9.1(h) and
9.1(i) have been satisfied; and
(32) such other assurances, certificates, documents, consents or
opinions as the Managing Agent reasonably may require.
(b) The arrangement fee payable pursuant to Section 3.2 shall
have been paid.
(c) The upfront fees payable pursuant to Section 3.3 shall have
been paid.
(d) Any agency fees payable on the Closing Date pursuant to
Section 3.6 shall have been paid.
(e) Any co-agency fees payable on the Closing Date pursuant to
Section 3.7 shall have been paid.
(f) The reasonable costs and expenses of the Managing Agent in
connection with the preparation of the Loan Documents payable pursuant to
Section 12.3, and invoiced to Borrower prior to the Closing Date, shall
have been paid.
(g) The Managing Agent shall be satisfied that the Collateral
Documents create a first priority Lien in the Collateral (subject only to
Permitted Encumbrances and such other exceptions as may be acceptable to
the Lenders), and that the funds required to terminate the existing Lien on
the Project Property securing an obligation of approximately $6,150,000
have been provided from a source other than a Loan hereunder.
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(h) The representations and warranties of Borrower contained
in ARTICLE 4 shall be true and correct.
(i) Borrower and any other Parties shall be in compliance with
all the terms and provisions of the Loan Documents, and giving effect to
the initial Advance no Default or Event of Default shall have occurred
and be continuing.
(j) All legal matters relating to the Loan Documents shall be
satisfactory to Sheppard, Mullin, Richter & Hampton, special counsel to
the Managing Agent.
(k) The Closing Date shall have occurred on or before
September 30, 1996.
9.2 INITIAL ADVANCES - FURTHER CONDITIONS. The obligation of each
Lender to make the initial Advance to be made by it is subject to the further
conditions to be satisfied prior to the making of the initial Advances (unless
all of the Lenders, in their sole and absolute discretion shall agree otherwise)
that:
(a) the Managing Agent shall have received the final written
appraisal by a qualified independent appraiser acceptable to the Managing
Agent and complying in all respects with FIRREA of the Project Property
and either (i) such appraisal reflects an aggregate fair market value
thereof (INCLUDING the value of the Leased Equipment) on an as-built
stabilized basis of not less than $170,000,000 or (ii) Parent
concurrently makes a Cash Equity Contribution in an amount at least equal
to the amount by which the fair market value set forth in such appraisal
is less than $170,000,000; and
(b) the Managing Agent shall have received a Certificate of a
Senior Officer of Borrower stating that Borrower has received permanent
equity contributions from Parent of not less than $52,000,000.
9.3 ADVANCES - SPECIAL CONDITION. The obligation of each Lender to
make any Advance is subject to the condition precedent (unless the Supermajority
Lenders, in their sole and absolute discretion, shall otherwise agree) that,
giving effect to such Advance, the Lenders will not have funded pursuant to this
Agreement more than fifty-five percent (55%) of the Total Incurred Project Cost
as of such date, and the Managing Agent shall have received a written
certification to that effect from CSG.
9.4 ANY ADVANCE. The obligation of each Lender to make any Advance
is subject to the following conditions precedent (unless the Requisite Lenders,
in their sole and absolute discretion, shall agree otherwise):
(a) EXCEPT (i) for representations and warranties which
expressly speak as of a particular date or are no longer true and correct
as a result of a change which is permitted by this Agreement
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or (ii) as disclosed by Borrower and approved in writing by the Requisite
Lenders, the representations and warranties contained in ARTICLE 4 (OTHER
THAN Sections 4.4(a), 4.6 (first sentence), 4.10, 4.17 and 4.19) shall be
true and correct on and as of the date of the Advance as though made on
that date;
(b) other than matters described in SCHEDULE 4.10 or not
required as of the Closing Date to be therein described, there shall not
be then pending or threatened any action, suit, proceeding or
investigation against or affecting Borrower or any of its Subsidiaries or
any Property of any of them before any Governmental Agency that
constitutes a Material Adverse Effect;
(c) the Managing Agent shall have timely received a Request
for Loan in compliance with ARTICLE 2 (or telephonic or other request for
Loan referred to in the second sentence of Section 2.1(b), if
applicable); and
(d) the Managing Agent shall have received, in form and
substance satisfactory to the Managing Agent, such other assurances,
certificates, documents or consents related to the foregoing as the
Managing Agent or Requisite Lenders reasonably may require.
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Article 10
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
10.1 EVENTS OF DEFAULT. The existence or occurrence of any one or
more of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:
(a) Borrower fails to pay any principal on any of the Notes,
or any portion thereof, on the date when due; or
(b) Borrower fails to pay any interest on any of the Notes, or
any fees under Sections 3.4, 3.5 or 3.6, or any portion thereof, within
two (2) Banking Days after the date when due; or fails to pay any other
fee or amount payable to the Lenders under any Loan Document, or any
portion thereof, within two (2) Banking Days after demand therefor; or
(c) Borrower fails to comply with any of the covenants
contained in Sections 5.1, 5.4, 5.6, 5.13 or ARTICLE 6; or
(d) Borrower fails to comply with Section 8.1(l) in any
respect that is materially adverse to the interests of the Lenders; or
(e) Borrower, any of its Subsidiaries or any other Party fails
to perform or observe any other covenant or agreement (not specified in
clause (a), (b), (c) or (d) above) contained in any Loan Document on its
part to be performed or observed within ten (10) Banking Days after the
giving of notice by the Managing Agent on behalf of the Requisite Lenders
of such Default; or
(f) Any representation or warranty of Borrower or any of its
Subsidiaries or any other Party made in any Loan Document, or in any
certificate or other writing delivered by Borrower or such Subsidiary or
Party pursuant to any Loan Document, proves to have been incorrect when
made or reaffirmed in any respect that is materially adverse to the
interests of the Lenders; or
(g) Borrower or any of its Subsidiaries (i) fails to pay the
principal, or any principal installment, of any present or future
Indebtedness of $2,000,000 or more, or any guaranty of present or future
Indebtedness of $2,000,000 or more, on its part to be paid, when due (or
within any stated grace period), whether at the stated maturity, upon
acceleration, by reason of required prepayment or otherwise or (ii) fails
to perform or observe any other term, covenant or agreement on its part
to be performed or observed, or suffers any event of default to occur, in
connection with any present or future Indebtedness of $2,000,000 or more,
or of any guaranty of present or future Indebtedness of $2,000,000 or
more, if as a result of such failure or sufferance any holder or holders
thereof (or an agent or trustee on its or their behalf) has the right to
declare such Indebtedness due before the date on which it otherwise would
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become due or the right to require Borrower or any of its Subsidiaries to
redeem or purchase, or offer to redeem or purchase, all or any portion of
such Indebtedness (provided, that for the purposes of this clause (g),
the principal amount of Indebtedness consisting of a Swap Agreement shall
be the amount which is then payable by the counterparty to close out the
Swap Agreement); or
(h) The occurrence of an Event of Default (as such term is
defined under the Parent Bank Credit Facility) under the Parent Bank
Credit Facility; or
(i) Any event occurs which gives the holder or holders of any
Subordinated Obligation of $2,000,000 or more (or an agent or trustee on
its or their behalf) the right to declare such Subordinated Obligation
due before the date on which it otherwise would become due, or the right
to require the issuer thereof to redeem or purchase, or offer to redeem
or purchase, all or any portion of any such Subordinated Obligation; or
the trustee for, or any holder of, a Subordinated Obligation breaches any
subordination provision applicable to such Subordinated Obligation; or
(j) Any Loan Document, at any time after its execution and
delivery and for any reason OTHER THAN the agreement or action (or
omission to act) of the Managing Agent or any of the Lenders or
satisfaction in full of all the Obligations ceases to be in full force
and effect or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect which is materially
adverse to the interests of the Lenders; or any Collateral Document
ceases (other than by action or inaction of the Managing Agent or any
Lender) to create a valid and effective Lien in any material Collateral
covered thereby; or any Party thereto denies in writing that it has any
or further liability or obligation under any Loan Document in accordance
with its terms, or purports to revoke, terminate or rescind same; or
Parent denies in writing that it has any or further liability or
obligation under the Supplemental Loan Agreement in accordance with its
terms, or purports to revoke, terminate or rescind same; or
(k) A final judgment against Borrower or any of its
Subsidiaries is entered for the payment of money in excess of $2,000,000
(not covered by insurance or for which an insurer has reserved its
rights) and, absent procurement of a stay of execution, such judgment
remains unsatisfied for thirty (30) calendar days after the date of entry
of judgment, or in any event later than five (5) days prior to the date
of any proposed sale thereunder; or any writ or warrant of attachment or
execution or similar process is issued or levied against all or any
material part of the Property of any such Person and is not released,
vacated or fully bonded within thirty (30) calendar days after its issue
or levy; or
(l) Borrower or any of its Subsidiaries institutes or consents
to the institution of any proceeding under a Debtor Relief Law relating
to it or to all or any material part of its Property, or
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is unable or admits in writing its inability to pay its debts as they
mature, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its Property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer is appointed without the application or consent of
that Person and the appointment continues undischarged or unstayed for
sixty (60) calendar days; or any proceeding under a Debtor Relief Law
relating to any such Person or to all or any part of its Property is
instituted without the consent of that Person and continues
undismissed or unstayed for sixty (60) calendar days; or
(m) The occurrence of an Event of Default (as such term is or
may hereafter be specifically defined in any other Loan Document) under
any other Loan Document; or
(n) A final judgment is entered by a court of competent
jurisdiction that any Subordinated Obligation is not subordinated in
accordance with its terms to the Obligations; or
(o) The occurrence of an Event of Default (as such term or
analogous term is or may hereafter be specifically defined in the
Equipment Lease or Equipment Sublease) under the Equipment Lease or
Equipment Sublease, or the occurrence of any event of default (after the
expiration of all grace or notice periods) under any other operating
lease covering Property valued at $2,000,000 or more to which Borrower is
a party as lessee or sublessee; or
(p) The occurrence of a Default (as such term or analogous
term is or may hereafter be specifically defined under the Realty Lease)
under the Realty Lease; or
(q) During the period ending on the date that is six (6)
months after the Completion Date, (i) the Equipment Lease and the Parent
Bank Credit Facility both cease to be in effect, and (ii) Parent fails to
be in compliance with the covenants contained in Sections 9.11 or 9.12 of
the Parent Bank Credit Facility as such covenants existed as of the date
the Parent Bank Credit Facility ceased to be in effect; or
(r) Any Pension Plan maintained by Borrower or any of its
ERISA Affiliates is determined to have a material "accumulated funding
deficiency" as that term is defined in Section 302 of ERISA and the
result is a Material Adverse Effect; or
(s) The occurrence of a Change of Ownership or a Parent Change
of Control; or
(t) The failure of the Completion Date to occur prior to
December 31, 1997; or
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(u) The occurrence of a License Revocation that continues for
three (3) consecutive calendar days.
10.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other
rights or remedies of the Managing Agent or the Lenders provided for elsewhere
in this Agreement, or the other Loan Documents, or by applicable Law, or in
equity, or otherwise:
(a) Upon the occurrence, and during the continuance, of any Event
of Default OTHER THAN an Event of Default described in Section 10.1(l):
(1) the Commitment to make Advances and all other obligations
of the Managing Agent or the Lenders and all rights of Borrower and
any other Parties under the Loan Documents shall be suspended
without notice to or demand upon Borrower, which are expressly
waived by Borrower, EXCEPT that all of the Lenders or the Requisite
Lenders (as the case may be, in accordance with Section 12.2) may
waive an Event of Default or, without waiving, determine, upon terms
and conditions satisfactory to the Lenders or Requisite Lenders, as
the case may be, to reinstate the Commitment and such other
obligations and rights and make further Advances, which waiver or
determination shall apply equally to, and shall be binding upon, all
the Lenders;
(2) the Requisite Lenders may request the Managing Agent to,
and the Managing Agent thereupon shall, terminate the Commitment
and/or declare all or any part of the unpaid principal of all Notes,
all interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents to be forthwith due and payable,
whereupon the same shall become and be forthwith due and payable,
without protest, presentment, notice of dishonor, demand or further
notice of any kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence, and during the continuance, of any
Event of Default described in Section 10.1(l):
(1) the Commitment to make Advances and all other obligations
of the Managing Agent or the Lenders and all rights of Borrower and
any other Parties under the Loan Documents shall terminate without
notice to or demand upon Borrower, which are expressly waived by
Borrower, EXCEPT that all of the Lenders may waive the Event of
Default or, without waiving, determine, upon terms and conditions
satisfactory to all the Lenders, to reinstate the Commitment and
such other obligations and rights and make further Advances which
determination shall apply equally to, and shall be binding upon, all
the Lenders; and
(2) the unpaid principal of all Notes, all interest accrued
and unpaid thereon and all other amounts payable under
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the Loan Documents shall be forthwith due and payable, without
protest, presentment, notice of dishonor, demand or further notice
of any kind, all of which are expressly waived by Borrower.
(c) Upon the occurrence, and during the continuance, of any
Event of Default, the Lenders and the Managing Agent, without notice to
(EXCEPT as expressly provided for in any Loan Document) or demand upon
Borrower, which are expressly waived by Borrower (EXCEPT as to notices
expressly provided for in any Loan Document), may proceed (but only with
the consent of the Requisite Lenders) to protect, exercise and enforce
their rights and remedies under the Loan Documents against Borrower and
any other Party and such other rights and remedies as are provided by Law
or equity.
(d) In addition to any other rights and remedies, if an Event
of Default occurs prior to the Completion Date, the Managing Agent and
the Lenders shall have the right to (i) obtain the appointment of a
receiver to take possession of the Project (and Borrower agrees not to
contest the appointment of such receiver except in good faith) and
(ii) take such steps as the Managing Agent and the Lenders reasonably
deem necessary or appropriate to complete construction of the Project,
INCLUDING making any changes to the Construction Plans, Construction
Budget or Construction Timetable and/or terminating or amending any of
the Architect Contracts, Construction Contracts or any other contract or
arrangement related to the Project; PROVIDED, however, that the Managing
Agent shall be responsible for any breach of contract resulting from any
such change, termination or amendment. Any such action shall not be
construed as an assumption of responsibility by the Managing Agent or the
Lenders to complete the Project, and such steps may be discontinued at
any time. Any such action shall not be construed to make the Managing
Agent or the Lenders a partner or joint venturer with Borrower. All
amounts expended by the Managing Agent and the Lenders for the completion
of the Project shall be deemed additional Advances and shall be secured
by the Collateral Documents.
(e) The order and manner in which the Lenders' rights and
remedies are to be exercised shall be determined by the Requisite Lenders
in their sole discretion, and all payments received by the Managing Agent
and the Lenders, or any of them, shall be applied first to the costs and
expenses (including reasonable attorneys' fees and disbursements and the
reasonably allocated costs of attorneys employed by the Managing Agent or
by any Lender) of the Managing Agent and of the Lenders, and thereafter
paid pro rata to the Lenders in the same proportions that the aggregate
Obligations owed to each Lender under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders,
without priority or preference among the Lenders. Regardless of how each
Lender may treat payments for the purpose of its own accounting, for the
purpose of computing Borrower' Obligations hereunder and under the Notes,
payments shall be applied FIRST, to the costs and expenses of the
Managing Agent and the Lenders, as set forth above, SECOND, to the
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payment of accrued and unpaid interest due under any Loan Documents to
and including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under each
of the Loan Documents), and THIRD, to the payment of all other amounts
(including principal and fees) then owing to the Managing Agent or the
Lenders under the Loan Documents. Amounts due to a Lender under a
Secured Swap Agreement shall be considered a principal amount for
purposes of the preceding sentence. No application of payments will cure
any Event of Default, or prevent acceleration, or continued acceleration,
of amounts payable under the Loan Documents, or prevent the exercise, or
continued exercise, of rights or remedies of the Lenders hereunder or
thereunder or at Law or in equity.
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Article 11
THE MANAGING AGENT
11.1 APPOINTMENT AND AUTHORIZATION. Subject to Section 11.8, each
Lender hereby irrevocably appoints and authorizes the Managing Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Managing Agent by the terms thereof or are
reasonably incidental, as determined by the Managing Agent, thereto. This
appointment and authorization is intended solely for the purpose of facilitating
the servicing of the Loans and does not constitute appointment of the Managing
Agent as trustee for any Lender or as representative of any Lender for any other
purpose and, EXCEPT as specifically set forth in the Loan Documents to the
contrary, the Managing Agent shall take such action and exercise such powers
only in an administrative and ministerial capacity.
11.2 MANAGING AGENT AND AFFILIATES. Bank of America National Trust
and Savings Association (and each successor Managing Agent) has the same rights
and powers under the Loan Documents as any other Lender and may exercise the
same as though it were not the Managing Agent, and the term "Lender" or
"Lenders" includes Bank of America National Trust and Savings Association in its
individual capacity. Bank of America National Trust and Savings Association
(and each successor Managing Agent) and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust or other
business with Borrower, any Subsidiary thereof, or any Affiliate of Borrower or
any Subsidiary thereof, as if it were not the Managing Agent and without any
duty to account therefor to the Lenders. Bank of America National Trust and
Savings Association (and each successor Managing Agent) need not account to any
other Lender for any monies received by it for reimbursement of its costs and
expenses as Managing Agent hereunder, or for any monies received by it in its
capacity as a Lender hereunder. The Managing Agent shall not be deemed to hold
a fiduciary relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Managing Agent.
11.3 PROPORTIONATE INTEREST IN ANY COLLATERAL. The Managing Agent,
on behalf of all the Lenders, shall hold in accordance with the Loan Documents
all items of any collateral or interests therein received or held by the
Managing Agent. Subject to the Managing Agent's and the Lenders' rights to
reimbursement for their costs and expenses hereunder (INCLUDING reasonable
attorneys' fees and disbursements and other professional services and the
reasonably allocated costs of attorneys employed by the Managing Agent or a
Lender) and subject to the application of payments in accordance with Section
10.2(D), each Lender shall have an interest in the Lenders' interest in the
Collateral or interests therein in the same proportions that the aggregate
Obligations owed such Lender under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Lenders, without priority
or preference among the Lenders, EXCEPT that Obligations owed to any Lender (or
Affiliate of a Lender) under a Secured Swap Agreement shall be secured on a PARI
passu basis with all other Obligations up to an amount equal to the Managing
Agent's then
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customary credit risk factor for Swap Agreements times the notional amount
of Indebtedness covered by such Secured Swap Agreement and shall be secured
on a subordinate basis as to amounts in excess of such amount.
11.4 LENDERS' CREDIT DECISIONS. Each Lender agrees that it has,
independently and without reliance upon the Managing Agent, any other Lender or
the directors, officers, agents, employees or attorneys of the Managing Agent or
of any other Lender, and instead in reliance upon information supplied to it by
or on behalf of Borrower and upon such other information as it has deemed
appropriate, made its own independent credit analysis and decision to enter into
this Agreement. Each Lender also agrees that it shall, independently and
without reliance upon the Managing Agent, any other Lender or the directors,
officers, agents, employees or attorneys of the Managing Agent or of any other
Lender, continue to make its own independent credit analyses and decisions in
acting or not acting under the Loan Documents.
11.5 ACTION BY MANAGING AGENT.
(a) Absent actual knowledge of the Managing Agent of the
existence of a Default, the Managing Agent may assume that no Default has
occurred and is continuing, unless the Managing Agent (or the Lender that
is then the Managing Agent) has received notice from Borrower stating the
nature of the Default or has received notice from a Lender stating the
nature of the Default and that such Lender considers the Default to have
occurred and to be continuing.
(b) The Managing Agent has only those obligations under the
Loan Documents as are expressly set forth therein.
(c) EXCEPT for any obligation expressly set forth in the Loan
Documents and as long as the Managing Agent may assume that no Event of
Default has occurred and is continuing, the Managing Agent may, but shall
not be required to, exercise its discretion to act or not act, EXCEPT
that the Managing Agent shall be required to act or not act upon the
instructions of the Requisite Lenders (or of all the Lenders, to the
extent required by Section 12.2) and those instructions shall be binding
upon the Managing Agent and all the Lenders, PROVIDED that the Managing
Agent shall not be required to act or not act if to do so would be
contrary to any Loan Document or to applicable Law or would result, in
the reasonable judgment of the Managing Agent, in substantial risk of
liability to the Managing Agent.
(d) If the Managing Agent has received a notice specified in
clause (A), the Managing Agent shall immediately give notice thereof to
the Lenders and shall act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by
Section 12.2), PROVIDED that the Managing Agent shall not be required to
act or not act if to do so would be contrary to any Loan Document or to
applicable Law or would result, in the reasonable judgment of the
Managing Agent, in substantial risk of liability to the Managing Agent,
and EXCEPT that if the Requisite
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Lenders (or all the Lenders, if required under Section 12.2) fail, for
five (5) Banking Days after the receipt of notice from the Managing
Agent, to instruct the Managing Agent, then the Managing Agent, in its
sole discretion, may act or not act as it deems advisable for the
protection of the interests of the Lenders.
(e) The Managing Agent shall have no liability to any Lender
for acting, or not acting, as instructed by the Requisite Lenders (or all
the Lenders, if required under Section 12.2), notwithstanding any other
provision hereof.
11.6 LIABILITY OF MANAGING AGENT. Neither the Managing Agent nor
any of its directors, officers, agents, employees or attorneys shall be liable
for any action taken or not taken by them under or in connection with the Loan
Documents, EXCEPT for their own gross negligence or willful misconduct. Without
limitation on the foregoing, the Managing Agent and its directors, officers,
agents, employees and attorneys:
(a) May treat the payee of any Note as the holder thereof
until the Managing Agent receives notice of the assignment or transfer
thereof, in form satisfactory to the Managing Agent, signed by the payee,
and may treat each Lender as the owner of that Lender's interest in the
Obligations for all purposes of this Agreement until the Managing Agent
receives notice of the assignment or transfer thereof, in form
satisfactory to the Managing Agent, signed by that Lender;
(b) May consult with legal counsel (INCLUDING in-house legal
counsel), accountants (INCLUDING in-house accountants) and other
professionals or experts selected by it, or with legal counsel,
accountants or other professionals or experts for Borrower and/or their
Subsidiaries or the Lenders, and shall not be liable for any action taken
or not taken by it in good faith in accordance with any advice of such
legal counsel, accountants or other professionals or experts;
(c) Shall not be responsible to any Lender for any statement,
warranty or representation made in any of the Loan Documents or in any
notice, certificate, report, request or other statement (written or oral)
given or made in connection with any of the Loan Documents;
(d) EXCEPT to the extent expressly set forth in the Loan
Documents, shall have no duty to ask or inquire as to the performance or
observance by Borrower or its Subsidiaries of any of the terms,
conditions or covenants of any of the Loan Documents or to inspect any
Collateral or the Property, books or records of Borrower or their
Subsidiaries;
(e) Will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
effectiveness, sufficiency or value of any Loan Document, any other
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instrument or writing furnished pursuant thereto or in connection
therewith, or any Collateral;
(f) Will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate, statement,
request or other instrument or writing believed in good faith by it to be
genuine and signed or sent by the proper party or parties; and
(g) Will not incur any liability for any arithmetical error in
computing any amount paid or payable by the Borrower or any Subsidiary or
Affiliate thereof or paid or payable to or received or receivable from
any Lender under any Loan Document, INCLUDING, principal, interest,
commitment fees, Advances and other amounts; PROVIDED that, promptly upon
discovery of such an error in computation, the Managing Agent, the
Lenders and (to the extent applicable) Borrower and/or its Subsidiaries
or Affiliates shall make such adjustments as are necessary to correct
such error and to restore the parties to the position that they would
have occupied had the error not occurred.
11.7 INDEMNIFICATION. Each Lender shall, ratably in accordance
with its Pro Rata Share of the Commitment (if the Commitment is then in effect)
or in accordance with its proportion of the aggregate Indebtedness then
evidenced by the Notes (if the Commitment has then been terminated), indemnify
and hold the Managing Agent and its directors, officers, agents, employees and
attorneys harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (INCLUDING reasonable attorneys' fees and
disbursements and allocated costs of attorneys employed by the Managing Agent)
that may be imposed on, incurred by or asserted against it or them in any way
relating to or arising out of the Loan Documents (other than losses incurred by
reason of the failure of Borrower to pay the Indebtedness represented by the
Notes) or any action taken or not taken by it as Managing Agent thereunder,
EXCEPT such as result from its own gross negligence or willful misconduct.
Without limitation on the foregoing, each Lender shall reimburse the Managing
Agent upon demand for that Lender's Pro Rata Share of any out-of-pocket cost or
expense incurred by the Managing Agent in connection with the negotiation,
preparation, execution, delivery, amendment, waiver, restructuring,
reorganization (INCLUDING a bankruptcy reorganization), enforcement or attempted
enforcement of the Loan Documents, to the extent that Borrower or any other
Party is required by Section 12.3 to pay that cost or expense but fails to do so
upon demand. Nothing in this Section 11.7 shall entitle the Managing Agent or
any indemnitee referred to above to recover any amount from the Lenders if and
to the extent that such amount has theretofore been recovered from Borrower or
any other Party. To the extent that the Managing Agent or any indemnitee
referred to above is later reimbursed such cost or expense by Borrower or any
other Party, it shall return the amounts paid to it by the Lenders in respect of
such cost or expense.
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11.8 SUCCESSOR MANAGING AGENT. The Managing Agent may, and at the
request of the Requisite Lenders shall, resign as Managing Agent upon reasonable
notice to the Lenders and Borrower effective upon acceptance of appointment by a
successor Managing Agent. If the Managing Agent shall resign as Managing Agent
under this Agreement, the Requisite Lenders shall appoint from among the Lenders
a successor Managing Agent for the Lenders, which successor Managing Agent shall
be approved by Borrower (and such approval shall not be unreasonably withheld or
delayed). If no successor Managing Agent is appointed prior to the effective
date of the resignation of the Managing Agent, the Managing Agent may appoint,
after consulting with the Lenders and the Borrower, a successor Managing Agent
from among the Lenders. Upon the acceptance of its appointment as successor
Managing Agent hereunder, such successor Managing Agent shall succeed to all the
rights, powers and duties of the retiring Managing Agent and the term "Managing
Agent" shall mean such successor Managing Agent and the retiring Managing
Agent's appointment, powers and duties as Managing Agent shall be terminated.
After any retiring Managing Agent's resignation hereunder as Managing Agent, the
provisions of this ARTICLE 11, and Sections 12.3, 12.11 and 12.22, shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Managing Agent under this Agreement. If (a) the Managing Agent has not been
paid its agency fees under Section 3.6 or has not been reimbursed for any
expense reimbursable to it under Section 12.3, in either case for a period of at
least one (1) year and (b) no successor Managing Agent has accepted appointment
as Managing Agent by the date which is thirty (30) days following a retiring
Managing Agent's notice of resignation, the retiring Managing Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Managing Agent hereunder until such time, if
any, as the Requisite Lenders appoint a successor Managing Agent as provided for
above.
11.9 FORECLOSURE ON COLLATERAL. In the event of foreclosure or
enforcement of the Lien created by any of the Collateral Documents, title to the
Collateral covered thereby shall be taken and held by the Managing Agent (or an
Affiliate or designee thereof) pro rata for the benefit of the Lenders in
accordance with the Obligations outstanding to each of them.
11.10 NO OBLIGATIONS OF BORROWER. Nothing contained in this
Article 11 shall be deemed to impose upon Borrower any obligation in respect of
the due and punctual performance by the Managing Agent of its obligations to the
Lenders under any provision of this Agreement, and Borrower shall have no
liability to the Managing Agent or any of the Lenders in respect of any failure
by the Managing Agent or any Lender to perform any of its obligations to the
Managing Agent or the Lenders under this Agreement. Without limiting the
generality of the foregoing, where any provision of this Agreement relating to
the payment of any amounts due and owing under the Loan Documents provides that
such payments shall be made by Borrower to the Managing Agent for the account of
the Lenders, Borrower's obligations to the Lenders in respect of such payments
shall be deemed to be satisfied upon the making of such payments to the Managing
Agent in the manner provided by this Agreement.
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Article 12
MISCELLANEOUS
12.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers,
privileges and remedies of the Managing Agent and the Lenders provided herein or
in any Note or other Loan Document are cumulative and not exclusive of any
right, power, privilege or remedy provided by Law or equity. No failure or
delay on the part of the Managing Agent or any Lender in exercising any right,
power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor
may any single or partial exercise of any right, power, privilege or remedy
preclude any other or further exercise of the same or any other right, power,
privilege or remedy. The terms and conditions of ARTICLE 9 hereof are inserted
for the sole benefit of the Managing Agent and the Lenders; the same may be
waived in whole or in part, with or without terms or conditions, in respect of
any Loan without prejudicing the Managing Agent's or the Lenders' rights to
assert them in whole or in part in respect of any other Loan.
12.2 AMENDMENTS; CONSENTS. EXCEPT as set forth in the last
sentence of this Section 12.2, no amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by the Borrower or any other Party therefrom, may in any event be
effective unless in writing signed by the Managing Agent with the approval of
Requisite Lenders (and, in the case of any amendment, modification or supplement
of or to any Loan Document to which any of the Borrower or any of its
Subsidiaries is a Party, signed by each such Party, and, in the case of any
amendment, modification or supplement to ARTICLE 11, signed by the Managing
Agent), and then only in the specific instance and for the specific purpose
given; and, without the approval in writing of the Supermajority Lenders, no
amendment, modification, supplement, termination, waiver or consent may be
effective with respect to Sections 6.20, 6.21 and 9.2; and, without the approval
in writing of all the Lenders, no amendment, modification, supplement,
termination, waiver or consent may be effective:
(a) To amend or modify the principal of, or the amount of
principal, principal prepayments or the rate of interest payable on, any
Note, or the amount of the Commitment or the Pro Rata Share of any Lender
or the amount of any commitment fee payable to any Lender, or any other
fee or amount payable to any Lender under the Loan Documents or to waive
an Event of Default consisting of the failure of Borrower to pay when due
principal, interest or any commitment fee;
(b) To postpone any date fixed for any payment of principal
of, prepayment of principal of or any installment of interest on, any
Note or any installment of any commitment fee, or to extend the term of
the Commitment;
(c) To release the Subsidiary Guaranty or the Completion
Guaranty or any material portion of the Collateral, EXCEPT
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(i) in the case of the Pledged Collateral, release thereof to the
extent ordered by any Gaming Board, (ii) in the case of a Disposition
permitted by Sections 6.2(A) or 6.2(b), releases of the Collateral
therein described and (iii) in any other case, as otherwise may be
expressly provided for in any Loan Document;
(d) To amend the provisions of the definition of "AMORTIZATION
AMOUNT", "AMORTIZATION DATE", "REQUISITE LENDERS", "MATURITY DATE" or
"SUPERMAJORITY LENDERS";
(e) To amend or waive ARTICLE 9, Sections 5.13, 6.4, or this
Section 12.2; or
(f) To amend any provision of this Agreement that expressly
requires the consent or approval of all the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 12.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Managing Agent. Notwithstanding the foregoing, the Managing
Agent may execute such amendments to the Pledge Agreement as may be required by
a Gaming Board referred to in Section 5.12 and are acceptable to the Managing
Agent.
12.3 COSTS, EXPENSES AND TAXES. Borrower shall pay within five (5)
Banking Days after demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Managing Agent in connection with the negotiation,
preparation, syndication, execution and delivery of the Loan Documents and any
amendment thereto or waiver thereof. Borrower shall also pay on demand,
accompanied by an invoice therefor, the reasonable costs and expenses of the
Managing Agent and the Lenders in connection with the refinancing,
restructuring, reorganization (INCLUDING a bankruptcy reorganization) and
enforcement or attempted enforcement of the Loan Documents, and any matter
related thereto. The foregoing costs and expenses shall include filing fees,
recording fees, title insurance fees, appraisal fees, search fees, and other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal counsel (INCLUDING reasonably allocated costs of legal counsel employed by
the Managing Agent or any Lender), independent public accountants and other
outside experts retained by the Managing Agent or any Lender, whether or not
such costs and expenses are incurred or suffered by the Managing Agent or any
Lender in connection with or during the course of any bankruptcy or insolvency
proceedings of Borrower or any Subsidiary thereof. Such costs and expenses
shall also include, in the case of any amendment or waiver of any Loan Document
requested by Borrower, the administrative costs of the Managing Agent reasonably
attributable thereto. Borrower shall pay any and all documentary and other
taxes, EXCLUDING (i) taxes imposed on or measured in whole or in part by its
overall net income by (A) any jurisdiction (or political subdivision thereof) in
which it is organized or maintains its principal office or Eurodollar Lending
Office or (B) any jurisdiction (or political subdivision thereof) in which it is
"doing business" or (ii) any withholding taxes or other taxes based on gross
income imposed by the United States of America for any period with respect to
which it has failed to provide Borrower with the appropriate form or forms
required by
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Section 12.21, to the extent such forms are then required by applicable Laws,
and all costs, expenses, fees and charges payable or determined to be payable
in connection with the filing or recording of this Agreement, any other Loan
Document or any other instrument or writing to be delivered hereunder or
thereunder, or in connection with any transaction pursuant hereto or thereto,
and shall reimburse, hold harmless and indemnify on the terms set forth in
12.11 the Managing Agent and the Lenders from and against any and all loss,
liability or legal or other expense with respect to or resulting from any
delay in paying or failure to pay any such tax, cost, expense, fee or charge
or that any of them may suffer or incur by reason of the failure of any Party
to perform any of its Obligations. Any amount payable to the Managing Agent
or any Lender under this Section shall bear interest from the second Banking
Day following the date of demand for payment at the Default Rate.
12.4 NATURE OF LENDERS' OBLIGATIONS. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action taken by
the Managing Agent or the Lenders or any of them pursuant hereto or thereto may,
or may be deemed to, make the Lenders a partnership, an association, a joint
venture or other entity, either among themselves or with the Borrower or any
Affiliate of any of Borrower. Each Lender's obligation to make any Advance
pursuant hereto is several and not joint or joint and several, and in the case
of the initial Advance only is conditioned upon the performance by all other
Lenders of their obligations to make initial Advances. A default by any Lender
will not increase the Pro Rata Share of the Commitment attributable to any other
Lender. Any Lender not in default may, if it desires, assume in such proportion
as the nondefaulting Lenders agree the obligations of any Lender in default, but
is not obligated to do so. The Managing Agent agrees that it will use its best
efforts either to induce the other Lenders to assume the obligations of a Lender
in default or to obtain another Lender, reasonably satisfactory to Borrower, to
replace such a Lender in default.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the Parties to any Loan Document, will survive the making of the Loans
hereunder and the execution and delivery of the Notes, and have been or will be
relied upon by the Managing Agent and each Lender, notwithstanding any
investigation made by the Managing Agent or any Lender or on their behalf.
12.6 NOTICES. EXCEPT as otherwise expressly provided in the Loan
Documents, all notices, requests, demands, directions and other communications
provided for hereunder or under any other Loan Document must be in writing and
must be mailed, telegraphed, telecopied, dispatched by commercial courier or
delivered to the appropriate party at the address set forth on the signature
pages of this Agreement or other applicable Loan Document or, as to any party to
any Loan Document, at any other address as may be designated by it in a written
notice sent to all other parties to such Loan Document in accordance with this
Section. EXCEPT as otherwise expressly provided in any Loan Document, if any
notice, request, demand,
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direction or other communication required or permitted by any Loan Document
is given by mail it will be effective on the earlier of receipt or the fourth
Banking Day after deposit in the United States mail with first class or
airmail postage prepaid; if given by telegraph or cable, when delivered to
the telegraph company with charges prepaid; if given by telecopier, when
sent; if dispatched by commercial courier, on the scheduled delivery date; or
if given by personal delivery, when delivered.
12.7 EXECUTION OF LOAN DOCUMENTS. Unless the Managing Agent
otherwise specifies with respect to any Loan Document, (a) this Agreement and
any other Loan Document may be executed in any number of counterparts and any
party hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, when taken
together will be deemed to be but one and the same instrument and (b) execution
of any such counterpart may be evidenced by a telecopier transmission of the
signature of such party. The execution of this Agreement or any other Loan
Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
12.8 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents to which
Borrower are a Party will be binding upon and inure to the benefit of
Borrower, the Managing Agent, each of the Lenders, and their respective
successors and assigns, EXCEPT that Borrower may not assign its rights
hereunder or thereunder or any interest herein or therein without the
prior written consent of all the Lenders. Each Lender represents that it
is not acquiring its Note with a view to the distribution thereof within
the meaning of the Securities Act of 1933, as amended (subject to any
requirement that disposition of such Note must be within the control of
such Lender). Any Lender may at any time pledge its Note or any other
instrument evidencing its rights as a Lender under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Lender from
its obligations hereunder or grant to such Federal Reserve Bank the
rights of a Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Lender
may assign to one or more Eligible Assignees all or any portion of its
Pro Rata Share of the Commitment; PROVIDED that (i) with respect to an
assignment made prior to the Availability Termination Date such Eligible
Assignee, if not then a Lender or an Affiliate of the assigning Lender,
shall be approved by each of the Managing Agent and (if no Event of
Default then exists) Borrower (neither of which approvals shall be
unreasonably withheld or delayed), (ii) such assignment shall be
evidenced by a Commitment Assignment and Acceptance, a copy of which
shall be furnished to the Managing Agent as hereinbelow provided,
(iii) EXCEPT in the case of an assignment to an Affiliate of the
assigning Lender, to another Lender or of the entire remaining Commitment
of the assigning Lender, the assignment shall not assign a Pro Rata Share
of the Commitment
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that is equivalent to less than $5,000,000, and (iv) the effective
date of any such assignment shall be as specified in the Commitment
Assignment and Acceptance, but not earlier than the date which is five
(5) Banking Days after the date the Managing Agent has received the
Commitment Assignment and Acceptance. Upon the effective date of such
Commitment Assignment and Acceptance, the Eligible Assignee named
therein shall be a Lender for all purposes of this Agreement, with the
Pro Rata Share of the Commitment therein set forth and, to the extent
of such Pro Rata Share, the assigning Lender shall be released from
its further obligations under this Agreement. Borrower agrees that it
shall execute and deliver (against delivery by the assigning Lender to
Borrower of its Note) to such assignee Lender, a Note evidencing that
assignee Lender's Pro Rata Share of the Commitment, and to the
assigning Lender, a Note evidencing the remaining balance of the Pro
Rata Share retained by the assigning Lender.
(c) By executing and delivering a Commitment Assignment and
Acceptance, the Eligible Assignee thereunder acknowledges and agrees
that: (i) other than the representation and warranty that it is the legal
and beneficial owner of the Pro Rata Share of the Commitment being
assigned thereby free and clear of any adverse claim, the assigning
Lender has made no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness or sufficiency
of this Agreement or any other Loan Document; (ii) the assigning Lender
has made no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or the performance by
Borrower of the Obligations; (iii) it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 8.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Commitment Assignment and Acceptance;
(iv) it will, independently and without reliance upon the Managing Agent
or any Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) it appoints and
authorizes the Managing Agent to take such action and to exercise such
powers under this Agreement as are delegated to the Managing Agent by
this Agreement; and (vi) it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(d) The Managing Agent shall maintain at the Managing Agent's
Office a copy of each Commitment Assignment and Acceptance delivered to
it and a register (the "Register") of the names and address of each of
the Lenders and the Pro Rata Share of the Commitment held by each Lender,
giving effect to each Commitment Assignment and Acceptance. The Register
shall be available during normal business hours for inspection by
Borrower or any Lender upon reasonable prior notice to the Managing
Agent. After receipt of a
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completed Commitment Assignment and Acceptance executed by any Lender
and an Eligible Assignee, and receipt of an assignment fee of $2,500
from such Lender or Eligible Assignee, the Managing Agent shall,
promptly following the effective date thereof, provide to Borrower and
the Lenders a revised SCHEDULE 1.1 giving effect thereto. Borrower,
the Managing Agent and the Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the Pro
Rata Share of the Commitment listed therein for all purposes hereof,
and no assignment or transfer of any such Pro Rata Share of the
Commitment shall be effective, in each case unless and until a
Commitment Assignment and Acceptance effecting the assignment or
transfer thereof shall have been accepted by the Managing Agent and
recorded in the Register as provided above. Prior to such
recordation, all amounts owed with respect to the applicable Pro Rata
Share of the Commitment shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent
of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Pro Rata Share of the Commitment.
(e) Each Lender may from time to time grant participations to
one or more banks or other financial institutions (INCLUDING another
Lender) in a portion of its Pro Rata Share of the Commitment; PROVIDED,
HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other financial institutions shall not be a Lender
hereunder for any purpose EXCEPT, if the participation agreement so
provides, for the purposes of Sections 3.8, 3.9, 12.11 and 12.22 but only
to the extent that the cost of such benefits to Borrower does not exceed
the cost which Borrower would have incurred in respect of such Lender
absent the participation, (iv) Borrower, the Managing Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement, (v) the participation interest shall be expressed as a
percentage of the granting Lender's Pro Rata Share of the Commitment as
it then exists and shall not restrict an increase in the Commitment, or
in the granting Lender's Pro Rata Share of the Commitment, so long as the
amount of the participation interest is not affected thereby, and
(vi) the consent of the holder of such participation interest shall not
be required for amendments or waivers of provisions of the Loan Documents
OTHER THAN those which (A) extend any Amortization Date, the Maturity
Date or any other date upon which any payment of money is due to the
Lenders, (B) reduce the rate of interest on the Notes, any fee or any
other monetary amount payable to the Lenders, (C) reduce the amount of
any installment of principal due under the Notes, or (D) release any
material portion of the Collateral (except as may be otherwise expressly
provided for in any Loan Document).
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(f) Notwithstanding anything in this Section to the contrary,
the rights of the Lenders to make assignments of, and grant
participations in, their Pro Rata Shares of the Commitment shall be
subject to the approval of any Gaming Board, to the extent required by
applicable Gaming Laws, and to compliance with applicable securities
laws.
12.9 RIGHT OF SETOFF. If an Event of Default has occurred and is
continuing, the Managing Agent or any Lender (but in each case only with the
consent of the Requisite Lenders) may exercise its rights under Article 9 of the
Uniform Commercial Code and other applicable Laws and, to the extent permitted
by applicable Laws, apply any funds in any deposit account maintained with it by
Borrower and/or any Property of Borrower in its possession against the
Obligations.
12.10 SHARING OF SETOFFS. Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by it
that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws: (a) the Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; PROVIDED that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Borrower or any Person claiming through or succeeding
to the rights of Borrower, the purchase of a participation shall be rescinded
and the purchase price thereof shall be restored to the extent of the recovery,
but without interest. Each Lender that purchases a participation in the
Obligations pursuant to this Section shall from and after the purchase have the
right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Borrower expressly consent to
the foregoing arrangements and agree that any Lender holding a participation in
an Obligation so purchased may exercise any and all rights of setoff, banker's
lien or counterclaim with respect to the participation as fully as if the Lender
were the original owner of the Obligation purchased.
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12.11 INDEMNITY BY BORROWER. Borrower agrees to indemnify, save
and hold harmless the Managing Agent and each Lender and their directors,
officers, agents, attorneys and employees (collectively the "INDEMNITEES") from
and against: (a) any and all claims, demands, actions or causes of action
(EXCEPT a claim, demand, action, or cause of action for any amount excluded from
the definition of "Taxes" in Section 3.12(d)) if the claim, demand, action or
cause of action arises out of or relates to any act or omission (or alleged act
or omission) of Borrower, their Affiliates or any of their officers, directors
or stockholders relating to the Commitment, the use or contemplated use of
proceeds of any Loan, or the relationship of Borrower and the Lenders under this
Agreement; (b) any administrative or investigative proceeding by any
Governmental Agency arising out of or related to a claim, demand, action or
cause of action described in clause (a) above; and (c) any and all liabilities,
losses, costs or expenses (INCLUDING reasonable attorneys' fees and the
reasonably allocated costs of attorneys employed by any Indemnitee and
disbursements of such attorneys and other professional services) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action or cause of action; PROVIDED that no Indemnitee shall be
entitled to indemnification for any loss caused by its own gross negligence or
willful misconduct or for any loss asserted against it by another Indemnitee.
If any claim, demand, action or cause of action is asserted against any
Indemnitee, such Indemnitee shall promptly notify Borrower, but the failure to
so promptly notify Borrower shall not affect Borrower's obligations under this
Section unless such failure materially prejudices Borrower's right to
participate in the contest of such claim, demand, action or cause of action, as
hereinafter provided. Such Indemnitee may (and shall, if requested by Borrower
in writing) contest the validity, applicability and amount of such claim,
demand, action or cause of action and shall permit Borrower to participate in
such contest. Any Indemnitee that proposes to settle or compromise any claim or
proceeding for which Borrower may be liable for payment of indemnity hereunder
shall give Borrower written notice of the terms of such proposed settlement or
compromise reasonably in advance of settling or compromising such claim or
proceeding and shall obtain Borrower's prior consent (which shall not be
unreasonably withheld or delayed). In connection with any claim, demand, action
or cause of action covered by this Section against more than one Indemnitee, all
such Indemnitees shall be represented by the same legal counsel (which may be a
law firm engaged by the Indemnitees or attorneys employed by an Indemnitee or a
combination of the foregoing) selected by the Indemnitees and reasonably
acceptable to Borrower; PROVIDED, that if such legal counsel determines in good
faith that representing all such Indemnitees would or could result in a conflict
of interest under Laws or ethical principles applicable to such legal counsel or
that a defense or counterclaim is available to an Indemnitee that is not
available to all such Indemnitees, then to the extent reasonably necessary to
avoid such a conflict of interest or to permit unqualified assertion of such a
defense or counterclaim, each Indemnitee so affected shall be entitled to
separate representation by legal counsel selected by that Indemnitee and
reasonably acceptable to Borrower, with all such legal counsel using reasonable
efforts to avoid unnecessary duplication of effort by counsel for all
Indemnitees; and FURTHER PROVIDED that the Managing Agent (as an Indemnitee)
shall at all times be entitled to representation by separate
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legal counsel (which may be a law firm or attorneys employed by the Managing
Agent or a combination of the foregoing). Any obligation or liability of
Borrower to any Indemnitee under this Section shall survive the expiration or
termination of this Agreement, the repayment of all Loans and the payment and
performance of all other Obligations owed to the Lenders.
12.12 NONLIABILITY OF THE LENDERS. Borrower acknowledges and
agrees that:
(a) Any inspections of any Property of Borrower made by or
through the Managing Agent or the Lenders are for purposes of
administration of the Loan only and Borrower is not entitled to rely upon
the same (whether or not such inspections are at the expense of
Borrower);
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to the Managing Agent or the
Lenders pursuant to the Loan Documents, neither the Managing Agent nor
the Lenders shall be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of
any term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with
respect thereto by the Managing Agent or the Lenders;
(c) The relationship between Borrower and the Managing Agent
and the Lenders is, and shall at all times remain, solely that of
borrower and lenders; neither the Managing Agent nor the Lenders shall
under any circumstance be construed to be partners or joint venturers of
Borrower or its Affiliates; neither the Managing Agent nor the Lenders
shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary or other "special" relationship with
Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or
its Affiliates; neither the Managing Agent nor the Lenders undertake or
assume any responsibility or duty to Borrower or its Affiliates to
select, review, inspect, supervise, pass judgment upon or inform Borrower
or its Affiliates of any matter in connection with their Property or the
operations of Borrower or its Affiliates; Borrower and its Affiliates
shall rely entirely upon their own judgment with respect to such matters;
and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by the Managing Agent or the Lenders
in connection with such matters is solely for the protection of the
Managing Agent and the Lenders and neither Borrower nor any other Person
is entitled to rely thereon; and
(d) The Managing Agent and the Lenders shall not be
responsible or liable to any Person for any loss, damage, liability or
claim of any kind relating to injury or death to Persons or damage to
Property caused by the actions, inaction or negligence of Borrower and/or
its Affiliates and Borrower hereby indemnifies and hold the Managing
Agent and the Lenders harmless on the terms set forth in Section 12.11
from any such loss, damage, liability or claim.
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12.13 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower, the Managing Agent and the Lenders in connection with the Loans, and
is made for the sole benefit of Borrower, the Managing Agent and the Lenders,
and the Managing Agent's and the Lenders' successors and assigns. EXCEPT as
provided in Sections 12.8 and 12.11, no other Person shall have any rights of
any nature hereunder or by reason hereof.
12.14 CONFIDENTIALITY. Each Lender agrees to hold any confidential
information that it may receive from Borrower pursuant to this Agreement in
confidence, EXCEPT for disclosure: (a) to other Lenders; (b) to legal counsel
and accountants for Borrower or any Lender; (c) to other professional advisors
to Borrower or any Lender, provided that the recipient has accepted such
information subject to a confidentiality agreement substantially similar to this
Section; (d) to regulatory officials having jurisdiction over that Lender; (e)
to any Gaming Board having regulatory jurisdiction over Borrower or its
Subsidiaries, provided that each Lender agrees to notify Borrower of any such
disclosure unless prohibited by applicable Laws; (f) as required by Law or legal
process, provided that such Lender agrees to notify Borrower of any such
disclosures unless prohibited by applicable Laws or in connection with any legal
proceeding to which that Lender and Borrower are adverse parties; and (g) to
another financial institution in connection with a disposition or proposed
disposition to that financial institution of all or part of that Lender's
interests hereunder or a participation interest in its Note, provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section. For purposes of the foregoing,
"confidential information" shall mean any information respecting Borrower or its
Subsidiaries reasonably considered by Borrower to be confidential, OTHER THAN
(i) information previously filed with any Governmental Agency and available to
the public, (ii) information previously published in any public medium from a
source other than, directly or indirectly, that Lender, and (iii) information
previously disclosed by Borrower to any Person not associated with Borrower
without a confidentiality agreement or obligation substantially similar to this
Section. Nothing in this Section shall be construed to create or give rise to
any fiduciary duty on the part of the Managing Agent or the Lenders to Borrower.
12.15 FURTHER ASSURANCES. Borrower and its Subsidiaries shall, at
their expense and without expense to the Lenders or the Managing Agent, do,
execute and deliver such further acts and documents as the Requisite Lenders or
the Managing Agent from time to time reasonably require for the assuring and
confirming unto the Lenders or the Managing Agent of the rights hereby created
or intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document.
12.16 INTEGRATION. This Agreement, together with the other Loan
Documents and the letter agreements referred to in Sections 3.2, 3.6 and 3.7,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and supersedes all prior agreements, written or oral, on the
subject matter hereof. In the event of any conflict between
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the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; PROVIDED that the
inclusion of supplemental rights or remedies in favor of the Managing Agent
or the Lenders in any other Loan Document shall not be deemed a conflict with
this Agreement. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against nor
in favor of any party, but rather in accordance with the fair meaning thereof.
12.17 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the local Laws of California
applicable to contracts made and performed in California.
12.18 SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
12.19 HEADINGS. Article and Section headings in this Agreement and
the other Loan Documents are included for convenience of reference only and are
not part of this Agreement or the other Loan Documents for any other purpose.
12.20 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.
12.21 FOREIGN LENDERS AND PARTICIPANTS. Each Lender that is
incorporated or otherwise organized under the Laws of a jurisdiction other than
the United States of America or any State thereof or the District of Columbia
shall deliver to Borrower (with a copy to the Managing Agent), within
twenty (20) days after the Closing Date (or after accepting an assignment or
receiving a participation interest herein pursuant to Section 12.8, if
applicable) two duly completed copies, signed by a Responsible Official, of
either Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all payments to be made to such Lender by Borrower
pursuant to this Agreement) or Form 4224 (relating to all payments to be made to
such Lender by Borrower pursuant to this Agreement) of the United States
Internal Revenue Service or such other evidence (INCLUDING, if reasonably
necessary, Form W-9) satisfactory to Borrower and the Managing Agent that no
withholding under the federal income tax laws is required with respect to such
Lender. Thereafter and from time to time, each such Lender shall upon request
by Borrower (a) promptly submit to Borrower (with a copy to the Managing Agent),
such additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to
Borrower and the Managing Agent of any available exemption from, United States
withholding taxes in respect of all payments to be made to such Lender by
Borrower pursuant to this Agreement and (b) take such
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steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Eurodollar Lending Office, if any) to avoid any
requirement of applicable Laws that Borrower make any deduction or
withholding for taxes from amounts payable to such Lender. In the event that
Borrower or the Managing Agent become aware that a participation has been
granted pursuant to Section 12.8(e) to a financial institution that is
incorporated or otherwise organized under the Laws of a jurisdiction other
than the United States of America, any State thereof or the District of
Columbia, then, upon request made by Borrower or the Managing Agent to the
Lender which granted such participation, such Lender shall cause such
participant financial institution to deliver the same documents and
information to Borrower and the Managing Agent as would be required under
this Section if such financial institution were a Lender.
12.22 HAZARDOUS MATERIAL INDEMNITY. Borrower hereby agrees to
indemnify, hold harmless and defend (by counsel reasonably satisfactory to the
Managing Agent) the Managing Agent and each of the Lenders and their respective
directors, officers, employees, agents, successors and assigns from and against
any and all claims, losses, damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind, and all costs and expenses
incurred in connection therewith (INCLUDING reasonable attorneys' fees and the
reasonably allocated costs of attorneys employed by the Managing Agent or any
Lender, and expenses to the extent that the defense of any such action has not
been assumed by Borrower), arising directly or indirectly out of (i) the
presence on, in, under or about any Real Property of any Hazardous Materials, or
any releases or discharges of any Hazardous Materials on, under or from any Real
Property and (ii) any activity carried on or undertaken on or off any Real
Property by Borrower or any of its predecessors in title, whether prior to or
during the term of this Agreement, and whether by Borrower or any predecessor in
title or any employees, agents, contractors or subcontractors of Borrower or any
predecessor in title, or any third persons at any time occupying or present on
any Real Property, in connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous Materials at
any time located or present on, in, under or about any Real Property. The
foregoing indemnity shall further apply to any residual contamination on, in,
under or about any Real Property, or affecting any natural resources, and to any
contamination of any Property or natural resources arising in connection with
the generation, use, handling, storage, transport or disposal of any such
Hazardous Materials, and irrespective of whether any of such activities were or
will be undertaken in accordance with applicable Laws, but the foregoing
indemnity shall not apply to Hazardous Materials on any Real Property, the
presence of which is caused by the Managing Agent or the Lenders. Borrower
hereby acknowledges and agrees that, notwithstanding any other provision of this
Agreement or any of the other Loan Documents to the contrary, the obligations of
Borrower under this Section (and under Sections 4.18 and 5.11) shall be
unlimited corporate obligations of Borrower and shall NOT be secured by any deed
of trust on any Real Property. Any obligation or liability of Borrower to any
Indemnitee under this Section shall survive the expiration or termination of
this Agreement, the repayment of all Loans
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and the payment and performance of all other Obligations owed to the Lenders.
12.23 GAMING BOARDS. The Managing Agent and each of the Lenders
agree to cooperate with all Gaming Boards in connection with the administration
of their regulatory jurisdiction over Borrower and its Subsidiaries, INCLUDING
the provision of such documents or other information as may be requested by any
such Gaming Board relating to Borrower or any of its Subsidiaries or to the Loan
Documents.
12.24 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
12.25 PURPORTED ORAL AMENDMENTS. BORROWER EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 12.2. BORROWER AGREES THAT IT
WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE MANAGING AGENT OR ANY LENDER
THAT DOES NOT COMPLY WITH
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SECTION 12.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SUNSET STATION, INC.
By: /s/ Glenn C. Christenson
---------------------------------
Glenn C. Christenson
Vice President, Chief Financial
Officer and Treasurer
Address:
c/o Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, Nevada 89102
Attn: Glenn C. Christenson
Executive Vice President
Telecopier: (702) 367-2424
Telephone: (702) 367-2484
With a copy to:
Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, Nevada 89102
Attn: Bill Warner
Director of Finance
Telecopier: (702) 221-2424
Telephone: (702) 221-6620
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, Managing Agent and
as a Lender
By: /s/ Scott Faber
-----------------------------------
Scott Faber
Vice President
Address:
Bank of America National Trust and
Savings Association
555 South Flower Street, #3283
Los Angeles, California 90071
Attn: Scott Faber
Vice President
Telecopier: (213) 228-2641
Telephone: (213) 228-2768
With a copy to:
Bank of America National Trust and
Savings Association
555 South Flower Street (LA-5777)
Los Angeles, California 90071
Attn: William Newby
Managing Director
Telecopier: (213) 228-3145
Telephone: (213) 228-2438
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BANK OF SCOTLAND, as a Co-Agent and a
Lender
By: /s/ Catherine M. Oniffrey
-----------------------------------
Catherine M. Oniffrey
Vice President
Address:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Attn: Catherine M. Oniffrey
Vice President
Telecopier: (212) 557-9460
Telephone: (212) 450-0870
SOCIETE GENERALE, as a Co-Agent and a
Lender
By: /s/ Donald L. Schubert
-----------------------------------
Donald L. Schubert
Vice President
Address:
Societe Generale
2029 Century Park East, Suite 2900
Los Angeles, California 90067
Attn: Donald L. Schubert
Vice President
Telecopier: (310) 551-1537
Telephone: (310) 788-7104
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THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY, as a Lender
By: /s/ Paul Clifford
-----------------------------------
Paul Clifford
Deputy General Manager
Address:
The Long-Term Credit Bank of Japan, Ltd.,
Los Angeles Agency
350 South Grand Avenue, Suite 3000
Los Angeles, California 90071
Attn: Paul Clifford
Deputy General Manager
Telecopier: (213) 622-6908
Telephone: (213) 629-5777
MICHIGAN NATIONAL BANK, as a Lender
By: /s/ Jeffrey W. Billig
-----------------------------------
Jeffrey W. Billig
Second Vice President
Address:
Michigan National Bank
27777 Inkster Road, M/C 10-36
Farmington Hills, Michigan 48334
Attn: Jeffrey W. Billig
Second Vice President
Telecopier: (810) 473-4345
Telephone: (810) 473-4374
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PILGRIM AMERICA PRIME RATE TRUST, as a
Lender
By: /s/ Dan Norman
-----------------------------------
Dan Norman
Senior Vice President
Address:
Pilgrim America Prime Rate Trust
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
Attn: Dan Norman
Senior Vice President
Telecopier: (602) 417-8327
Telephone: (602) 417-8112
BANK OF AMERICA NEVADA, as a Lender
By: /s/ Herb Steege
-----------------------------------
Herb Steege
Vice President
Address:
Bank of America Nevada
Commercial Banking Division - CB 2006
300 South Fourth Street, Suite 200
Las Vegas, Nevada 89101
Attn: Herb Steege
Vice President
Telecopier: (702) 654-7158
Telephone: (702) 654-7142
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THE NIPPON CREDIT BANK, LTD., LOS ANGELES
AGENCY, as a Lender
By: /s/ Jay Schwartz
-----------------------------------
Jay Schwartz
Vice President and Manager
Address:
The Nippon Credit Bank, Ltd.,
Los Angeles Agency
550 South Hope Street, Suite 2500
Los Angeles, California 90071
Attn: Jay Schwartz
Vice President and Manager
Telecopier: (213) 892-0111
Telephone: (213) 243-5722
PNC BANK, N.A., as a Lender
By: /s/ Denise D. Killen
-----------------------------------
Denise D. Killen
Vice President
Address:
PNC Bank, N.A.
2 Tower Center, 16th Floor
East Brunswick, New Jersey 08816
Attn: Denise D. Killen
Vice President
Telecopier: (908) 220-3270
Telephone: (908) 220-3262
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<PAGE>
BANK OF THE WEST, as a Lender
By: /s/ Dale Kobsar
-----------------------------------
Dale Kobsar
Regional Vice President
Address:
Bank of the West
1450 Treat Boulevard
Walnut Creek, California 94596
Attn: Dale Kobsar
Regional Vice President
Telecopier: (510) 930-5635
Telephone: (510) 942-8463
FIRST SECURITY BANK, N.A., as a Lender
By: /s/ David Williams
-----------------------------------
David Williams
Vice President
Address:
First Security Bank, N.A.
Commercial Banking Division
15 East 100 South, 2nd Floor
Salt Lake City, Utah 84111
Attn: David Williams
Vice President
Telecopier: (801) 246-5532
Telephone: (801) 246-5540
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MCDONNELL DOUGLAS FINANCE CORPORATION, as
a Lender
By: /s/ Daniel O. Anderson
-----------------------------------
Daniel O. Anderson
Vice President - Operations
Address:
McDonnell Douglas Finance Corporation
4060 Lakewood Boulevard, 6th Floor
Long Beach, California 90808
Attn: Jim Hammersmith
Director - Operations
Telecopier: (310) 627-3002
Telephone: (310) 627-3238
<PAGE>
COMPLETION GUARANTY
This Completion Guaranty ("Guaranty") is made as of September 25,
1996, by Station Casinos, Inc., a Nevada corporation (the "Guarantor"), in favor
of Bank of America National Trust and Savings Association, as Managing Agent,
for the benefit of the Lenders under the Loan Agreement described below.
Capitalized terms used but not defined herein shall have the meanings defined
for those terms in the Loan Agreement described below.
RECITALS
A. Pursuant to the Construction/Term Loan Agreement (the "Loan
Agreement") of even date herewith by and among Sunset Station, Inc., a Nevada
corporation and a wholly-owned Subsidiary of the Guarantor ("Borrower"), the
Lenders named therein, Bank of Scotland and Societe Generale as Co-Agents, and
Bank of America National Trust and Savings Association, as Managing Agent, the
Lenders have agreed to extend certain credit facilities to Borrower.
B. The Loan Agreement provides, as a condition precedent to the
Lenders' obligation to extend credit facilities to Borrower, that Guarantor
shall enter into this Guaranty, and shall guaranty completion of the Project,
all under the terms and conditions set forth in this Guaranty.
C. Guarantor expects to realize direct and indirect benefits as a
result of the availability of the aforementioned credit facilities.
D. This Guaranty is one of the Loan Documents described in the Loan
Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce the Lenders to extend credit
facilities to Borrower under the Loan Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Guarantor hereby agrees as follows:
1. COMPLETION GUARANTY AND AGREEMENT.
Guarantor hereby irrevocably and unconditionally guarantees that:
(a) Guarantor shall complete or cause to be completed in
accordance with SECTION 4.2 the construction of the Project in conformity
in all material respects with the Construction Plans, the Construction
Budget, the Construction Timetable and the Loan Agreement, free and clear
of material defects and, except for
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<PAGE>
Permitted Encumbrances and Permitted Rights of Others and Liens
permitted under Section 6.8 of the Loan Agreement, Liens or claims for
Liens for material supplied or labor or services performed in connection
therewith.
(b) If the Construction Budget is insufficient to complete the
Project in accordance with the Construction Plans, the Guarantor shall
promptly after demand make or cause to be made Cash Equity Contributions to
Borrower in an amount sufficient to permit such completion.
(c) If the Completion Date does not occur on or before
September 30, 1997, the Guarantor shall promptly after demand make or cause
to be made Cash Equity Contributions to Borrower in an amount equal to
$86,000 multiplied by the number of days between September 30, 1997 and the
Completion Date.
2. PAYMENT PROVISIONS IN THE EVENT OF BANKRUPTCY.
In the event, prior to the Completion Date, that the Borrower becomes
insolvent or subject to an Insolvency Proceeding as defined below,
notwithstanding SECTION 1, but subject to confirmation by the Managing Agent
that any undisbursed Loans will be made pursuant to the Loan Agreement and
confirmation by the Equipment Lessors that any undisbursed advances for
equipment purchase prices will be made pursuant to the Equipment Lease, in each
case subject to the terms and conditions thereof (EXCLUDING the effect thereon
of such Insolvency Proceeding), Guarantor guarantees and agrees that:
(a) To the extent the Construction Budget is insufficient to
complete the Project in accordance with the Construction Plans, the
Guarantor shall make or cause to be made Cash payments into an interest-
bearing deposit account designated and controlled exclusively by the
Managing Agent (the "Deposit Account") in which the Managing Agent is
hereby granted a security interest for the benefit of the Lenders. The
Deposit Account is intended to be a "deposit account" for the purposes of
Nevada Revised Statutes ("NRS") 40.430.4(g). Such funds in the Deposit
Account shall only be available for, and used to complete, construction of
the Project.
(b) If the Completion Date does not occur on or before
December 31, 1997, the Guarantor shall make or cause to be made a Cash
payment into the Deposit Account in the amount required under SECTION
1(C). Such funds shall be held in the Deposit Account as additional
collateral for the Obligations under the Loan Agreement; PROVIDED that,
if requested by Borrower, such funds shall be applied, with the approval
of the Requisite Lenders (which shall not be unreasonably withheld) to
payment of such other obligations of Borrower incurred in the ordinary
course for the acquisition of goods or services which have enhanced or
maintained the value of the Collateral covered by the Collateral
Documents.
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<PAGE>
(c) The Cash payments into the Deposit Account and the funds
therein shall be free and clear of any third party claims thereto,
including any claims by Borrower as a third party beneficiary under this
Guaranty. The Guarantor and the Managing Agent on behalf of the Lenders
specifically agree that Borrower is not an intended third party beneficiary
to this Guaranty and that Borrower has no rights under this Guaranty.
(d) If, notwithstanding SECTION 2(A) OR 2(B) above, Borrower
asserts in an Insolvency Proceeding that it holds the right under this
Guaranty to have Cash Equity Contributions made to it directly or that
funds in the Deposit Account deposited pursuant to SECTION 2(A) shall or
may be used for any purposes other than completion of the Project or that
funds in the Deposit Account deposited pursuant to SECTION 2(B) are not
collateral solely for the Obligations under the Loan Agreement, then
(a) Guarantor shall contest such assertion in such Insolvency Proceeding to
the best of its ability and (b) if Borrower prevails in such assertion, it
will promptly pay directly to the Managing Agent a further amount equal to
the affected Cash Equity Contributions.
(e) The term "Insolvency Proceeding" means any case or
proceeding, voluntary or involuntary, under the Bankruptcy Code, or any
similar existing or future law of any jurisdiction, state or federal,
relating to bankruptcy, insolvency reorganization or relief of debtors.
3. PERFORMANCE OF GUARANTY. In fulfilling its obligations
hereunder, Guarantor hereby irrevocably and unconditionally guarantees, promises
and agrees in accordance with SECTION 4.2 to cause Borrower to perform and
comply with all provisions and conditions of the Loan Agreement relating to
(a) the construction of the Project within the time and in the manner set forth
in Construction Plans and the Construction Timetable, (b) the payment of all
costs and expenses thereof, (c) the payment, satisfaction or discharge of all
Liens (other than Permitted Encumbrances and Permitted Rights of Others and
Liens under Section 6.8 of the Loan Agreement) that are or may be imposed upon
or asserted against Borrower, the Project or the Project Property in connection
with the construction of the Project, and (d) the defense and indemnification of
the Managing Agent and the Lenders against all such Liens (other then Permitted
Encumbrances and Permitted Rights of Others and Liens under Section 6.8 of the
Loan Agreement), whether arising from the furnishing of labor, materials,
supplies or equipment, from taxes, assessments, fees or other charges, from
injuries or damage to Persons or property, or otherwise in connection with the
construction of the Project. Without limiting the generality of the foregoing,
Guarantor agrees (w) to cause any and all costs of constructing and completing
the Project, including, without limitation, the costs of all labor, materials,
supplies and equipment related thereto, to be paid and satisfied as the same
shall become due, subject to Guarantor's right to remove any Liens arising
therefrom by securing bond(s) therefor, (x) to cause the net amount of cost
overruns to be directly or indirectly funded, paid and satisfied from
Guarantor's own resources, (y) directly or
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<PAGE>
indirectly to cause the completion of the Project in a timely, good,
workmanlike and Lien-free manner (except for Permitted Encumbrances and
Permitted Rights of Others and Liens under Section 6.8 of the Loan
Agreement), in accordance in all material respects with the terms of the
Construction Plans, the Construction Budget and the Construction Timetable
and (z) to cause all pre-operating and carrying costs of the Project,
including, without limitation the payment of taxes, assessments, utilities,
insurance and maintenance expenses, to be funded, paid and satisfied as the
same shall become due throughout the term of this Guaranty.
4. PROCEDURES FOR COMPLETION.
4.1 In the event that Borrower fails to perform all of its
Obligations under the Loan Agreement relating to construction of the Project,
then in any such event or at any time thereafter, the Managing Agent may give
written notice to Guarantor of the occurrence of such event.
4.2 Within ten (10) days after the date on which the Managing
Agent gives any such notice to Guarantor, but subject to confirmation by the
Managing Agent that any undisbursed Loans will be made pursuant to the Loan
Agreement subject to the terms and conditions thereof and confirmation by the
Equipment Lessors that any undisbursed advances for equipment purchase prices
will be made pursuant to the Equipment Lease, Guarantor, at its sole cost
(exclusive of undisbursed Loans) shall commence to complete the construction of
the Project and diligently prosecute such construction to completion within the
time and in the manner specified in the Construction Timetable, free of Liens
(OTHER THAN Permitted Encumbrances and Permitted Rights of Others and Liens
under Section 6.8 of the Loan Agreement) and fully paid for, and shall defend,
indemnify and hold the Managing Agent and/or the Lenders harmless from all
losses, costs, liabilities and expenses, including reasonable attorneys' fees,
incurred in connection with such completion other than arising as a result of
the gross negligence or wilful misconduct of the Managing Agent or a Lender. If
at the date of such notice, there are no undisbursed Loans allocated to
construction of the Project, the Guarantor's obligations under this Section
shall be absolute. If on such date there are any such undisbursed Loans the
obligations of the Guarantor under this Section shall be that percentage of the
remaining costs to complete the Project equal to 100% minus the percentage
thereof represented by the undisbursed Loans.
4.3 If Guarantor fails to commence to complete the construction
of the Project or diligently to prosecute such construction to timely completion
as provided in SECTION 4.2 above, then the right of the Managing Agent to
recover under Section 5 shall not be affected or diminished by its exercise of
the rights and remedies that may be available to the Managing Agent under the
Loan Agreement and the other Loan Documents, at law or in equity, including:
(a) Managing Agent may, at the Managing Agent's option,
enter the Project Property to complete construction of the Project (either
itself or through any agent, contractor or
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<PAGE>
subcontractor of its selection), which option of the Managing Agent
shall be exercisable whether or not the Managing Agent elects to proceed
judicially or non-judicially to foreclose on all or any portion of the
Collateral.
(b) The Managing Agent, at its option and in accordance
with the Loan Agreement and the other Loan Documents, shall have the right,
but shall have no obligation, to proceed judicially or non-judicially to
foreclose on all or any portion of the Collateral, exercisable whether or
not the Managing Agent elects to undertake to complete the construction of
the Project.
(c) If the Managing Agent elects to undertake to complete
the construction of the Project, and whether or not the Managing Agent
elects to proceed judicially or non-judicially to foreclose on all or any
portion of the Collateral, the Managing Agent shall have the right to
recover damages from Guarantor in an amount equal to the sum of:
(i) The costs reasonably incurred or reasonably estimated
to be incurred by the Managing Agent to complete the construction of
the Project as set forth in Paragraph 2 hereof minus any undisbursed
Loans allocated to construction of the Project (the "Cost to
Complete"), PROVIDED that with respect to damages recovered for costs
estimated to be incurred by the Managing Agent, such funds shall be
used for no purpose other than the construction of the Project and
PROVIDED FURTHER that should the total actual costs incurred by the
Managing Agent to complete the construction of the Project be less
than the Cost to Complete, the amount by which the Cost to Complete
recovered by the Managing Agent exceeds such actual construction costs
shall be remitted to Guarantor; plus
(ii) All unreimbursed costs and expenses, including
attorneys' fees, reasonably incurred by the Managing Agent in
protecting and preserving the Project and enforcing or defending the
interests of the Lenders under this Guaranty (the "Unreimbursed
Expenses").
(d) In any action or proceeding by the Managing Agent to
recover damages from Guarantor, the Managing Agent may exercise any and all
remedies available under applicable Law.
4.4 The remedy of specific performance, the recovery of damages
and all other rights and remedies under this Guaranty, under the Loan Agreement
and the other Loan Documents, at law or in equity are intended to be non-
exclusive and cumulative. The parties recognize that the choice of remedies by
the Managing Agent will necessarily and properly be a matter of business
judgment, which the passage of time and events may or may not prove to have been
the best choice to maximize recovery by the Managing Agent at the lowest cost to
either the Borrower or the Guarantor. Nevertheless, the choice of alternatives
by the Managing Agent shall not be
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<PAGE>
subject to question or challenge by Guarantor or any other Person, nor shall
any such choice be asserted as a defense, set-off or basis for any claim of
failure to mitigate damages in any action or proceeding arising from this
Guaranty.
5. COMMENCEMENT OF LAWSUIT BY MANAGING AGENT; MEASURE OF DAMAGES.
At any time after the occurrence of an Event of Default under this Guaranty,
Managing Agent, on behalf of the Lenders, may commence a lawsuit against
Guarantor to compel Guarantor to perform its obligations under this Guaranty
and/or to recover damages under this Guaranty. The Lenders' damages under this
Guaranty shall include: (a) the costs of completing the Project and/or
correcting any construction defects, MINUS any undisbursed Loans allocated to
construction of the Project, (b) damages arising from any delay in completing
the Project, including interest, taxes and insurance premiums, and (c) the
Unreimbursed Expenses. Managing Agent need not perform any work on the Project
before commencing such a lawsuit. GUARANTOR EXPRESSLY ACKNOWLEDGES THAT THE
MEASURE OF THE LENDERS' DAMAGES FOR BREACH OF THIS GUARANTY SHALL BE BASED ON
THE COSTS OF COMPLETING THE PROJECT, NOT THE EXTENT TO WHICH COMPLETING THE
PROJECT WOULD INCREASE THE VALUE OF THE PROJECT PROPERTY.
6. RIGHTS OF THE MANAGING AGENT. Guarantor authorizes the Managing
Agent and the Lenders to perform any or all of the following acts at any time in
their sole discretion, all without notice to Guarantor and without affecting
Guarantor's obligations under this Guaranty:
(a) The Managing Agent and the Lenders may alter any terms of
the Loan Documents to which Guarantor is not a party (EXCEPT Article 7 of
the Loan Agreement), including renewing, compromising, extending or
accelerating, or otherwise changing the time for payment of, or increasing
or decreasing the rate of interest on, the Loans or any part of them.
(b) The Managing Agent and the Lenders may take and hold
security for the Loans or this Guaranty, accept additional or substituted
security for either, and subordinate, exchange, enforce, waive, release,
compromise, fail to perfect and sell or otherwise dispose of any such
security.
(c) The Managing Agent and the Lenders may direct the order and
manner of any sale of all or any part of any security now or later to be
held for the Loans or this Guaranty, and may also bid at any such sale.
(d) The Managing Agent and the Lenders may apply any payments or
recoveries from Borrower, Guarantor or any other source, and any proceeds
of any security, to Borrower's obligations under the Loan Documents in such
manner, order and priority as they may elect, whether or not those
obligations are guarantied by this Guaranty or secured at the time of the
application.
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<PAGE>
(e) The Managing Agent and the Lenders may release Borrower of
its liability for the Loans or any portion thereof.
(f) The Managing Agent and the Lenders may substitute, add or
release any one or more guarantors or endorsers.
(g) In addition to the Loans the Managing Agent and the Lenders
may extend other credit to Borrower, and may take and hold security for the
credit so extended, all without affecting Guarantor's liability under this
Guaranty.
(h) The Managing Agent and the Lenders may approve modifications
to the Construction Contracts, Construction Budget and/or the Construction
Timetable.
(i) The Managing Agent and the Lenders may change the terms or
conditions of disbursement of the Loan.
(j) The Managing Agent and the Lenders may advance additional
funds to Borrower for purposes related to those of the Loan Documents.
7. GUARANTY TO BE ABSOLUTE. Guarantor expressly agrees that until
the Project is fully completed in all material respects in accordance with the
Construction Plans, the Construction Budget and the Construction Timetable and
each and every term, covenant and condition of this Guaranty is fully performed,
Guarantor shall not be released by or because of:
(a) Any act or event which might otherwise discharge, reduce,
limit or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or
other act or omission of the Managing Agent or the Lenders, or any failure
to proceed promptly or otherwise as against Borrower, Guarantor or any
security;
(c) Any action, omission or circumstance which might increase
the likelihood that Guarantor may be called upon to perform under this
Guaranty or which might affect the rights or remedies of Guarantor as
against Borrower; or
(d) Any dealings occurring at any time between Borrower, the
Managing Agent or any Lender, whether relating to the Loans or otherwise.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts, omissions,
agreements, waivers or matters. It is the purpose and intent of this Guaranty
that the obligations of Guarantor under it shall be absolute and unconditional
under any and all circumstances.
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<PAGE>
8. GUARANTOR'S WAIVERS. Guarantor waives:
(a) Any right it may have to require the Managing Agent or the
Lenders to proceed against Borrower, proceed against or exhaust any
security held from Borrower, or pursue any other remedy in their power to
pursue;
(b) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;
(c) Any defense based on: (i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation of the
liability of Borrower under the Loan Documents from any cause, whether
consented to by the Managing Agent or any Lender or arising by operation of
Law or from any Insolvency Proceeding, (iii) any rejection or disaffirmance
of the Loans or any security held for the Loans, in any Insolvency
Proceeding and (iv) Guarantor's rights under NRS 104.3605, Guarantor
specifically agreeing that this clause (iv) shall constitute a waiver of
discharge under NRS 104.3605;
(d) Any defense based on any action taken or omitted by the
Managing Agent or any Lender in any Insolvency Proceeding involving
Borrower, including any election to have a claim allowed as being secured,
partially secured or unsecured, any extension of credit by the Managing
Agent or any Lender to Borrower in any Insolvency Proceeding, and the
taking and holding by the Managing Agent or any Lender of any security for
any such extension of credit;
(e) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices
of acceptance of this Guaranty and of the existence, creation, or incurring
of new or additional indebtedness, and demands and notices of every kind
except for any demand or notice expressly provided for in SECTION 1;
(f) Any defense based on or arising out of any defense that
Borrower may have to the payment or performance of the Loans or any portion
of the Loans; and
(g) Any defense or benefit based on NRS 40.430 and judicial
decisions relating thereto and NRS 40.451 ET SEQ. and judicial decisions
relating thereto, Guarantor agreeing that the waiver in this paragraph (h)
is intended to take advantage of the two (2) waivers permitted by
NRS 40.495 (1) and (2) to the maximum extent permitted.
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<PAGE>
9. WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(a) Upon the occurrence of any Event of Default, the Managing
Agent in its sole discretion, without prior notice to or consent of
Guarantor, may elect to: (i) foreclose either judicially or nonjudicially
against any real or personal property security for the Loans, (ii) accept a
transfer of any such security in lieu of foreclosure, (iii) compromise or
adjust the Loans or any part thereof or make any other accommodation with
Borrower or any other guarantor, or (iv) exercise any other remedy against
Borrower or any security. No such action by the Managing Agent or any
Lender shall release or limit the liability of Guarantor, who shall remain
liable under this Guaranty after the action, even if the effect of the
action is to deprive Guarantor of any subrogation rights, rights of
indemnity, or other rights to collect reimbursement from Borrower for any
sums paid to the Managing Agent or the Lenders, whether contractual or
arising by operation of Law or otherwise. Guarantor expressly waives any
defenses or benefits that may be derived from NRS Section 40.430 and
judicial decisions relating thereto and NRS 40.451, ET SEQ. and judicial
decisions relating thereto, or comparable provisions of Nevada Law which
are comparable to California Civil Procedure Sections 580a, 580b, 580d,
or 726 or comparable provisions of the Laws of any other jurisdiction, and
all other suretyship defenses they otherwise might or would have under
Nevada Law or other applicable Law. Guarantor expressly agrees that under
no circumstances shall it be deemed to have any right, title, interest or
claim in or to any real or personal property to be held by the Managing
Agent or any Lender or any third party after any foreclosure or transfer in
lieu of foreclosure of any security for the Loans.
(b) Regardless of whether Guarantor may have made any payments
to the Managing Agent or any Lender, Guarantor hereby waives: (i) all
rights of subrogation, all rights of indemnity, and any other rights to
collect reimbursement from Borrower for any sums paid to the Managing Agent
or any Lender, whether contractual or arising by operation of Law
(including the United States Bankruptcy Code or any successor or similar
statute) or otherwise, (ii) all rights to enforce any remedy that the
Managing Agent or any Lender may have against Borrower, and (iii) all
rights to participate in any security now or later to be held by the
Managing Agent or any Lender for the Loans. The waivers given in this
SUBSECTION 9(B) shall be effective until the Loans and all other
Obligations have been paid and performed in full and all Commitments have
been terminated.
(c) Guarantor understands and acknowledges that if the Managing
Agent or any Lender forecloses judicially or nonjudicially against any real
property security for the Loans that foreclosure could impair or destroy
any ability that Guarantor may have to seek reimbursement, contribution or
indemnification from Borrower or others based on any right Guarantor may
have of subrogation, reimbursement, contribution or indemnification for any
amounts paid by Guarantor under this Guaranty. Guarantor further
understands and
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acknowledges that in the absence of this SECTION 9, such potential
impairment or destruction of Guarantor's rights, if any, may entitle
Guarantor to assert a defense to this Guaranty. By executing this
Guaranty, Guarantor freely, irrevocably and unconditionally: (i) waives
and relinquishes that defense and agrees that Guarantor will be fully
liable under this Guaranty even though the Managing Agent or the Lenders
may foreclose judicially or nonjudicially against any real property
security for the Loans; (ii) agrees that Guarantor will not assert that
defense in any action or proceeding which the Managing Agent or the
Lenders may commence to enforce this Guaranty; and (iii) acknowledges
and agrees that the Managing Agent and the Lenders are relying on this
waiver in making the Loans, and that this waiver is a material part of
the consideration which they are receiving for making the Loans.
10. REVIVAL AND REINSTATEMENT. If the Lenders are required to pay,
return or restore to Borrower or any other person any amounts previously paid on
the Loans because of any Insolvency Proceeding of Borrower, any stop notice or
any other reason, to the extent that the source of such payment was a Cash
Equity Contribution from Guarantor pursuant to this Guaranty, the obligations of
Guarantor shall be reinstated and revived and the rights of the Managing Agent
and the Lenders shall continue with regard to such amounts, all as though they
had never been paid.
11. INFORMATION REGARDING BORROWER AND THE PROPERTY. Before signing
this Guaranty, Guarantor investigated the financial condition and business
operations of Borrower, the present and former condition, uses and ownership of
the Project Property, and such other matters as Guarantor deemed appropriate to
assure itself of Borrower's ability to discharge its obligations under the Loan
Documents. Guarantor assumes full responsibility for that due diligence, as
well as for keeping informed of all matters which may affect Borrower's ability
to pay and perform its obligations to the Managing Agent and the Lenders. The
Managing Agent and the Lenders have no duty to disclose to Guarantor any
information which they may have or receive about Borrower's financial condition
or business operations, the condition or uses of the Project Property, or any
other circumstances bearing on Borrower's ability to perform.
12. SUBORDINATION. Any rights of Guarantor, whether now existing or
later arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any subsequent owner of the Property, or to
withdraw capital invested by it in Borrower, or to receive Distributions from
Borrower, shall at all times be subordinate as to lien and time of payment and
in all other respects to the full and prior repayment to the Managing Agent and
the Lenders of the Loans and the other Obligations of Borrower, EXCEPT to the
extent that such payments or Distributions are expressly contemplated by the
Loan Agreement. Guarantor shall not be entitled to enforce or receive payment
of any sums hereby subordinated until the Loans and all other Obligations have
been paid and performed in full and all Commitments have been terminated and any
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such sums received in violation of this Guaranty shall be received by Guarantor
in trust for the Lenders.
13. FINANCIAL INFORMATION. Guarantor shall keep true and correct
financial books and records, using generally accepted accounting principles
consistently applied. Guarantor shall provide to the Lenders such financial
statements and other information respecting Guarantor as is required under
SECTION 8.1(G) of the Loan Agreement and such other information concerning its
affairs and properties as the Managing Agent or any Lender may reasonably
request. Any confidential information of Guarantor so furnished shall be
subject to the provisions of SECTION 12.14 of the Loan Agreement.
14. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants that:
(a) All financial statements and other financial information
furnished or to be furnished to the Managing Agent or the Lenders by
Guarantor are or will be true and correct and do or will fairly represent
the financial condition of Guarantor as of the dates and for the periods
covered thereby;
(b) All such financial statements were or will be prepared in
accordance with Generally Accepted Accounting Principles, consistently
applied;
(c) There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently
furnished to the Lenders; and
(d) The performance of this Guaranty will not violate any
indenture, credit agreement or other material agreement to which Guarantor
is a party.
15. EVENTS OF DEFAULT. The Managing Agent may declare Guarantor to
be in default under this Guaranty upon the occurrence of any of the following
events ("Events of Default"):
(a) Guarantor fails to perform any of its obligations under this
Guaranty; or
(b) Guarantor revokes this Guaranty or disputes the validity
thereof or this Guaranty becomes ineffective for any reason; or
(c) Any representation or warranty made or given by Guarantor in
any Loan Document proves to be false or misleading in any material respect;
or
(d) Guarantor becomes insolvent or the subject of any case or
proceeding, voluntary or involuntary, under the Bankruptcy Code or any
similar existing or future law of any jurisdiction, state
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or federal, relating to bankruptcy, insolvency, reorganization or relief
of debtors and, in the case of an involuntary case or proceeding, the
same continues undismissed or unstayed for ninety (90) calendar days; or
(e) Guarantor dissolves or liquidates.
16. AUTHORIZATION; NO VIOLATION. Guarantor is authorized to execute,
deliver and perform under this Guaranty, which is a valid and binding obligation
of Guarantor enforceable against Guarantor in accordance with its terms, except
as enforcement may be limited by Debtor Relief Laws, Gaming Laws or equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion. No provision or obligation of
Guarantor contained in this Guaranty violates any Requirement of Law applicable
to Guarantor. No such provision or obligation conflicts with, or constitutes a
breach or default under, any agreement to which any Guarantor is a party.
17. ADDITIONAL AND INDEPENDENT OBLIGATIONS. Guarantor's obligations
under this Guaranty are in addition to its obligations under any other existing
or future guaranties given in connection with the Loan Agreement, and they shall
remain in full force and effect until (a) they are performed in full or (b) they
terminate in accordance with SECTION 19. Guarantor's obligations under this
Guaranty are independent of those of Borrower under the other Loan Documents.
The Managing Agent may bring a separate action, or commence a separate reference
or arbitration proceeding against Guarantor without first proceeding against
Borrower or any other Guarantor any other person or any security that the
Managing Agent or the Lenders may hold, and without pursuing any other remedy.
The rights under this Guaranty shall not be exhausted by any action by the
Managing Agent or any Lender until the Loans have been paid and performed in
full.
18. NO WAIVER; CONSENTS; CUMULATIVE REMEDIES. Each waiver by the
Managing Agent and the Lenders must be in writing, and no waiver shall be
construed as a continuing waiver. No waiver shall be implied from the Managing
Agent's or any Lender's delay in exercising or failure to exercise any right or
remedy against Borrower, Guarantor or any security. Consent by the Managing
Agent or any Lender to any act or omission by Borrower or Guarantor shall not
be construed as a consent to any other or subsequent act or omission, or as a
waiver of the requirement for their consent to be obtained in any future or
other instance. All remedies of the Managing Agent and the Lenders against
Borrower and Guarantor are cumulative.
19. RELEASE. This Guaranty shall automatically terminate upon
satisfaction of the Obligations. Absent such termination, Guarantor shall not
be released from its obligations under this Guaranty except by a writing signed
by the Managing Agent with the consent of such percentage of the Lenders as is
required under the Loan Agreement or upon delivery and acceptance by the
Managing Agent and CSG of the Completion Certificates specified in SECTION 7.14
of the Loan Agreement.
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20. SUCCESSORS AND ASSIGNS; PARTICIPATIONS. The terms of this
Guaranty shall bind and benefit the legal representatives, successors and
assigns of the Managing Agent, the Lenders and the Guarantor; provided, however,
that Guarantor may not assign this Guaranty, or assign or delegate any of its
rights or obligations under this Guaranty, without the prior written consent of
the Managing Agent in each instance. The Lenders may sell or assign
participations or other interests in the Loans and this Guaranty, in accordance
with SECTION 12.8 of the Loan Agreement. Also without notice to or the consent
of Guarantor, the Managing Agent and the Lenders may disclose any and all
information in their possession concerning Guarantor, this Guaranty and any
security for this Guaranty to any actual or prospective purchaser of any
securities issued or to be issued by Lenders, and to any actual or prospective
purchaser or assignee of any participation or other interest in the Loan
Documents, all in accordance with SECTION 12.14 of the Loan Agreement.
21. GOVERNING LAW. This Guaranty shall be governed by, and construed
in accordance with, the local Laws of the State of California.
22. COSTS AND EXPENSES. If any lawsuit, reference or arbitration is
commenced which arises out of, or which relates to this Guaranty, the prevailing
party shall be entitled to recover from each other party such sums as the court,
referee or arbitrator may adjudge to be reasonable attorneys' fees (including
reasonably allocated costs for services of in-house counsel) in the action or
proceeding, in addition to costs and expenses otherwise allowed by Law. In all
other situations, including any Insolvency Proceeding, Guarantor agrees to pay
all of the Managing Agent's and the Lenders' reasonable costs and expenses,
including attorneys' fees (including reasonably allocated costs for services of
their respective in-house counsel) which may be incurred in any effort to
collect or enforce this Guaranty. From the time(s) demanded until paid in full,
all sums shall bear interest at the Default Rate.
23. INTEGRATION; MODIFICATIONS. This Guaranty (a) integrates all the
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor, the Managing Agent and the Lenders as the final
expression of the agreement with respect to the terms and conditions set forth
in this Guaranty and as the complete and exclusive statement of the terms agreed
to by Guarantor, the Managing Agent and the Lenders. No representation,
understanding, promise or condition shall be enforceable against any party
unless it is contained in this Guaranty.
24. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO THIS GUARANTY, THE LOAN AGREEMENT AND ANY OTHER LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY
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SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS GUARANTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
25. NOTICES. Notices hereunder shall be in writing and shall be
delivered in the manner prescribed for notices in the Loan Agreement.
26. MISCELLANEOUS. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision.
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
date first written above by its respective duly authorized officer.
"Guarantor"
STATION CASINOS, INC.
a Nevada corporation
By: /s/ Glenn C. Christenson
----------------------------
Glenn C. Christenson
Executive Vice President,
Chief Financial Officer
and Treasurer
Address for Guarantor:
2411 West Sahara Avenue
Las Vegas, Nevada 89102
Telecopier: (702) 367-2424
Telephone: (702) 367-2484
Accepted:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Managing Agent and as a Lender
By: /s/ Scott Faber
--------------------------
Scott Faber, Vice President
Address:
Bank of America National Trust and
Savings Association
555 South Flower Street, # 3283
Los Angeles, California 90071
Attn: Scott Faber, Vice President
Telecopier: (213) 228-2641
Telephone: (213) 228-2768
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SUPPLEMENTAL LOAN AGREEMENT
Dated as of September 25, 1996
This Supplemental Loan Agreement is made between Station Casinos,
Inc., a Nevada corporation ("Parent") and Sunset Station, Inc., a Nevada
corporation ("Sunset"). The parties hereto, for valuable consideration and
intending to be legally bound, hereby agree as follows:
Article I.
DEFINITIONS
Section 1.01 DEFINITIONS. As used in this Agreement, the
following terms shall have the meaning set forth below:
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Nevada are authorized or required to close.
"COMMITMENT" means, collectively, (a) the commitment of Parent to
make Supplemental Loans to Sunset in an aggregate outstanding principal amount
of up to $25,000,000 pursuant to Section 2.01(a), subject to automatic reduction
of such amount pursuant to Section 2.04, (b) the commitment of Parent to make a
Supplemental Loan to Sunset in an amount sufficient to permit Sunset to exercise
its early termination option under Section 5.4 of the Sublease and (c) the
commitment of Parent to make a Supplemental Loan to Sunset in an amount
sufficient to permit Sunset to exercise the Purchase Option (as such term is
defined in the Sublease), but not to exceed the Purchase Option Exercise Amount
(as such term is defined in the Sublease) as it exists from time to time,
subject in the case of each of clauses (a), (b) and (c) to the terms and
conditions of Section 3.02.
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"INDEBTEDNESS" means, with respect to any person, all indebtedness
of such person for borrowed money or the deferred purchase price of assets sold
to such person.
"INDENTURES" means those certain Indentures dated as of June 1, 1993
(as amended), May 11, 1994 (as amended) and March 29, 1996 covering Parent's 9-
5/8% Senior Subordinated Notes Due 2003 and 2006.
"INDENTURE BASKET AMOUNT", as of any date of determination, the
aggregate amount of additional "Restricted Investments" which may as of such
date be made pursuant to Section 4.05 of each of the Indentures giving effect to
all "Restricted Payments" and "Restricted Investments" made by Parent prior to
such date. The terms "Restricted Investments" and "Restricted Payments" are
defined in the Indentures.
"INTEREST ACCRUAL DATE" means each March 31, June 30, September 30
and December 31, commencing with the first such date to occur after the initial
Supplemental Loan.
"INITIAL DRAWDOWN PERIOD" means the one-year period commencing on
the Initial Test Date; PROVIDED that a Supplemental Loan made under
Section 2.01(a) that is requested by Sunset based on its financial condition as
of the last day of the Initial Drawdown Period shall be deemed made within the
Initial Drawdown Period if made within forty-five (45) days after the Initial
Drawdown Period.
"INITIAL TEST DATE" means the last day of the first full calendar
quarter ending after the Project Completion Date.
"MATURITY DATE" means September 30, 2001.
"PARENT'S REVOLVING CREDIT FACILITY" means that certain Amended And
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Parent, certain of its subsidiaries, Bank of America, N.T.&S.A. as Managing
Agent and the other banks party thereto, as the same may be amended.
"PROJECT COMPLETION DATE" means the date upon which the Sunset
Station Hotel & Casino is open for business to the
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general public with at least 95% of the planned hotel rooms ready for
occupancy, at least 95% of the planned casino space ready for gaming and
substantially all other amenities substantially complete.
"REVOLVER BASKET AMOUNT" means, as of any date of determination, the
aggregate amount of additional "New Venture Investments" in "Unrestricted New
Venture Entities" which may as of such date be made pursuant to Section 9.15 of
Parent's Revolving Credit Facility, giving effect to all such "New Venture
Investments" in "Unrestricted New Venture Entities" made by Parent prior to such
date. The terms "New Venture Investments" and "Unrestricted New Venture Entity"
are defined in the Parent's Revolving Credit Facility. For the purpose of
Section 5.03, the Revolver Basket Amount shall be deemed to include amounts of
"New Equity Proceeds" that have not been allocated to the Expansion/New Venture
Basket (as defined in the Parent's Revolving Credit Facility) and are therefore
available to be allocated under Section 9.15(d) of the Parent's Revolving Credit
Facility, PROVIDED that Parent shall allocate such "New Equity Proceeds" in
accordance with such Section 9.15(d) promptly upon receipt of a drawdown notice
under Section 2.02.
"SECOND DRAWDOWN PERIOD" means the one year period commencing on the
first day following the end of the Initial Drawdown Period; PROVIDED that a
Supplemental Loan made under Section 2.01(a) that is requested by Sunset based
on its financial condition as of the last day of the Second Drawdown Period
shall be deemed made during the Second Drawdown Period if made within forty-five
(45) days after the Drawdown Period.
"SUBLEASE" means that certain Sublease dated as of September 25,
1996 between Parent (as sublessor) and Sunset (as sublessee) covering certain
leased equipment to be installed at the Sunset Station Hotel & Casino.
"SUBLEASE BALANCE" shall mean the amount payable by Sunset in
connection with the exercise of the early termination option under Section 5.4
of the Sublease.
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"SUPPLEMENTAL LOANS" means the loans made and to be made by Parent
to Sunset pursuant to Section 2.01.
"THIRD DRAWDOWN PERIOD" means the period commencing on the first day
following the end of the Second Drawdown Period and ending on October 31, 2000.
Article II.
AMOUNT AND TERMS OF THE LOANS
Section 2.01 SUPPLEMENTAL CREDIT FACILITY. (a) Parent hereby
agrees, on the terms and conditions hereinafter set forth, to make Supplemental
Loans to Sunset from time to time during the period from the date hereof up to
and including October 31, 2000 in an aggregate principal amount not to exceed at
any time outstanding $25,000,000; PROVIDED that (i) Supplemental Loans made
during the Initial Drawdown Period shall not exceed $10,000,000,
(ii) Supplemental Loans made during the Second Drawdown Period shall not exceed
$10,000,000 and (iii) Supplemental Loans made during the Third Drawdown Period
shall not exceed $5,000,000, subject, in the case of each of clauses (i), (ii)
and (iii), to Section 3.02. Each Supplemental Loan under this Section 2.01(a)
shall be in an amount not less than $100,000 and shall be an integral multiple
thereof.
(b) Parent hereby agrees, on the terms and conditions
hereinafter set forth, and subject in any event to Sections 3.02 and 2.01(d), to
make a Supplemental Loan to Sunset at such time as the early termination option
is exercised under Section 5.4 of the Sublease in an amount sufficient to permit
Sunset to pay the early termination option exercise price.
(c) Parent hereby agrees, on the terms and conditions
hereinafter set forth, and subject in any event to Sections 3.02 and 2.01(d). to
make a Supplemental Loan to Sunset at such time as the Purchase Option (as such
term is defined in the Sublease) is exercised in an amount sufficient to permit
Sunset to pay the Purchase Option Exercise Amount (as such term is defined in
the Sublease).
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(d) No Supplemental Loan shall be made pursuant to Section
2.01(b) or 2.01(c) if the effect thereof is to reduce availability of the
Commitment under Section 2.01(a).
Section 2.02 DRAWDOWNS. Sunset shall give Parent written or
telephonic notice (effective upon receipt) of any Supplemental Loan at least one
(1) Business Day prior to the date of such Supplemental Loan. Not later than
1:00 o'clock p.m., Nevada time on the date specified in such notice for the
Supplemental Loan, and upon fulfillment of the applicable conditions set forth
in Section 3.02, Parent shall make the Supplemental Loan available to Sunset in
immediately available funds by crediting the amount thereof to Sunset's demand
deposit account with Bank of America Nevada.
Section 2.03 INTEREST. Sunset shall pay interest on the
outstanding and unpaid principal amounts of the Supplemental Loans at a rate per
annum equal to the interest rate then in effect for three month "Eurodollar
Loans" under Parent's Revolving Credit Facility; PROVIDED that such interest
shall be payable solely in the form of commensurate additions to the principal
of Supplemental Loans, such additions to be made on each Interest Accrual Date.
Parent shall provide Sunset with a written statement as of each Interest Accrual
Date setting forth the cumulative accrued interest on Supplemental Loans as of
such Interest Accrual Date, which shall be conclusive absent manifest error.
Section 2.04 AUTOMATIC REDUCTION OF COMMITMENT. The Commitment
available for Supplemental Loans under Section 2.01(a) shall automatically be
reduced to $15,000,000 on the first day of the Second Drawdown Period and to
$5,000,000 on the first day of the Third Drawdown Period, subject in each case
to Section 3.02.
Section 2.05 SUBORDINATION. The Supplemental Loans shall be
subordinated in right of payment to all other Indebtedness of Sunset, whether
existing at the date hereof or hereafter incurred. No payment or prepayment
(whether principal, interest or otherwise) with respect to Supplemental Loans
may in any event be made prior to the Maturity Date (EXCEPT for payment of "in-
kind" interest pursuant to Section
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2.03) nor shall Sunset be required to set aside any amount for the benefit of
Parent or the repayment of the Supplemental Loans prior to the Maturity Date.
No such payment with respect to Supplemental Loans may in any event be made
in any liquidation, reorganization, insolvency or similar proceeding of
Sunset unless the holders of all other Indebtedness of Sunset have been paid
in full in cash and, until the holders of such other Indebtedness have been
so paid in full, any distribution to which Parent would otherwise be entitled
with respect to Supplemental Loans shall instead be made to the holders of
such other Indebtedness of Sunset on a pro rata basis. Parent agrees that it
will hold in trust for the benefit of the holders of all other Indebtedness
of Sunset any payments received by it from time to time with respect to
Supplemental Loans.
Section 2.06 THE NOTE. The Supplemental Loans shall be evidenced
by the Note in the form attached hereto as Exhibit "A".
Section 2.07 USE OF PROCEEDS. Sunset agrees to use the proceeds
of the Supplemental Loans (a) made under Section 2.01(a) solely in the ordinary
course of its business, including satisfaction of its legal obligations to third
parties from time to time, (b) made under Section 2.01(b) solely for the purpose
of fulfilling its payment obligations in connection with the exercise of the
early termination option under the Sublease and (c) made under Section 2.01(c)
solely for the purpose of fulfilling its payment obligations in connection with
the exercise of the Purchase Option under the Sublease.
Article III.
CONDITIONS PRECEDENT
Section 3.01 CONDITIONS PRECEDENT TO INITIAL SUPPLEMENTAL LOAN.
The obligation of Parent to make the initial Supplemental Loan is subject to the
conditions precedent that Parent shall have received on or before the day of
such Supplemental Loan each of the following:
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(1) The Note duly executed by Sunset;
(2) Certified copies of the Articles of Incorporation and
Bylaws of Sunset and copies of Good Standing Certificates with respect to Sunset
issued by the Secretary of State of Nevada; and
(3) Certified copies of all corporate action taken by Sunset,
including resolutions of its Board of Directors authorizing the execution,
delivery and performance of this Agreement and the Note.
Section 3.02 CONDITIONS PRECEDENT TO ALL SUPPLEMENTAL LOANS. The
obligation of Parent to make any Supplemental Loan shall be subject to the
further conditions precedent that on the date of such Supplemental Loan:
(1) Giving effect thereto, such Supplemental Loan is within
the Indenture Basket Amount and no "Default" or "Event of Default" (as such
terms are defined in the Indentures) would occur under the Indentures as a
result of such Supplemental Loan; and
(2) Giving effect thereto, such Supplemental Loan is within
the Revolver Basket Amount and no "Default" or "Event of Default" (as such terms
are defined in the Parent's Revolving Credit Facility) would occur under the
Parent's Revolving Credit Facility as a result of such Supplemental Loan.
In the event that either of the foregoing conditions precedent is not satisfied
as of the date on which notice of a Supplemental Loan is received by Parent
pursuant to Section 2.02, such notice of Supplemental Loan shall be deemed to be
automatically renewed on each Business Day thereafter until such time as the
applicable condition precedent is satisfied and, if such condition is so
satisfied on a subsequent date, Parent shall be obligated to make such
Supplemental Loan notwithstanding clauses (a), (b) and (c) of
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the proviso to Section 2.01 or any reduction of the Commitment pursuant to
Section 2.04.
Article IV.
REPRESENTATIONS OF SUNSET
Sunset represents and warrants to Parent that:
Section 4.01 STATUS AND POWER. Sunset is a corporation duly
incorporated under the laws of Nevada, and has the corporate power and authority
to transact the business in which it is engaged and to consummate the
transactions contemplated by this Agreement.
Section 4.02 AUTHORITY. The execution, delivery and
performance by Sunset of this Agreement and the Note have been duly
authorized by all necessary corporate action and do not require the consent
of any other person or violate any provision of any law, judgment, indenture
or other material agreement to which it is a party.
Section 4.03 ENFORCEABILITY. This Agreement and the Note are
legal, valid and binding obligations of Sunset and enforceable against Sunset in
accordance with their terms except to the extent limited by bankruptcy and
similar laws affecting creditors' rights generally.
Article V.
REPRESENTATIONS AND COVENANTS OF PARENT
Section 5.01 ENFORCEABILITY. Parent represents that its
commitment to make Supplemental Loans set forth in Section 2.01 is a legal,
valid and binding obligation of Parent and enforceable against Parent in
accordance with its terms except to the extent limited by bankruptcy and similar
laws affecting creditors' rights generally.
Section 5.02 BASKET AMOUNTS. Parent represents that, as of the
date hereof, the Indenture Basket Amount is not
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less than $93,500,000 and the Revolver Basket Amount is not less than
$77,000,000.
Section 5.03 ACTIONS AFFECTING BASKETS. Parent covenants that,
other than the making of Supplemental Loans and other investments in Sunset, it
will not take any voluntary action that would reduce the Indenture Basket Amount
below 150% of the unused Commitment under clause (a) or below 105% of the unused
Commitment under clause (c) of the definition of the term "Commitment" then in
effect or that would reduce the Revolver Basket Amount below $35,000,000 for the
purpose of Supplemental Loans under Section 2.01(a) or below the Sublease
Balance for the purpose of Supplemental Loans under Section 2.01(c); PROVIDED
that, solely for the purpose of Supplemental Loans under Section 2.01(a), on and
after the date that is three months after the Project Completion Date, Parent
may reduce the Revolver Basket Amount, but not below $25,000,000. Parent
further covenants that if, on the Project Completion Date, the Revolver Basket
Amount is less than $25,000,000 for the purpose of Supplemental Loans under
Section 2.01(a) or less than the Sublease Balance for the purpose of
Supplemental Loans under Section 2.01(c), it will promptly allocate such "New
Equity Proceeds" as may be necessary and available under Section 9.15(d) of
Parent's Revolving Credit Facility to result in the Revolver Basket Amount being
$25,000,000 for the purposes of Supplemental Loans under Section 2.01(a) and
$105% of the then Sublease Balance for the purpose of Supplemental Loans under
Section 2.01(c).
Article VI.
EVENTS OF DEFAULT
Section 6.01 EVENTS OF DEFAULT. The occurrence of either of the
following shall be an Event of Default under this Agreement:
(1) Sunset shall fail to pay the principal amount due on the
Note on the Maturity Date; or
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(2) Any representations made in Article IV hereof shall prove
to have been incorrect, incomplete or misleading in any material respect as of
the date made; or
(3) Sunset institutes or consents to a proceeding relating to
it under a bankruptcy or insolvency law or for the appointment of a receiver or
any such proceeding is instituted against it without its consent and the same
continues undismissed or unstayed for 60 days.
Section 6.02 REMEDIES. Upon the occurrence of an Event of
Default, Parent may declare its obligation to make further Supplemental Loans to
be terminated and may declare the principal amount outstanding under the Note to
be due and payable, all without notice, presentment or demand, which are hereby
waived by Sunset; PROVIDED that none of the foregoing shall be effective until
the tenth (10) Business Day after Parent has notified the holders of all
Indebtedness of Sunset of its intent to do so. In addition, Parent may exercise
such remedies as are available under applicable laws to a creditor, subject to
the rights of the holders of other Indebtedness of Sunset as set forth in
Section 2.05.
Article VII.
MISCELLANEOUS
Section 7.01 AMENDMENTS AND WAIVERS. Any amendment to or waiver
of this Agreement must be in a writing that specifically refers to this
Agreement and that is signed by an authorized officer of both Parent and Sunset.
Section 7.02 ASSIGNMENTS. The rights of Sunset hereunder are
assignable (including by the grant of a security interest therein) without the
consent of Parent. The parties hereto agree that any amendment or waiver hereof
after Parent has been notified in writing of such assignment or security
interest shall not be effective without the written consent of any such assignee
or grantee of a security interest.
Section 7.03 COSTS AND EXPENSES. Each of the parties hereto
agrees to pay on demand all costs and expenses
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incurred by the other party in any legal proceeding to enforce the rights of
such party under this Agreement if such other party is the prevailing party
in such legal proceeding.
Section 7.04 INTEGRATION. This Agreement and the Note contains
the entire Agreement between the parties relating to the subject matter hereof
and supersedes all oral agreements and prior writings with respect thereto.
Section 7.05 GOVERNING LAW. This Agreement shall be governed by,
and constructed in accordance with, the laws of the State of Nevada.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
STATION CASINOS, INC.,
A Nevada Corporation
By /s/ Glenn C. Christenson
-------------------------------------
Glenn C. Christenson
Executive Vice President,
Chief Financial Officer
and Treasurer
SUNSET STATION, INC.,
A Nevada Corporation
By /s/ Glenn C. Christenson
-------------------------------------
Glenn C. Christenson
Vice President, Chief
Financial Officer and
Treasurer
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- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
dated as of September 25, 1996
among
STATION CASINOS, INC.
as Lessee,
THE PERSONS LISTED ON SCHEDULE I HERETO,
as Holders,
and
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity, but solely as
as Lessor and Trustee
Acquisition Financing for Equipment Associated with
Sunset Station Hotel and Casino, in Henderson, Nevada
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<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS . . . . . . . . . 2
2.1 Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . 2
2.2 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Yield; Return of Investment . . . . . . . . . . . . . . . . . . 5
2.4 Procedures for Advance; Use of Proceeds . . . . . . . . . . . . 6
2.5 Postponement of Advance . . . . . . . . . . . . . . . . . . . . 7
2.6 Obligations Several . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Timing of Advance to the Trustee and Payments to the Holders . . 8
2.8 Holders' Instructions to Trustee . . . . . . . . . . . . . . . . 9
2.9 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . 9
2.11 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Legal and Tax Representation . . . . . . . . . . . . . . . . . 10
ARTICLE 3
CONDITIONS TO ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Advance Date . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Amortization Schedule . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Representations and Warranties of Lessee . . . . . . . . . . . . 12
4.2 Representations and Warranties of Each Holder. . . . . . . . . . 18
4.3 Representations and Warranties of the Trustee. . . . . . . . . . 19
ARTICLE 5
COVENANTS OF LESSEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Consolidation, Merger. . . . . . . . . . . . . . . . . . . . . . 21
5.3 Payment of Taxes and Other Potential Liens . . . . . . . . . . . 21
5.4 Preservation of Existence. . . . . . . . . . . . . . . . . . . . 21
5.5 Maintenance of Properties. . . . . . . . . . . . . . . . . . . . 22
5.6 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . 22
5.7 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 22
5.8 Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . 22
5.9 Keeping of Records and Books of Account. . . . . . . . . . . . . 22
5.10 Compliance With Agreements. . . . . . . . . . . . . . . . . . . 22
5.11 Hazardous Materials Laws. . . . . . . . . . . . . . . . . . . . 23
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5.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.13 Financial and Other Information . . . . . . . . . . . . . . . . 23
5.14 Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.15 Sublease. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.16 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . 26
5.17 Final Appraisal . . . . . . . . . . . . . . . . . . . . . . . . 27
5.18 Completion. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.19 Value of Equipment. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6
COVENANTS OF TRUSTEE AND HOLDERS . . . . . . . . . . . . . . . . . . . . . 28
6.1 Covenants of Trustee and the Holders . . . . . . . . . . . . . . 28
6.2 Restrictions On and Effect of Transfer . . . . . . . . . . . . . 29
6.3 Covenants and Agreements of Holders. . . . . . . . . . . . . . . 32
6.4 Required Transfers . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 7
GENERAL INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 General Indemnification. . . . . . . . . . . . . . . . . . . . . 33
7.2 Increased Commitment Costs . . . . . . . . . . . . . . . . . . . 36
7.3 Eurodollar Costs and Related Matters . . . . . . . . . . . . . . 37
7.4 Excessive Use Indemnity. . . . . . . . . . . . . . . . . . . . . 41
7.5 Indemnification of Trust Company . . . . . . . . . . . . . . . . 41
ARTICLE 8
GENERAL TAX INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 General Tax Indemnity. . . . . . . . . . . . . . . . . . . . . . 42
8.2 Exclusions from General Tax Indemnity. . . . . . . . . . . . . . 43
8.3 Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.6 Withholding Tax Exemption. . . . . . . . . . . . . . . . . . . . 47
8.7 Tax Character of Transaction . . . . . . . . . . . . . . . . . . 47
8.8 Tax Savings. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 9
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.1 Cumulative Remedies; No Waiver . . . . . . . . . . . . . . . . . 49
9.2 Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . . 50
9.3 Nature of Holders' Obligations . . . . . . . . . . . . . . . . . 50
9.4 Survival of Representations and Warranties . . . . . . . . . . . 51
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.6 Execution of Operative Documents . . . . . . . . . . . . . . . . 51
9.7 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 51
9.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.9 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.11 Severability of Provisions. . . . . . . . . . . . . . . . . . . 53
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9.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.13 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . 53
9.14 Gaming Boards . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.15 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.16 Release of Lien . . . . . . . . . . . . . . . . . . . . . . . . 54
9.17 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.18 Waiver of Right to Trial by Jury. . . . . . . . . . . . . . . . 55
9.19 Purported Oral Amendments . . . . . . . . . . . . . . . . . . . 55
SCHEDULE I HOLDER COMMITMENTS
SCHEDULE II NOTICE INFORMATION, FUNDING OFFICES, AND WIRE INSTRUCTIONS
SCHEDULE III RECORDINGS, FILINGS AND REGISTRATIONS
SCHEDULE IV AMORTIZATION SCHEDULE
SCHEDULE V EQUIPMENT CATEGORIES
SCHEDULE VI DISCLOSURE MATTERS
APPENDIX I DEFINITIONS
EXHIBIT A FORM OF LEASE
EXHIBIT B FORM OF SUBLEASE
EXHIBIT C FORM OF TRUST AGREEMENT
EXHIBIT D FORM OF SUBLEASE ASSIGNMENT
EXHIBIT E FORM OF CONSENT TO SUBLEASE ASSIGNMENT
EXHIBIT F FORM OF ADVANCE REQUEST
EXHIBIT G FORM OF BILL OF SALE
EXHIBIT H FORM OF CERTIFICATE OF ACCEPTANCE
EXHIBIT I FORM OF INVESTOR'S LETTER
EXHIBIT J FORM OF PURCHASE ORDER ASSIGNMENT
EXHIBIT K FORM OF OPINION OF COUNSEL TO LESSEE AND SUBLESSEE
EXHIBIT L FORM OF OPINION OF NEVADA COUNSEL TO LESSEE AND SUBLESSEE
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "AGREEMENT"), dated as of
September 25, 1996, is entered into by and among STATION CASINOS, INC., a
Nevada corporation, as Lessee; FIRST SECURITY TRUST COMPANY OF NEVADA, not
in its individual capacity, except as expressly stated herein, but solely as
Lessor and Trustee; and the Persons listed on SCHEDULE I hereto, as Holders;
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Lease, Lessor will lease to
Lessee, and Lessee will lease from Lessor, the Equipment on a "lease intended
for security" basis; and
WHEREAS, simultaneously therewith, Lessee shall sublease the
Equipment to the Sublessee on a "true lease" basis; and
WHEREAS, Lessee will apply Advances from the Trust to finance the
acquisition of the Equipment subject to the terms of the Lease; and
WHEREAS, Holders 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 Holders, the Holders will
have the benefit of a Lien from the Lessee of all of its right, title and
interest to the Equipment and the Sublease;
NOW, THEREFORE, in consideration of the mutual terms and conditions
herein contained, the parties hereto agree as follows:
ARTICLE 1
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 2
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EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
SECTION 2.1 EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective on the date on which all of the following conditions precedent shall
have been satisfied or waived by the applicable parties (the "CLOSING DATE"):
2.1.1 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 or the
Sublessee is a party (either before or after giving effect to the
transactions contemplated by the Operative Documents).
2.1.2 ARTICLES OF INCORPORATION, BYLAWS, CORPORATE RESOLUTIONS AND
CERTIFICATES OF GOOD STANDING. Trustee and each Holder shall have
received from each of Lessee and the Sublessee;
(a) certificates of existence and good standing issued by the
Secretary of State of the State of Nevada, each dated within thirty
Business Days of the Closing Date;
(b) copies of the respective articles of incorporation and by-
laws certified to be true and correct by a Responsible Official of
Lessee and the Sublessee, respectively; and
(c) certificates of the Secretary or Assistant Secretary of each
of Lessee and Sublessee certifying as to (A) the resolutions of the
Board of Directors duly authorizing the execution, delivery and
performance by Lessee and Sublessee, 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 Sublessee, respectively and
(C) the accuracy of all representations and warranties and absence of
Defaults.
2.1.3 NO MATERIAL ADVERSE EFFECT. Since June 30, 1996, there shall
not have occurred any Material Adverse Effect.
2.1.4 OPINIONS OF COUNSEL. Trustee and each Holder shall have
received the legal opinions set forth below, each dated as of the Closing
Date and addressed to Trustee and each Holder:
(a) from Milbank, Tweed, Hadley & McCloy, counsel to Lessee and
Sublessee, as to the matters set forth in the form of EXHIBIT K; and
(b) Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada counsel
to Lessee and Sublessee, as to the matters set forth in the form of
EXHIBIT L.
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2.1.5 FINANCIAL STATEMENTS. Trustee and each Holder shall have
received copies of the consolidated financial statements of the Lessee and
its consolidated Subsidiaries for the last fiscal quarter ended June 30,
1996, together with a statement or certificate from the Chief Financial
Officer, Controller or Treasurer of the Lessee to the effect that (i) such
financial statements are true, complete and correct and (ii) no event or
circumstance affecting the Lessee and its consolidated Subsidiaries shall
have occurred since the date of such financial statements which could
reasonably be expected to constitute a Material Adverse Effect.
2.1.6 PAYMENT OF FEES. The upfront fee and any other fees payable to
each Holder in the amount set forth in the letter dated August 28, 1996
from the Arranger to each Holder and the arrangement fee payable to the
Arranger pursuant to the Arranger Fee Letter shall have been paid.
2.1.7 SECURED CREDIT AGREEMENT. The Secured Credit Agreement shall
have been (or shall concurrently be) executed and delivered by each of the
parties thereto.
2.1.8 INTERCREDITOR AGREEMENT. The Intercreditor Agreement shall have
been (or shall concurrently be) executed and delivered by each of the
parties thereto and shall be in form and substance satisfactory to the
Holders.
2.1.9 TRUSTEE'S CERTIFICATE. Lessee and each Holder shall have
received a certificate of an authorized officer of the Trust Company
certifying as to (i) the due authorization of the execution, delivery and
performance by the Trust Company of each Operative Document to which it is
or will be a party, (ii) its articles of incorporation, certified as of a
recent date by an appropriate officer of Trust Company, (iii) its by-laws
and (iv) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party.
2.1.10 SUBLEASE. The Sublease shall have been (or shall concurrently
be) executed and delivered by Lessee and Sublessee, and the same shall
have been assigned to the Trustee with the original thereof delivered to
the Trustee.
2.1.11 CONSENT TO SUBLEASE ASSIGNMENT. The Consent to Sublease
Assignment shall have been (or shall concurrently be) executed by
Sublessee and delivered to the Trustee.
2.1.12 PRELIMINARY APPRAISAL REPORT. The Trustee and each Holder
shall have received the Preliminary Appraisal Report.
2.1.13 CERTIFICATES. Each Holder shall have received a Certificate
setting forth the Commitment of such Holder.
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2.1.14 FILINGS AND RECORDINGS. All filings, registrations and
recordings set forth on SCHEDULE III shall have been made, or shall have
been arranged to be made promptly thereafter, in the appropriate places or
offices and all fees and taxes with respect to any recordings, filings or
registrations made pursuant to this SECTION 2.1.14 shall have been paid in
full, and satisfactory evidence thereof shall have been delivered to
Trustee and each Holder, or arrangements for such payment shall have been
made to the satisfaction of Trustee and each Holder.
2.1.15 SEARCHES. Trustee and each Holder shall have received a
report, as of a current date, prepared by a search company reasonably
satisfactory to Trustee and each Holder, of judgment liens, tax liens,
Uniform Commercial Code filings and other encumbrances of record with
respect to Lessee and Sublessee with the applicable filing offices in the
State of Nevada, and such report shall show no Liens other than Permitted
Encumbrances on or affecting the Equipment.
2.1.16 INSURANCE. Trustee and each Holder shall have received
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.
2.1.17 SATISFACTORY LEGAL FORM. All documents executed or submitted
pursuant hereto by or on behalf of the Lessee and Sublessee shall be
satisfactory in form and substance to Trustee and each Holder and their
respective counsel; Trustee and each Holder, and their respective counsel
shall have received all information, approvals, opinions, documents or
instruments as Trustee and each Holder, and their respective counsel may
reasonably request.
2.1.18 TRANSACTION COSTS. Lessee shall have paid all Transaction
Costs invoiced to it at least two Business Days prior to the Closing Date
to the parties to whom such Transaction Costs are payable. Such payment
shall be made by wire transfer of immediately available funds.
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 an Advance Request, on the
Advance Date each Holder shall finance a portion of the applicable Advance
by making an advance to the Trustee (in accordance with the Trustee's
payment instructions set forth on SCHEDULE II) by remitting to the Trustee
an amount (each, a "CERTIFICATE ADVANCE") in immediately available funds
equal to such Holder's Commitment Percentage of the aggregate amount of the
Advance. Each Certificate Advance shall be evidenced by the Certificate
delivered to each Holder on the Closing Date. Notwithstanding any other
provision hereof, no Holder shall be permitted or required to fund any
Certificate Advance to the extent that, after giving effect thereto, the
aggregate amount advanced would exceed such Holder's Commitment, and the
aggregate original principal amount of all Certificate Advances made since
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<PAGE>
the Closing Date would exceed the Commitment Amount. No amounts paid or
prepaid with respect to the Certificate Advances may be readvanced.
SECTION 2.3 YIELD; RETURN OF INVESTMENT.
2.3.1 The amount of the Certificate Advances outstanding from time to
time shall accrue Yield at the Applicable Yield Rate. If all or any
portion of the Certificate Advances, any Yield payable thereon or any
other amount payable hereunder shall not be paid when due (whether at
stated maturity, acceleration thereof or otherwise), such overdue amount
shall bear interest at a rate per annum which is equal to the Default
Rate.
2.3.2 Each Certificate Advance shall be an Alternate Base Rate
Certificate Advance from the date when made through the next following
Eurodollar Period Commencement Date, at which time it shall automatically
convert into a Eurodollar Rate Certificate Advance. Each such Eurodollar
Rate Certificate Advance shall automatically convert at the end of its
Eurodollar Period into another Eurodollar Rate Loan; PROVIDED that any
Eurodollar Rate expiring on or after July 1, 2000 for which Lessee has not
designated a Eurodollar Period of one (1) or two (2) months shall
automatically convert at the end of its Eurodollar Period into an
Alternate Base Rate Certificate Advance.
2.3.3 The Trustee shall notify the Holders and Lessee of the
Applicable Yield Rate in effect from time to time.
2.3.4 The Trustee shall distribute, in accordance with the Trust
Agreement, Periodic Rent and all other amounts due with respect to the
Certificate Advances paid to the Trustee by the Lessee under the Lease
from time to time.
2.3.5 During the Commitment Period, Yield shall accrue on
outstanding Certificate Advances and shall be paid on each Payment Date
during the Commitment Period.
2.3.6 During the Base Period, Yield shall accrue on outstanding
Certificate Advances and shall be paid on each Payment Date.
2.3.7 The outstanding aggregate Certificate Advances shall be
repaid according to the Amortization Schedule set forth in Schedule IV in
accordance with SECTION 3.2.
SECTION 2.4 PROCEDURES FOR ADVANCE; USE OF PROCEEDS.
2.4.1 REQUEST. With respect to the funding of each Advance, Lessee
shall deliver to the Trustee, not later than 10:00 a.m., San Francisco
time, three Business Days prior to the proposed Advance Date, an
irrevocable written notice substantially in the form of EXHIBIT E (an
"ADVANCE REQUEST"), specifying (i) the proposed Advance Date, (ii) the
total Equipment Cost for the items of Equipment being (or to be) acquired,
(iii) the portion of such Advance to be applied to Equipment Costs for
each item of Equipment being (or to be) acquired, (iv) the nature (initial
vendor deposit, vendor progress payment, vendor final invoice payment or
Charges) for the portion of such Advance to be applied to Equipment
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Costs for each item of Equipment being (or to be) acquired,
(v) identifying each item of Equipment being (or to be) acquired and
setting forth its Category of Equipment and (vi) wire instructions for the
disbursement of funds.
2.4.2 FUNDING - EQUIPMENT PURCHASED. On each scheduled Advance Date,
unless Section 2.4.3 applies, upon (i) receipt by Trustee of all amounts
to be paid by the Holders pursuant to SECTION 2.2 and (ii) satisfaction or
waiver of each of the conditions set forth in SECTION 3.1, (A) Lessor
shall purchase the Equipment described in the related Advance Request, and
Lessee shall deliver a Purchase Order Assignment or 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 such Equipment,
(B) Lessee shall lease such Equipment from the Lessor pursuant to the
Lease, (C) Lessee shall sublease such Equipment to the Sublessee pursuant
to the Sublease, and (D) Trustee shall pay to Lessee (or such Person as
Lessee may direct), from funds made available by the Holders pursuant to
SECTION 2.2, the amount specified in such Advance Request in immediately
available funds remitted by wire transfer in accordance with such Advance
Request.
2.4.3 FUNDING - EQUIPMENT TO BE PURCHASED. On each scheduled
Advance Date if the Advance Request states that any part of the
requested Advance will be used for vendor deposits or vendor progress
payments relating to Equipment to be acquired at a later date, (i) the
conditions precedent set forth in Sections 3.1.8 and 3.1.9 shall not
apply and (ii) the Bill of Sale or Purchase Order Assignment and
Certificate of Acceptance described in such Sections and the matters
described in clauses (A), (B) and (C) of Section 2.4.2 shall occur as
of such later date when the Equipment is so acquired. If Lessee fails
to deliver a Certificate of Acceptance with respect to any item of
Equipment for which an Advance has been made under this Section 2.4.3,
Lessee shall on demand of Lessor purchase such item of Equipment from
Lessor for the aggregate amount so advanced by Lessor and any other
costs or obligations incurred by Lessor in connection therewith plus
all accrued and unpaid Interim Rent with respect to such item of Equipment.
2.4.4 NUMBER, AMOUNT AND DATES OF ADVANCES. There shall not be more
than one Advance in any calendar month. Each Advance shall be in an amount
of no less than $5,000,000 or the remaining available Commitment. No
Advance shall be made on or after the Outside Delivery Date, or such
earlier date as the Commitments are terminated, and no Advance may occur
when the Commitments are suspended.
2.4.5 USE OF PROCEEDS. Proceeds from all Certificate Advances shall
be used solely for the purpose of funding Equipment Costs.
SECTION 2.5 POSTPONEMENT OF ADVANCE. If the Holders make a Certificate
Advance requested pursuant to an Advance Request and the conditions
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precedent to such Advance have not been satisfied on the date specified in
such Advance Request and as a result no Advance is then made to Lessee, the
Lessee shall pay to the Trustee, for the benefit of each Holder, interest on
the amount funded by each Holder at a rate equal to the sum of the
Alternate Base Rate plus the Alternate Base Rate Margin (determined as of
the date of such funding) for the period from the date of each such Advance
to the date such Advance is returned to such Holder or such Advance Date
shall have occurred, less any interest earned by the Trustee on behalf of
the Holders by investing such funded amounts. Trustee (or its assignee)
shall not be required to invest such funds in interest-bearing investments,
but Trustee (or its assignee) shall upon direction of Lessee (or, if an
Event of Default exists, the Requisite Holders) invest such funds in short
term money market instruments at the written authorization and direction of
Lessee (or if an Event of Default exists, the Requisite Holders), to the
extent it is practicably able to do so. The Trustee shall provide a
written statement of any such investments to the Holders reasonably
promptly thereafter. Such interest shall be due and payable by the Lessee
upon the occurrence of such postponed Advance Date or upon return of such
funds to the Holders. Such payment of interest shall be an additional
condition precedent to the postponed Advance Date. If any 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 Trustee shall refund to each Holder all amounts funded
by such Holder and all accrued interest allocable to such Holder. No
additional Advance Request shall be required if an Advance Date is
postponed and thereafter consummated.
SECTION 2.6 OBLIGATIONS SEVERAL. The obligations of the Holders
herein or elsewhere in the Operative Documents shall be several and not joint;
and, 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 HOLDERS.
2.7.1 TIMING OF ADVANCES TO TRUSTEE. Subject to timely delivery of
an Advance Request and the other terms and conditions of the Operative
Documents, each Holder shall make its Commitment Percentage of the
requested Advance available to the Trustee by 1:00 p.m., San Francisco
time, on the requested Advance Date, and the Trustee will forward any such
amounts so received to the Lessee, not later than 3:00 p.m., San Francisco
time, on such Advance Date.
2.7.2 PAYMENTS TO HOLDERS. Any payments received by the Trustee
from or on behalf of the Lessee not later than 12:00 noon, San
Francisco time, shall be paid by the Trustee to the Holders in
immediately available funds no later than 3:00 p.m., San Francisco time,
on the same day, and any payments received by the Trustee from or on
behalf of the Lessee after 12:00 noon, San Francisco time, shall be
paid by the Trustee to the Holders as soon after receipt as practicable,
but not later than 11:00 a.m., San Francisco time, on the next
succeeding Business Day. Rent and all other payments due to Trustee or
any Holder
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under the Operative Documents shall be paid in immediately
available funds, at its respective office specified in SCHEDULE II or
at such other office as it may from time to time specify to the Trustee
and Lessee in a notice pursuant hereto. All such payments shall be
made to the Trustee (in its individual or trust capacity) or such Holder,
as applicable, not later than 12:00 noon, San Francisco 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.
SECTION 2.8 HOLDERS' INSTRUCTIONS TO TRUSTEE. By making its Advance
pursuant to SECTION 2.2, each Holder agrees that such act shall constitute,
without further act, (i) evidence that the conditions precedent to such Advance
applicable to such Holder set forth in ARTICLE III have been satisfied or
waived and (ii) authorization and direction by such Holder to Trustee to
make a corresponding Certificate Advance pursuant to Section 2.2.
SECTION 2.9 COMPUTATIONS.
2.9.1 DETERMINATION OF THE YIELD RATE. All computations of accrued
amounts pursuant to the Operative Documents shall be made on the basis of
actual number of days elapsed in a 360-day year.
2.9.2 DOLLARS. All payments required to be made by the Lessee or
the Trustee, including any Advance or payment of Rent, shall be made only
in Dollars in immediately available funds.
SECTION 2.10 COMMITMENT FEE. Lessee agrees to pay to the Trustee for the
account of each Holder, for the period (including any portion thereof when its
Commitment is suspended by reason of the Lessee's inability to satisfy any
condition of ARTICLE III) commencing on the Closing Date and continuing through
the Outside Delivery Date, a commitment fee at a per annum rate equal to 0.375%
of the average daily unused portion of each such Holder's Commitment. The
commitment fee shall be payable by the Lessee in arrears on each Quarterly
Payment Date, commencing with the first such day following the Closing Date,
and on the date on which the Commitment shall terminate.
SECTION 2.11 RECORDS. Each Holder is hereby authorized to record the
date and amount of each Certificate Advance advanced by it, each continuation
thereof, and the date and amount of each payment or prepayment thereof, on
the schedule annexed to and constituting a part of its Certificate, and any
such recordation shall constitute PRIMA FACIE evidence of the accuracy of the
information so recorded, provided that the failure to make any such recordation
or any error in such recordation shall not affect the Trustee's obligations
under the Operative Documents or under such Certificate.
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SECTION 2.12 LEGAL AND TAX REPRESENTATION. Lessee and Sublessee
acknowledge and agree that neither Trustee nor any Holder 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 and Sublessee have 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 Holder 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
without reliance on Trustee, Arranger or any other Holder.
ARTICLE 3
CONDITIONS TO ADVANCES
SECTION 3.1 ADVANCE DATE. The obligation of the Trustee and each Holder
to perform their respective obligations on each Advance Date shall be
subject to the fulfillment to the satisfaction of, or the waiver in writing
by, Trustee and each Holder of the conditions precedent set forth in this
SECTION 3.1 on or before each Advance Date (except that the obligation of
any party hereto shall not be subject to the performance or compliance of
such party or of any of such party's Affiliates).
3.1.1 ADVANCE REQUEST. With respect to any Advance, Trustee and each
Holder shall have received, at least three Business Days before each
Advance Date, an Advance Request duly executed by Lessee, in accordance
with SECTION 2.4. Each of the delivery of an 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 3.1.3
and in such Advance Request, are true and correct.
3.1.2 FUNDING. Each Holder shall have funded the full amount to be
funded by such Holder on such Advance Date as described in ARTICLE II.
3.1.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES, NO DEFAULT, ETC.
On such Advance Date, the following statements shall be true and correct:
(a) All of the representations and warranties of Lessee,
Sublessee and Trustee contained herein and in each of the other
Operative Documents are true and correct on and as of such Advance
Date in all material respects as though made on and as of that date,
except to the extent that such representations and warranties relate
solely to an earlier date, in which case such representations and
warranties shall have been true and correct on and as of such earlier
date; and
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(b) No Default or Event of Default then exists and no Event of
Default (as such term is defined in the Secured Credit Agreement)
then exists under the Secured Credit Agreement.
3.1.4 APPRAISAL REPORT CONFIRMATION. Trustee and each Holder shall
have received and each Holder shall have approved, at least five (5)
Business Days prior to the date of the Advance, an Appraisal Report
Confirmation with respect to the Equipment financed with the Advance made
on that Advance Date.
3.1.5 GOVERNMENTAL APPROVALS, PERMITS, CONSENTS, ETC. Trustee and
each Holder shall have received copies of all material permits, approvals
or consents by all Governmental Agencies required for or in connection
with the use and operation of the Equipment and the transactions provided
for in this Agreement, together with all supporting documents and
materials reasonably requested by any Holder.
3.1.6 THIRD PARTY APPROVALS. All third party approvals necessary in
the reasonable opinion of the Trustee and the Holders for the operation
and use of the Equipment and for Lessee and Sublessee to perform its
obligations with respect to the Lease and Sublease shall have been
obtained.
3.1.7 SATISFACTORY LEGAL FORM. All documents executed or submitted
pursuant to this Section 3.1 by or on behalf of the Lessee and Sublessee
shall be satisfactory in form and substance to Trustee and each Holder and
their respective counsel.
3.1.8 TRANSACTION COSTS. Lessee shall have paid all Transaction
Costs invoiced to it at least two Business Days prior to the Advance Date
to the parties to whom such Transaction Costs are payable. Such payment
shall be made by wire transfer of immediately available funds.
3.1.9 BILL OF SALE OR PURCHASE ORDER ASSIGNMENT. Lessee shall have
delivered to Trustee a fully-executed Bill of Sale or Purchase Order
Assignment (as applicable) with respect to the items of Equipment
identified in such Advance Request.
3.1.10 CERTIFICATES OF ACCEPTANCE. Lessee and Sublessee shall have
delivered to Trustee a fully-executed Certificate of Acceptance with
respect to each item of Equipment identified in such Advance Request.
3.1.11 ABSENCE OF MATERIAL ADVERSE EFFECT. Since June 30, 1996, no
Material Adverse Effect shall have occurred.
3.1.12 FURTHER ASSURANCES, ETC. Trustee and each Holder shall
have received such other and further instruments, duly executed,
acknowledged (if appropriate) and delivered, as Trustee and each Holder
reasonably shall have requested in connection with such Advance and this
Agreement.
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3.1.13 POST-APPRAISAL ADVANCES. Any Advance made subsequent to the
date of the Final Appraisal must fund Equipment Costs for items of
Equipment reflected in the Final Appraisal.
SECTION 3.2 AMORTIZATION SCHEDULE. SCHEDULE IV sets forth the
mandatory principal amortization schedule for the Certificate Advances (the
"AMORTIZATION SCHEDULE"). Holders will receive aggregate payments on each
Scheduled Principal Payment Date during the Base Period so as to cause all of
the Certificate Advances to amortize in an amount on each such Scheduled
Principal Payment Date equal to the product of (u) the percentage set forth
opposite each such Scheduled Principal Payment Date on the Amortization
Schedule and (v) Lessor's Cost. Each Certificate or Certificates evidencing
a Holder's Commitment will amortize by an amount equal to the product of (w)
the Commitment Percentage and (x) the aggregate amount payable to the
Holders on such Scheduled Principal Payment Date pursuant to the preceding
sentence.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents
and warrants to each of the other parties hereto, as of the Closing Date and as
of the date of each Certificate Advance, as follows:
4.1.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS.
Lessee is a corporation duly formed, validly existing and in good standing
under the Laws of Nevada. Lessee is duly qualified or registered to
transact business and is in good standing in each other jurisdiction in
which the conduct of its business or the ownership or leasing of its
properties makes such qualification or registration necessary, EXCEPT
where the failure so to qualify or register and to be in good standing
would not constitute a Material Adverse Effect. Lessee has all requisite
corporate or other organizational power and authority to conduct its
business, to own and lease its Properties and to execute and deliver
each Operative Document to which it is a Party and to perform its
Obligations. The chief executive offices of Lessee are located in
Nevada. Lessee is in compliance with all Requirements of Laws
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions
from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of its business, EXCEPT where the failure
so to comply, file, register, qualify or obtain exemptions does not
constitute a Material Adverse Effect.
4.1.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS
AND GOVERNMENT REGULATIONS. The execution, delivery and performance by
Lessee of the Operative Documents to which it is a Party have been duly
authorized by all necessary corporate or other organizational action,
and do not and will not:
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(a) Require any consent or approval not heretofore obtained of
any member, partner, director, stockholder, security holder or
creditor of such Party;
(b) Violate or conflict with any provision of such Party's
charter, articles of organization or incorporation, operating
agreement or bylaws, as applicable;
(c) Result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or leased or hereafter
acquired by such Party;
(d) Violate any Requirement of Law applicable to such Party,
subject to obtaining the authorizations from, or filings with, the
Governmental Authorities described in SCHEDULE III;
(e) Result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual
Obligation to which such Party is a party or by which such Party or
any of its property is bound or affected;
and Lessee is not in violation of, or default under, any Requirement of Law or
Contractual Obligation, or any indenture, loan or credit agreement described in
Section 4.1.2(e), in any respect that constitutes a Material Adverse Effect.
4.1.3 NO GOVERNMENTAL APPROVALS REQUIRED. EXCEPT as previously
obtained or made, no authorization, consent, approval, order, license or
permit from, or filing, registration or qualification with, any
Governmental Agency is or will be required to authorize or permit under
applicable Laws the execution, delivery or (except as set forth in
Schedule VI) performance by Lessee of the Operative Documents to which it
is a Party. Lessee has no reason to believe that the authorizations from,
or filings with, any Governmental Agency described in Schedule VI will not
be accomplished on or before the dates specified in Schedule VI.
4.1.4 FINANCIAL STATEMENTS. Lessee has furnished to the Holders
(a) the audited consolidated financial statements of Lessee and its
Subsidiaries for the fiscal year ended March 31, 1996 and (b) the
unaudited consolidated financial statements of Lessee and its
Subsidiaries for the fiscal quarter ended June 30, 1996. The financial
statements described in clauses (a) and (b) fairly present in all
material respects the financial condition, results of operations and
changes in financial position of Lessee, as of such dates and for such
periods in conformity with GAAP, consistently applied.
4.1.5 NO OTHER LIABILITIES; NO MATERIAL ADVERSE CHANGES. Lessee
does not have any material liability or material contingent liability
required under GAAP to be reflected or disclosed and not reflected or
disclosed in the balance sheet described in Section 4.5(b), other than
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liabilities and contingent liabilities arising in the ordinary course
of business since the date of such balance sheet. As of the Closing
Date, no circumstance or event has occurred that constitutes a Material
Adverse Effect since June 30, 1996. As of any date subsequent to the
Closing Date, no circumstance or event has occurred that constitutes a
Material Adverse Effect since the Closing Date.
4.1.6 INTANGIBLE ASSETS. Lessee owns, or possesses the right to use
pursuant to a written license agreement to the extent necessary in its
business, all material trademarks, trade names, copyrights, patents,
patent rights and other intangible assets that are used in the conduct
of its business as now operated, and no such intangible asset, to the best
knowledge of Lessee, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to
the extent that such conflict constitutes a Material Adverse Effect.
4.1.7 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Lessee nor any of
its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.1.8 LITIGATION. EXCEPT for (a) any matter fully covered as to
subject matter and amount (subject to applicable deductibles and
retentions) by insurance as to which the insurance carrier has been
notified and has not asserted lack of subject matter coverage or reserved
its right to do so, (b) any matter, or series of related matters,
involving a claim against Lessee or any of its Subsidiaries of less
than $2,000,000, (c) matters of an administrative nature not involving
a claim or charge against Lessee or any of its Subsidiaries and (d)
matters set forth in SCHEDULE VI, there are no actions, suits,
proceedings or investigations pending as to which Lessee or any of its
Subsidiaries have been served or have received notice or, to the best
knowledge of Lessee, threatened against or affecting Lessee or any of
its Subsidiaries or any Property of any of them before any Governmental
Agency.
4.1.9 BINDING OBLIGATIONS. Each of the Operative Documents to which
Lessee is a Party will, when executed and delivered by such Party,
constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, EXCEPT as
enforcement may be limited by Debtor Relief Laws, Gaming Laws or equitable
principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
4.1.10 NO DEFAULT. No event has occurred and is continuing that
is a Default or Event of Default.
4.1.11 ERISA.
(a) With respect to each Pension Plan:
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(i) such Pension Plan complies in all material respects
with ERISA and any other applicable Laws to the extent that
noncompliance could reasonably be expected to have a Material Adverse
Effect;
(ii) such Pension Plan has not incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA) that could
reasonably be expected to have a Material Adverse Effect;
(iii) no "reportable event" (as defined in Section 4043 of
ERISA) has occurred that could reasonably be expected to have a
Material Adverse Effect; and
(iv) neither Lessee nor any of its ERISA Affiliates has
engaged in any non-exempt "prohibited transaction" (as defined in
Section 4975 of the Code) that could reasonably be expected to have a
Material Adverse Effect.
(b) Neither Lessee nor any of its ERISA Affiliates has incurred
or expects to incur any withdrawal liability to any Multiemployer
Plan that could reasonably be expected to have a Material Adverse
Effect.
4.1.12 REGULATIONS G, T, U AND X; INVESTMENT COMPANY ACT. No part
of the proceeds of any Certificate Advance hereunder will be used to
purchase or carry, or to extend credit to others for the purpose of
purchasing or carrying, any margin stock in violation of Regulations G,
T, U and X. Neither Lessee nor any of its Subsidiaries is or is
required to be registered as an "investment company" under the
Investment Company Act of 1940.
4.1.13 DISCLOSURE. No written statement made by a Senior Officer of
Lessee to the Trustee or any Holder in connection with this Agreement, or
in connection with any Certificate Advance, as of the date thereof
contained any untrue statement of a material fact or omitted a material
fact necessary to make the statement made not misleading in light of all
the circumstances existing at the date the statement was made.
4.1.14 TAX LIABILITY. Lessee and its Subsidiaries have filed all
tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes with respect to the periods,
property or transactions covered by said returns, or pursuant to any
assessment received by Lessee or its Subsidiaries, EXCEPT (a) such taxes,
if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been established and
maintained and (b) immaterial taxes so long as no material property of
Lessee or any of its Subsidiaries is at impending risk of being seized,
levied upon or forfeited.
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4.1.15 HAZARDOUS MATERIALS. Except as described in SCHEDULE VI, as
of the Closing Date (a) neither Lessee nor any of its Subsidiaries at any
time has disposed of, discharged, released or threatened the release of
any Hazardous Materials on, from or under any Real Property in
violation of any Hazardous Materials Law that would individually or in
the aggregate constitute a Material Adverse Effect, (b) to the best
knowledge of Lessee, no condition exists that violates any Hazardous
Material Law affecting any Real Property except for such violations
that would not individually or in the aggregate have a Material Adverse
Effect, (c) no Real Property or any portion thereof is or has been
utilized by Lessee or any of its Subsidiaries as a site for the
manufacture of any Hazardous Materials and (d) to the extent that any
Hazardous Materials are used, generated or stored by Lessee or any of
its Subsidiaries on any Real Property, or transported to or from such
Real Property by Lessee or any of its Subsidiaries, such use, generation,
storage and transportation are in compliance with all Hazardous
Materials Laws except for such non-compliance that would not constitute
a Material Adverse Effect or be materially adverse to the interests of
the Holders.
4.1.16 GAMING LAWS. Lessee is in compliance with all Gaming Laws
except for such non-compliance that would not constitute a Material
Adverse Effect.
4.1.17 NO OTHER AGREEMENTS. Lessee is not a party to any agreement
to sell any interest in the Equipment.
4.1.18 SECURITIES ACT. Neither Lessee nor anyone authorized to act
on its behalf has, directly or indirectly, offered or sold any interest in
the Certificates, the Equipment, the Lease or any of the Operative
Documents in violation of Section 5 of the Securities Act or the
registration or qualification requirements of any applicable state
securities laws.
4.1.19 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.
4.1.20 APPRAISAL DATA. The information provided by the Lessee and
its Affiliates to the Appraiser, taken as a whole, was true and correct in
all material respects and did not omit any information known and available
to the Lessee or any of its Affiliates necessary to make the information
provided not materially misleading.
4.1.21 PURCHASE PRICE. The Fair Market Sales Value of the items of
Equipment accepted on each 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.
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SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF EACH HOLDER. Each Holder
represents and warrants, severally and only as to itself, to each of the other
parties hereto as follows:
4.2.1 ERISA. It is purchasing its interest in the Certificate with
assets that are either (i) not assets of any Employee Benefit Plan (or its
related trust) which is subject to Title I of ERISA or Section 4975 of the
Code, or (ii) assets of any Employee Benefit Plan (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 with respect to such plan assets.
4.2.2 INVESTMENT IN CERTIFICATES. It is acquiring the Certificate
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 its
interest in its Certificate, it understands that it may do so only in
compliance with the Securities Act and the rules and regulations
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 Certificate, the
Trust Estate (including the Equipment constituting a part thereof) 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 Holder's property shall be at all
times within its control.
4.2.3 LESSOR'S LIEN. The Equipment is free and clear of all Lessor's
Liens attributable to such Holder.
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:
4.3.1 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 is located at 530 Las Vegas Boulevard South,
Las Vegas, Nevada 89101, Attention: Corporate Trust Department, and
the place where the documents, accounts and records relating to the
transactions contemplated by the Operative Documents are kept is
located at Trust Company c/o First Security Bank, N.A., 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Services.
4.3.2 DUE ORGANIZATION, ETC. Trust Company is a banking corporation
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
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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.
4.3.3 DUE AUTHORIZATION; ENFORCEABILITY. The Operative Documents to
which 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 Trust Company (in its individual capacity)
and are, or upon execution and delivery by Trust Company will be, legal,
valid and binding obligations of 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.
4.3.4 NO CONFLICT. The execution and delivery by (i) 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) 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 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 incorporation or
by-laws of Trust Company, do not and will not contravene any Laws of
the United States of America or the State of Nevada relating to the
banking or trust powers of 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 Trust Company is a party or by which it or its
properties may be bound or affected.
4.3.5 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 Action by any Governmental Agency under any Laws of the
United States of America or the State of Nevada relating to the banking
or trust powers of Trust Company.
4.3.6 LITIGATION. There is no action, proceeding or investigation
pending or threatened against 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 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.
4.3.7 LESSOR LIENS. The Equipment is free and clear of all Lessor
Liens attributable to Trust Company (in its individual capacity).
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4.3.8 SECURITIES ACT. Neither 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
Certificates, 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.
ARTICLE 5
COVENANTS OF LESSEE
So long as any Certificate Advance remains unpaid, or any other
Obligation remains unpaid, or any portion of the Commitment remains in force,
unless the Trustee (with the written approval of the Requisite Holders)
otherwise consents, Lessee covenants that Lessee shall:
SECTION 5.1 FURTHER ASSURANCES. At its own cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances as any Holder or the Trustee 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, and 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 take all such other actions or cause such actions to be taken, as
may be necessary or as may be reasonably requested by any Holder or the Trustee
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 in favor of the Holders on the Trust Estate.
SECTION 5.2 CONSOLIDATION, MERGER. Not merge or consolidate with any
Person, except mergers and consolidations of a Subsidiary of Lessee into
Lessee.
SECTION 5.3 PAYMENT OF TAXES AND OTHER POTENTIAL LIENS. Pay and
discharge promptly all taxes, assessments and governmental charges or levies
imposed upon it or its property or any part thereof and upon its income or
profits or any part thereof, EXCEPT that Lessee and its Subsidiaries shall not
be required to pay or cause to be paid (a) any tax, assessment, charge or levy
that is not yet past due, or is being contested in good faith by appropriate
proceedings so long as the relevant entity has established and maintains
adequate reserves for the payment of the same or (b) any immaterial tax so long
as no material property of Lessee or any of its Subsidiaries is at impending
risk of being seized, levied upon or forfeited.
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SECTION 5.4 PRESERVATION OF EXISTENCE. Preserve and maintain its
existence in the jurisdiction of its formation and all material authorizations,
rights, franchises, privileges, consents, approvals, orders, licenses, permits,
or registrations from any Governmental Agency that are necessary for the
transaction of its business and qualify and remain qualified to transact
business in each jurisdiction in which such qualification is necessary in view
of its business or the ownership or leasing of its properties EXCEPT where the
failure to so qualify or remain qualified would not constitute a Material
Adverse Effect.
SECTION 5.5 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect
all of its Properties in good order and condition, subject to wear and tear
in the ordinary course of business, and not permit any waste of its
Properties, EXCEPT that the failure to maintain, preserve and protect a
particular item of Property that is not of significant value, either
intrinsically or to the operations of Lessee and its Subsidiaries, taken as
a whole, shall not constitute a violation of this covenant.
SECTION 5.6 MAINTENANCE OF INSURANCE. Maintain liability, casualty and
other insurance (subject to customary deductibles and retentions) with
responsible insurance companies in such amounts and against such risks as is
specified in Article IX of the Lease.
SECTION 5.7 COMPLIANCE WITH LAWS. Comply, within the time period, if
any, given for such compliance by the relevant Governmental Agency or
Agencies with enforcement authority, with all Requirements of Law
noncompliance with which constitutes a Material Adverse Effect, EXCEPT that
Lessee and its Subsidiaries need not comply with a Requirement of Law then
being contested by any of them in good faith by appropriate proceedings.
SECTION 5.8 INSPECTION RIGHTS. Upon reasonable notice, at any time
during regular business hours and as often as reasonably requested (but not
so as to materially interfere with the business of Lessee or any of its
Subsidiaries) permit the Trustee or any Holder, or any authorized employee,
agent or representative thereof, to examine, audit and make copies and
abstracts from the records and books of account to visit and inspect the
Equipment and Properties and to discuss the affairs, finances and accounts
of Lessee and its Subsidiaries with any of their officers, managers, key
employees or accountants.
SECTION 5.9 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate
records and books of account reflecting all financial transactions in
conformity with GAAP, consistently applied, and in material conformity with
all applicable requirements of any Governmental Agency having regulatory
jurisdiction over Lessee or any of its Subsidiaries.
SECTION 5.10 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply with
all Contractual Obligations under all material agreements, indentures, leases
and/or instruments to which Lessee is a party, whether such material
agreements, indentures, leases or instruments are with a Holder or another
Person, EXCEPT for any such Contractual Obligations (a) the performance of
which would cause a Default or (b) then being contested by any of them in
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good faith by appropriate proceedings or if the failure to comply with such
agreements, indentures, leases or instruments does not constitute a Material
Adverse Effect.
SECTION 5.11 HAZARDOUS MATERIALS LAWS. Keep and maintain all Real
Property and each portion thereof in compliance with all applicable Hazardous
Materials Laws (except for such non-compliance that would not constitute a
Material Adverse Effect or be materially adverse to the interests of the
Holders) and promptly notify the Trustee in writing (attaching a copy of any
pertinent written material) of (a) any and all material enforcement, cleanup,
removal or other governmental or regulatory actions instituted, completed or
threatened in writing by a Governmental Agency pursuant to any applicable
Hazardous Materials Laws, (b) any and all material claims made or threatened in
writing by any Person against Lessee relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials
and (c) discovery by any Senior Officer of Lessee of any material occurrence or
condition on any real Property adjoining or in the vicinity of such Real
Property that could reasonably be expected to cause such Real Property or any
part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such Real Property under any applicable Hazardous
Materials Laws.
SECTION 5.12 ERISA. (a) Not permit any Pension Plan to (i) engage in any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code),
(ii) fail to comply with ERISA or any other applicable Laws, (iii) incur any
material "accumulated funding deficiency" (as defined in Section 302 of ERISA),
or (iv) terminate in any manner, which, with respect to each event listed
above, could reasonably be expected to result in a Material Adverse Effect, or
(b) withdraw, completely or partially, from any Multiemployer Plan if to do so
could reasonably be expected to result in a Material Adverse Effect.
SECTION 5.13 FINANCIAL AND OTHER INFORMATION. Deliver to the Trustee and
each Holder the following financial and other information:
(a) As soon as practicable, and in any event within 30 days
after the end of each calendar month, a consolidated and consolidating (in
accordance with past consolidating practices of Lessee) summary statement
of operations of Lessee and its Subsidiaries for such calendar month, in a
form reasonably acceptable to the Trustee, together with a written report
as to current operating data and a narrative statement discussing any
significant trends reflected therein;
(b) As soon as practicable, and in any event within 60 days
after the end of each fiscal quarter (OTHER than the fourth fiscal quarter
in any fiscal year), (i) the consolidated balance sheet of Lessee and its
Subsidiaries as at the end of such fiscal quarter and the consolidated
statement of operations for such fiscal quarter, and its statement of cash
flows for the portion of the fiscal year ended with such fiscal quarter
and (ii) the consolidating (in accordance with past consolidating
practices of Lessee) balance sheets and statements of operations as at and
for the portion of the fiscal year ended with such
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fiscal quarter, all in reasonable detail. Such financial statements
shall be certified by a Senior Officer of Lessee as fairly presenting
the financial condition, results of operations and cash flows of Lessee
and its Subsidiaries in accordance with GAAP (other than footnote
disclosures), consistently applied, as at such date and for such periods,
subject only to normal year- end accruals and audit adjustments;
(c) As soon as practicable, and in any event within 120 days
after the end of each fiscal year, (i) the consolidated balance sheet of
Lessee and its Subsidiaries as at the end of such fiscal year and the
consolidated statements of operations, stockholders' equity and cash
flows, in each case of Lessee and its Subsidiaries for such fiscal year
and (ii) consolidating (in accordance with past consolidating practices of
Lessee) balance sheets and statements of operations, in each case as at
the end of and for the fiscal year, all in reasonable detail. Such
financial statements shall be prepared in accordance with GAAP,
consistently applied, and such consolidated balance sheet and
consolidated statements shall be accompanied by a report of independent
public accountants of recognized standing selected by Lessee and
reasonably satisfactory to the Requisite Holders, which report shall be
prepared in accordance with generally accepted auditing standards as at
such date, and shall not be subject to any qualifications or exceptions
as to the scope of the audit nor to any other qualification or
exception determined by the Requisite Holders in their good faith
business judgment to be adverse to the interests of the Holders;
(d) Promptly after request by the Trustee or any Holder, copies
of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the
board of directors) of Lessee by independent accountants in connection
with the accounts or books of Lessee or any of its Subsidiaries, or any
audit of any of them;
(e) Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or
communication sent to the stockholders of Lessee, and copies of all
annual, regular, periodic and special reports and registration
statements which Lessee may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and not otherwise required
to be delivered to the Holder pursuant to other provisions of this
Section 5.14;
(f) Promptly after the same are available, copies of the Nevada
"Regulation 6.090 Report" and "6-A Report", and copies of any written
communication to Lessee from any Gaming Board advising it of a
violation of or non-compliance with any Gaming Law by Lessee;
(g) Promptly after request by the Trustee or any Holder, copies
of any other report or other document (except any such report or document
pertaining solely to personal matters respecting an individual) that was
filed by Lessee with any Governmental Agency;
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(h) Promptly upon a Senior Officer becoming aware, and in any
event within ten (10) Business Days after becoming aware, of the
occurrence of any (i) "reportable event" (as such term is defined in
Section 4043 of ERISA) or (ii) "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) in
connection with any Pension Plan or any trust created thereunder,
telephonic notice specifying the nature thereof, and, no more than five
(5) Business Days after such telephonic notice, written notice again
specifying the nature thereof and specifying what action Lessees are
taking or proposes to take with respect thereto, and, when known, any
action taken by the Internal Revenue Service with respect thereto;
(i) As soon as practicable, and in any event within
two (2) Business Days after a Senior Officer becomes aware of the
existence of any condition or event which constitutes a Default or
Event of Default, telephonic notice specifying the nature and period of
existence thereof, and, no more than two (2) Business Days after such
telephonic notice, written notice again specifying the nature and
period of existence thereof and specifying what action Lessee is taking
or proposes to take with respect thereto;
(j) Promptly upon a Senior Officer becoming aware that (i) any
Person has commenced a legal proceeding with respect to a claim against
Lessee that is $10,000,000 or more in excess of the amount thereof that is
fully covered by insurance, (ii) any creditor under a credit agreement
involving Indebtedness of $10,000,000 or more or any lessor under a lease
involving aggregate remaining rent of $10,000,000 or more has asserted a
default thereunder on the part of Lessee, (iii) any Person has commenced a
legal proceeding with respect to a claim against Lessee under a contract
that is not a credit agreement or material lease in excess of $10,000,000
or which otherwise may reasonably be expected to result in a Material
Adverse Effect, (iv) any labor union has notified Lessee of its intent to
strike Lessee on a date certain and such strike would involve more than
100 employees of Lessee or (v) any Gaming Board has indicated its
intent to consider or act upon a License Revocation or a fine or
penalty of $1,000,000 or more with respect to Lessee, a written notice
describing the pertinent facts relating thereto and what action Lessees
are taking or propose to take with respect thereto;
(k) Such other data and information as from time to time may be
reasonably requested by the Trustee, any Holder (through the Trustee) or
the Requisite Holders; and
(l) A certificate addressed to the Trustee and the Holders in a
form acceptable to the Trustee with respect to its compliance with the
Operative Documents to which it is a party concurrently with the financial
statements described in clauses (b) and (c) above; PROVIDED that such
certificate may attach and incorporate by reference any compliance
certificate required under the Lessee Bank Credit Agreement or Replacement
Bank Credit Agreement (as applicable) with respect to compliance with
SECTION 5.16.
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SECTION 5.14 SECURITIES. Not take any action which would subject the
issuance or sale of the Certificates, 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 5.15 SUBLEASE. Not amend, modify, supplement or otherwise change
the terms and provisions of the Sublease or terminate the Sublease as a result
of an event of default under the Sublease without the prior written consent of
the Lessor.
SECTION 5.16 FINANCIAL COVENANTS. Comply at all times with the financial
covenants contained in Sections 9.11 and 9.12 of the Lessee Bank Credit
Agreement, as such covenants may from time to time be amended or waived by the
lenders party thereto or, if the Lessee Bank Credit Agreement is terminated and
a Replacement Bank Credit Agreement then exists, with such financial covenants
as may from time to time exist under such Replacement Bank Credit Agreement;
PROVIDED that if the Lessee Bank Credit Agreement is terminated and no
Replacement Bank Credit Agreement then exists, then the financial covenants
(including related definitions) in the Lessee Bank Credit Agreement or the
Replacement Bank Credit Agreement (whichever last existed) in the form that
existed immediately prior to such termination shall be deemed incorporated
herein by this reference.
SECTION 5.17 FINAL APPRAISAL. Provide, at its sole cost, to Trustee not
later than the earlier of (a) the date that is forty-five (45) days following
the Completion Date or (b) February 15, 1998 an appraisal report (the "FINAL
APPRAISAL") with respect to the Equipment prepared by the Appraiser
establishing (i) an aggregate minimum Fair Market Sales Value of the
Equipment as of the Completion Date of no less than the Base Value, (ii)
that the Fair Market Sales Value of the Equipment as of the Maturity Date
will be at least equal to 53% of Lessor's Cost but not greater than 60% of
Lessor's Cost, (iii) that the aggregate average useful life of the Equipment
as of the first day of the Base Period will be at least equal to 133% of the
remaining Base Period and (iv) as to such other matters as each Holder may
reasonably request, which Final Appraisal shall be satisfactory to the Holders.
SECTION 5.18 COMPLETION. Cause Completion to occur upon the earlier of
(a) the date the aggregate Commitments are reduced to zero or (b) the Outside
Delivery Date and certify in writing to Lessor that Completion has occurred.
The failure of Lessor to receive such certification within the time allowed for
Completion will be a "FAILURE OF COMPLETION."
SECTION 5.19 VALUE OF EQUIPMENT. Cause Equipment to be subject to the
Lease that has an aggregate Fair Market Sales Value as of the Maturity Date
equal to 60% of Lessor's Cost, as confirmed by the Final Appraisal. If the
Final Appraisal indicates that the aggregate Fair Market Sales Value of the
Equipment as of the Maturity Date will be less than 60% of Lessor's Cost
(but in no event less than 53% of Lessor's Cost), Schedule IV will be
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deemed amended to cause the Amortization Schedule to be adjusted accordingly.
The parties hereto agree promptly to enter into appropriate confirming
written amendments to reflect such deemed amendment.
ARTICLE 6
COVENANTS OF TRUSTEE AND HOLDERS
SECTION 6.1 COVENANTS OF TRUSTEE AND THE HOLDERS.
6.1.1 DISCHARGE OF LIENS. Each of the Holders and the Trustee
covenants as to itself, and not jointly with any other Holder, 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 6.1.1.
Notwithstanding the foregoing, none of the Holders, the Trustee or
Trust Company, 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 Holders in the Equipment 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 Holder, the Trustee and Trust
Company 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.
6.1.2 TRUST AGREEMENT. Without prejudice to any right under the
Trust Agreement of the Trustee to resign, or the Holders' right under
the Trust Agreement to remove the Trustee, the Trustee hereby agrees
with the Lessee and the Holders (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 Certificates, (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 without first obtaining the consent
of the Holders in accordance with SECTION 9.15 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.
6.1.3 SUCCESSOR TRUSTEE. Trustee or any successor may resign or be
removed by the Holders as Trustee, a successor Trustee may be appointed,
and a corporation may become the Trustee under the Trust
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Agreement, only in accordance with the provisions of Article IV of the
Trust Agreement. Notwithstanding anything to the contrary contained in
this Agreement or the Trust Agreement, so long as no Lease 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).
6.1.4 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 and the Holders,
agrees to be bound by Section 1.2(b) of the Trust Agreement.
6.1.5 CHANGE OF PRINCIPAL PLACE OF BUSINESS. Trustee shall give
prompt notice to the Holders and the Lessee if the Trustee's principal
place of business or chief executive office shall cease to be located at
530 Las Vegas Boulevard South, Las Vegas, Nevada 89101, Attention:
Corporate Trust Department, or the office where the records concerning the
transactions contemplated by the Operative Documents are kept shall cease
to be located at Trustee c/o First Security Bank, N.A., 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Services,
or if it shall change its name, identity or corporate structure.
SECTION 6.2 RESTRICTIONS ON AND EFFECT OF TRANSFER. No Holder 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 Certificate
Advances or any Certificate, except that (x) any Holder may pledge, assign or
grant a security interest in its interest to any Federal Reserve Bank or any
other central bank authority with respect to such Holder, (y) upon
satisfaction of the conditions set forth in SECTION 6.2.1 through SECTION
6.2.5 any Holder may transfer all or any ratable portion of its interest to
an Affiliate, to any other existing Holder or any Affiliate of such Holder or
to an Eligible Assignee and, upon compliance with any applicable provisions
of SECTION 6.3.1, 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 Holder
under the Operative Documents, and the Lessee shall be entitled to continue
to deal for all purposes under the Operative Documents exclusively with the
Holder who has transferred such participation, and (z) any Holder may assign
and delegate any portion or all of such right, title and interest upon the
satisfaction of each of the following conditions:
6.2.1 REQUIRED NOTICE AND EFFECTIVE DATE. Any Holder desiring to
effect a transfer of its interest shall give written notice of each such
proposed transfer to the Lessee, the Trustee and each other Holder at least
five (5) Business Days prior to such proposed transfer, setting forth the
name of such proposed transferee, the nature of the interest to be retained
by such Holder, if any, and the date on which such transfer is proposed to
become effective. All reasonable out-of-pocket costs (including any
applicable transfer tax) incurred by Trustee in
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connection with any such disposition by a Holder under this SECTION 6.2,
together with an administrative fee in the amount of $2,500 payable to
the Trustee, shall be borne by such Holder. In the event of a transfer
under this SECTION 6.2, any expenses incurred by the transferee in
connection with its review of the Operative Documents and its
investigation of the transactions contemplated thereby shall be borne by
such transferee or the relevant Holder, as they may determine, but shall
not be considered costs and expenses which the Lessee is obligated to pay
or reimburse under SECTION 9.6.
6.2.2 ASSUMPTION OF OBLIGATIONS. Any transferee pursuant to this
SECTION 6.2 shall have executed and delivered to the Trustee a letter in
substantially the form of the Investor's Letter attached hereto as EXHIBIT
I, and thereupon the obligations of the transferring Holder 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 Holder 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 "Holder" 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 "Holder" shall thereafter
be deemed a reference to the transferee, to the extent of such transfer,
for all purposes. Upon any such transfer, SCHEDULES I and II to this
Agreement, as applicable, shall be deemed to be revised to reflect the
relevant information for such new Holder and the Commitment of such new
Holder (and the revised Commitment of the transferor Holder if it shall not
have transferred its entire interest).
6.2.3 EMPLOYEE BENEFIT PLANS. No Holder may make any such assignment,
conveyance or transfer to or in connection with any arrangement or
understanding in any way involving any Employee Benefit Plan (or its
related trust), as defined in Section 3(3) of ERISA, or with the assets of
any such plan (or its related trust), as defined in 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 Holder or any of their
Affiliates is a party in interest within the meaning of ERISA or a
"disqualified person" within the meaning of the Code.
6.2.4 REPRESENTATIONS AND WARRANTIES. Notwithstanding anything to the
contrary set forth above, no Holder may assign, convey or transfer its
interest to any Person unless such Person shall have delivered to the
Trustee 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).
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6.2.5 AMOUNTS. Any transfer of Certificates by any Holder shall be in
a principal amount which is equal to or greater than $2,500,000, or, if
less, the remaining interest of such Holder in such Certificate.
6.2.6 EFFECT. From and after any transfer of its Certificates, the
transferring Holder 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 Holder as above
provided, any such transferee shall be deemed a "Holder" for all purposes
of such documents and each reference herein to a Holder shall thereafter be
deemed a reference to such transferee for all purposes, except as the
context may otherwise require.
6.2.7 LESSEE CONSENT. During the Commitment Period only, the
transferees (not including any other Holder or Affiliate of the Holder
transferring an interest) of an interest transferred pursuant to this
SECTION 6.2 shall have obtained the prior written consent of the Lessee,
which consent may not be unreasonably withheld or delayed by the Lessee.
Notwithstanding any transfer pursuant to this SECTION 6.2, the transferor
shall continue to be entitled to all benefits accrued and all rights vested
prior to such transfer, including rights to indemnification under this
Agreement or any other Operative Document.
SECTION 6.3 COVENANTS AND AGREEMENTS OF HOLDERS.
6.3.1 PARTICIPATIONS. Each Holder covenants and agrees that it will
not grant participations in its Certificates to any Person (a
"PARTICIPATING ENTITY") unless such Person (i) is a bank, mutual fund or
other financial institution and (ii) represents and warrants, in writing,
to such Holder for the benefit of the Holders, the Lessor and the Lessee
that no part of the funds used by it to acquire an interest in the
Certificates constitutes assets of any Employee Benefit Plan (as defined in
Section 3(3) of ERISA) or its related trust. Each Holder shall require any
transferee of its interest in the Certificates to make the representations
and warranties set forth in the preceding sentence, in writing, to such
Holder for its benefit and the benefit of the other Holders, Lessor and the
Lessee. In the event of any such sale by a Holder of a participating
interest to a Participating Entity such Holder's obligations under this
Agreement and under the other Operative Documents shall remain unchanged,
such Holder shall remain solely responsible for the performance thereof,
such Holder shall remain the holder of its Certificate for all purposes
under this Agreement and under the other Operative Documents, and the
Trustee and, except as set forth in SECTION 6.3.2, the Lessee shall
continue to deal solely and directly with such Holder in connection with
such Holder's rights and obligations under this Agreement and under the
other Operative Documents, and such Holder shall retain the sole right to
enforce the obligations of the Lessee under the Operative Documents and to
approve any amendment, modification or waiver of any provision of any
Operative
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Document other than an amendment, modification or waiver that (a) extends
the Scheduled Payment Date or any other date upon which any payment of
money is due to the Trustee or Holders, (b) reduces the Yield on the
Certificates, any fee or any other monetary amount payable to the Trustee
or Holders, (c) reduces the amounts payable under the Amortization
Schedule (except as contemplated by SECTION 5.19) or (d) releases any
interest of Trustee or the Holders in the Equipment (except as otherwise
expressly provided for in any Operative Document). Any Holder selling a
participation shall give notice thereof to the Lessee within ten (10)
Business Days after such sale.
6.3.2 TRANSFEREE INDEMNITIES. Each Participating Entity shall be
entitled to the benefits of SECTIONS 7.3 and 7.4 with respect to its
participation in the Certificates 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 Holder would have been entitled to
receive in respect of the amount of the participation in the Certificates
transferred by such transferor Holder 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
Holder shall request from the Trustee or the Lessee reimbursement for any costs
pursuant to SECTION 7.3 or 7.4, such Holder shall, upon request of the Lessee,
attempt in good faith to promptly sell to a Person who would qualify under
SECTION 6.3.1 the Certificates held by such Holder, the Commitment of such
Holder and any other interests of such Holder hereunder and under the other
Operative Documents, in accordance with SECTION 6.3, in exchange for an amount
equal to the outstanding principal amount of such Holder's Certificates 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 Holder (including any requested reimbursement amounts).
ARTICLE 7
GENERAL INDEMNITY
SECTION 7.1 GENERAL INDEMNIFICATION. Lessee agrees, 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 requested by Lessee; or (b) the Project or
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Project Property 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
or 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; (d) the offer, issuance, sale or
delivery of the Certificates; (e) the breach by the Lessee of any
representation or warranty made by it or deemed made by it in any Operative
Document; (f) the transactions contemplated hereby or by any other Operative
Document, in respect of the application of Parts 4 and 5 of Subtitle B of
Title I of ERISA and any prohibited transaction described in Section 4975(c)
of the Code or (g) any other agreement entered into or assumed by the Lessee
in connection with the Equipment; PROVIDED, HOWEVER, the Lessee shall not 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 (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, 5.2 or 5.4 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, 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 CLAUSE (f) above 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
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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 herein, 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 Encumbrance) 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 or Claims,
(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
may participate in a reasonable manner at its own expense and with its own
counsel in any proceeding conducted by the Lessee 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 without 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.
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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.
SECTION 7.2 INCREASED COMMITMENT COSTS. If any Holder shall determine
in good faith that the introduction after the Closing Date of any applicable
law, rule, regulation or guideline regarding capital adequacy, or any change
therein or any change in the interpretation or administration thereof by any
central bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Holder or any corporation
controlling the Holder, with any request, guideline or directive regarding
capital adequacy (whether or not having the force of Law) of any such central
bank or other authority not imposed as a result of such Holder's or such
corporation's failure to comply with any other Laws, affects or would affect
the amount of capital required or expected to be maintained by such Holder or
any corporation controlling such Holder and (taking into consideration such
Holder's or such corporation's policies with respect to capital adequacy and
such Holder's desired return on capital) determines in good faith that the
amount of such capital is increased, or the rate of return on capital is
reduced, as a consequence of its obligations under this Agreement, then,
within ten (10) Business Days after demand of such Holder, Lessee shall pay
to such Holder, from time to time as specified in good faith by such Holder,
additional amounts sufficient to compensate such Holder in light of such
circumstances, to the extent reasonably allocable to such obligations under
this Agreement, PROVIDED that Lessee shall not be obligated to pay any such
amount which arose prior to the date which is ninety (90) days preceding the
date of such demand or is attributable to periods prior to the date which is
ninety (90) days preceding the date of such demand. Each Holder's
determination of such amounts shall be conclusive in the absence of manifest
error.
7.3 EURODOLLAR COSTS AND RELATED MATTERS.
(a) In the event that any Governmental Agency imposes on any
Holder any reserve or comparable requirement (INCLUDING any emergency,
supplemental or other reserve) with respect to the Eurodollar Obligations
of that Holder, Lessee shall pay that Holder within five (5) Business Days
after demand all amounts necessary to compensate such Holder (determined as
though such Holder's Eurodollar Lending Office had funded 100% of its
Eurodollar Rate Certificate Advance in the Designated Eurodollar Market) in
respect of the imposition of such reserve requirements (PROVIDED, that
Lessee shall not be obligated to pay any such amount which arose prior to
the date which is ninety (90) days preceding the date of such demand or is
attributable to periods prior to the date which is ninety (90) days
preceding the date of such demand). The Holder's determination of such
amount shall be conclusive in the absence of manifest error.
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(b) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance:
(1) shall subject any Holder or its Eurodollar Lending Office to
any tax, duty or other charge or cost with respect to any Eurodollar
Rate Certificate Advance, its Certificate evidencing Eurodollar Rate
Certificate Advances or its obligation to make Eurodollar Rate
Certificate Advances, or shall change the basis of taxation of
payments to any Holder attributable to the principal of or interest on
any Eurodollar Rate Certificate Advance or any other amounts due under
this Agreement in respect of any Eurodollar Rate Certificate Advance,
its Certificate evidencing Eurodollar Rate Certificate Advances or its
obligation to make Eurodollar Rate Certificate Advances (PROVIDED,
that Lessee shall not be obligated to pay any such amount which arose
prior to the date which is ninety (90) days preceding the date of such
demand or is attributable to periods prior to the date which is ninety
(90) days preceding the date of such demand), EXCLUDING (i) taxes
imposed on or measured in whole or in part by its overall net income
by (A) any jurisdiction (or political subdivision thereof) in which it
is organized or maintains its principal office or Eurodollar Lending
Office or (B) any jurisdiction (or political subdivision thereof) in
which it is "doing business" and (ii) any withholding taxes or other
taxes based on gross income imposed by the United States of America
for any period with respect to which it has failed to provide Lessee
with the appropriate form or forms required by Section 8.6, to the
extent such forms are then available under applicable Laws;
(2) shall impose, modify or deem applicable any reserve not
applicable or deemed applicable on the date hereof (INCLUDING any
reserve imposed by the Board of Governors of the Federal Reserve
System, special deposit, capital or similar requirements against
assets of, deposits with or for the account of, or credit extended by,
any Holder or its Eurodollar Lending Office); or
(3) shall impose on any Holder or its Eurodollar Lending Office
or the Designated Eurodollar Market any other condition affecting any
Eurodollar Rate Certificate Advance, its Certificate evidencing
Eurodollar Rate Certificate Advances, its obligation to make
Eurodollar Rate Certificate Advances or this Agreement, or shall
otherwise affect any of the same;
and the result of any of the foregoing, as determined in good faith by such
Holder, increases the cost to such Holder or its Eurodollar Lending Office
of making or maintaining any Eurodollar Rate Certificate Advance or in
respect of any Eurodollar Rate Certificate Advance, its Certificate
evidencing Eurodollar Rate Certificate Advances or its obligation to make
Eurodollar Rate Certificate Advances or reduces the amount of any sum
received or receivable by such Holder or its Eurodollar Lending Office
with respect to any Eurodollar Rate Certificate Advance, its Certificate
evidencing Eurodollar Rate
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Certificate Advances or its obligation to make Eurodollar Rate Certificate
Advances (assuming such Holder's Eurodollar Lending Office had funded
100% of its Eurodollar Rate Certificate Advance in the Designated
Eurodollar Market), then, within five (5) Business Days after demand by
such Holder (with a copy to the Trustee), Lessee shall pay to such
Holder such additional amount or amounts as will compensate such Holder
for such increased cost or reduction (determined as though such Holder's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate
Certificate Advance in the Designated Eurodollar Market). A statement
of any Holder claiming compensation under this subsection shall be
conclusive in the absence of manifest error.
(c) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance shall, in the good faith opinion of any
Holder, make it unlawful or impossible for such Holder or its Eurodollar
Lending Office to make, maintain or fund its portion of any Eurodollar Rate
Certificate Advance, or materially restrict the authority of such Holder to
purchase or sell, or to take deposits of, Dollars in the Designated
Eurodollar Market, or to determine or charge interest rates based upon the
Eurodollar Rate, and such Holder shall so notify the Trustee, then such
Holder's obligation to make Eurodollar Rate Certificate Advances shall be
suspended for the duration of such illegality or impossibility and the
Trustee forthwith shall give notice thereof to the other Holders and
Lessee. Upon receipt of such notice, the outstanding principal amount of
such Holder's Eurodollar Rate Certificate Advances, together with accrued
interest thereon, automatically shall be converted to Alternate Base Rate
Certificate Advances on either (1) the last day of the Eurodollar Period(s)
applicable to such Eurodollar Rate Certificate Advances if such Holder may
lawfully continue to maintain and fund such Eurodollar Rate Certificate
Advances to such day(s) or (2) immediately if such Holder may not lawfully
continue to fund and maintain such Eurodollar Rate Certificate Advances to
such day(s), PROVIDED that in such event the conversion shall not be
subject to payment of a prepayment fee under clause (e) of this Section.
Each Holder agrees to endeavor promptly to notify Lessee of any event of
which it has actual knowledge, occurring after the Closing Date, which will
cause that Holder to notify the Trustee under this Section, and agrees to
designate a different Eurodollar Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of
such Holder, otherwise be materially disadvantageous to such Holder. In
the event that any Holder is unable, for the reasons set forth above, to
make, maintain or fund its portion of any Eurodollar Rate Certificate
Advance, such Holder shall fund such amount as an Alternate Base Rate
Certificate Advance for the same period of time, and such amount shall be
treated in all respects as an Alternate Base Rate Certificate Advance. Any
Holder whose obligation to make Eurodollar Rate Certificate Advances has
been suspended under this Section shall promptly notify the Trustee and
Lessee of the cessation of the Special Eurodollar Circumstance which gave
rise to such suspension.
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(d) If, with respect to any proposed Eurodollar Rate Certificate
Advance:
(1) the Requisite Holders advise that, by reason of
circumstances affecting the Designated Eurodollar Market generally
that are beyond the reasonable control of the Holders, deposits in
Dollars (in the applicable amounts) are not being offered to any
Holder in the Designated Eurodollar Market for the applicable
Eurodollar Period; or
(2) the Requisite Holders advise the Trustee that the Eurodollar
Rate as determined by the Trustee (i) does not represent the effective
pricing to such Holders for deposits in Dollars in the Designated
Eurodollar Market in the relevant amount for the applicable Eurodollar
Period, or (ii) will not adequately and fairly reflect the cost to
such Holders of making the applicable Eurodollar Rate Certificate
Advances;
then the Trustee forthwith shall give notice thereof to Lessee and the
Holders, whereupon until the Trustee notifies Lessee that the circumstances
giving rise to such suspension no longer exist, the obligation of the
Holders to make any future Eurodollar Rate Certificate Advances shall be
suspended. Upon delivery by the Trustee to Lessee of notice that the
circumstances giving rise to such suspension no longer exist, any Alternate
Base Rate Certificate Advance into which a Eurodollar Rate Certificate
Advance may have been converted as a result of any such suspension shall be
converted into a Eurodollar Rate Certificate Advance or Eurodollar Rate
Certificate Advances of one-, two- and/or three-months period or periods so
as (and on such dates as) to permit the outstanding Advances to be
Eurodollar Rate Certificate Advances of such Eurodollar Periods and
commencing on such Eurodollar Period Commencement Dates as would have
existed if such conversion had not occurred.
(e) Upon prepayment of any Eurodollar Rate Certificate Advance
(OTHER THAN as the result of a conversion required under clause (c) of this
Section) on a day other than the last day in the applicable Eurodollar
Period (whether voluntarily, involuntarily, by reason of acceleration, or
otherwise), Lessee shall pay to the appropriate Holder within ten (10)
Banking Days after demand a prepayment fee (determined as though 100% of
the Eurodollar Rate Certificate Advance had been funded in the Designated
Eurodollar Market), equal to the SUM OF:
(1) the principal amount of the Eurodollar Rate Advance prepaid
TIMES the number of days from and including the date of prepayment to
but excluding the last day in the applicable Eurodollar Period,
DIVIDED BY 360, TIMES the applicable Interest Differential (PROVIDED
that the product of the foregoing formula must be a positive number);
PLUS
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(2) all out-of-pocket expenses incurred by the Holder reasonably
attributable to such prepayment.
Each Holder's determination of the amount of any prepayment fee payable
under this Section shall be conclusive in the absence of manifest error.
(f) Each Holder agrees to endeavor promptly to notify Lessee of
any event of which it has actual knowledge, occurring after the Closing
Date, which will entitle such Holder to compensation pursuant to clause (a)
or clause (b) of this Section, and agrees to designate a different
Eurodollar Lending Office if such designation will avoid the need for or
reduce the amount of such compensation and will not, in the good faith
judgment of such Holder, otherwise be materially disadvantageous to such
Holder. Any request for compensation by a Holder under this Section shall
set forth the basis upon which it has been determined that such an amount
is due from Lessee, a calculation of the amount due, and a certification
that the corresponding costs have been incurred by the Holder.
SECTION 7.4 EXCESSIVE USE INDEMNITY. In the event that at the end of
the Base Period: (a) the Lessee elects the Sale Option; and (b) after paying
to the Trustee Periodic Rent then due and payable, Proceeds and the Sale
Recourse Amount, the Trustee does not have sufficient funds to make all
payments then due on the Certificates, then the Lessee shall promptly pay
over to the Trustee the shortfall unless and to the extent that the Lessee
delivers a report from the Appraiser in form and substance satisfactory to
the Holders which establishes that the decline in value in the Equipment from
that anticipated for such date in the Final Appraisal was not due to
extraordinary use, failure to maintain or replace, failure to use,
workmanship or method of installation or removal or any other cause or
condition within the power of the Lessee to control or effect.
SECTION 7.5 INDEMNIFICATION OF TRUST COMPANY. Lessee hereby agrees,
whether or not any of the transactions contemplated hereby or by the Sunset
Station 1996 Trust shall be consummated, to assume liability for, and hereby
indemnify, reimburse, defend, protect, save and keep harmless Trust Company
in its individual capacity, and its successors, assigns, agents and servants,
from and against any and all liabilities, obligations, demands, losses,
damages, penalties, taxes (excluding taxes payable by it as trustee on or
measured by any compensation received by it as trustee for its services under
the Sunset Station 1996 Trust), claims, actions, suits, costs, expenses or
disbursements (including attorneys' fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against it as
Trustee (whether or not also indemnified against by any other Person under
any other document) in any way, directly or indirectly, relating to or
arising out of the Sunset Station 1996 Trust Agreement, the Operative
Documents (as defined in the Sunset Station 1996 Trust) or the enforcement of
any of the terms of any hereof or thereof, or in any way, directly or
indirectly, relating to or arising out of the administration of the trust
estate of the Sunset Station 1996 Trust or the action or inaction of it as
trustee under the Sunset Station 1996 Trust, except in the case of willful
misconduct or negligence on the part of it as
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trustee under the Sunset Station 1996 Trust in the performance of its duties
thereunder or the breach by it of any warranties, representations, or
covenants made or undertaken by it as trustee or in its individual capacity
pursuant hereto. The indemnities contained in this SECTION 7.5 shall survive
the termination of the Sunset Station 1996 Trust Agreement. The indemnities
contained in this SECTION 7.8 extend to Trust Company as trustee in its
individual capacity and shall not be construed as indemnities of the Sunset
Station 1996 Trust or the Trust Estate.
ARTICLE 8
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, mortgaging,
design, construction, preparation, installation, inspection, delivery,
non-delivery, acceptance, rejection, purchase, ownership, possession, rental,
lease, sublease, repossession, maintenance, repair, alteration, modification,
addition or substitution, storage, transfer of title, redelivery, use,
financing, refinancing, operation, condition, sale, return or other
application or disposition of all or any part of 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 Certificates, 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).
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SECTION 8.2 EXCLUSIONS FROM GENERAL TAX INDEMNITY. SECTION 8.1 shall
not apply to:
8.2.1 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 Certificates, 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
Certificates 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;
8.2.2 Taxes that are based on, measured by or imposed with respect to
the fees or other compensation received by a Person acting as Trustee (in
its individual capacity) or any Affiliate thereof for acting as trustees
under the Trust Agreement;
8.2.3 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;
8.2.4 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 Certificates, 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, (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;
8.2.5 Taxes (other than sales, use, rental or property Taxes imposed
by a jurisdiction in which the Equipment is located) imposed against or
payable by an Indemnitee to the extent such Taxes would not
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have been imposed or payable but for the situs of organization, any place
of business or the activities of an Indemnitee in the jurisdiction
imposing such Taxes (unless such place of business or activities are a
result of the presence of the Equipment or the activities of Lessee or
any of its Affiliates in or with respect to such jurisdiction);
8.2.6 Taxes imposed as a result of any failure by an Indemnitee to
comply with any certification or other procedure timely requested by (and
prepared for filing by Lessor) Lessee in writing in accordance with Section
15.3 hereof and is addressed to the Lessor and each Holder, and required by
applicable law as a precondition to any exemption from, or reduction of,
such Taxes to which such Indemnitee would be entitled, so long as no such
procedure would expose such Indemnitee to any adverse consequences and such
failure is not due to Lessee's failure to provide information reasonably
requested or reasonable assistance in complying with such requirements;
8.2.7 Any interest, penalties or additions to tax imposed as a result
of the failure of an Indemnitee to file any return required under Section
8.5 in a procedurally proper and timely manner unless such failure is
caused by the failure of Lessee to fulfill its obligations under SECTION
8.5 with respect to such return;
8.2.8 Taxes (other than sales, use, rental or property Taxes imposed
by a jurisdiction in which the Equipment is located) to the extent of the
excess of such Taxes over the amount of any comparable Taxes that would
have been imposed had there not been a transfer (other than a transfer
described in clauses (A), (B), (C) and (D) of SECTION 8.2.4) made by any
Indemnitee or a predecessor in interest of any Indemnitee; PROVIDED,
HOWEVER, that the exclusion in this SECTION 8.2.8 shall not apply to any
amount necessary to make any payment hereunder After Tax;
8.2.9 Taxes that would not have been imposed but for the inaccuracy of
any representation of an Indemnitee, or any breach by an Indemnitee of any
warranty or covenant, contained in SECTION 4.2, SECTION 4.3 or ARTICLE VI.
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 8.1, or if any
Indemnitee shall determine that any Taxes as to which Lessee may have an
indemnity obligation pursuant to SECTION 8.1 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 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
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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 Encumbrance) 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 Default or Lease Event of Default has occurred and is
continuing, (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 or (F)
Lessee shall not have acknowledged in writing its obligation to indemnify
fully such Indemnitee in respect of such action, suit or proceeding. The
Indemnitee may participate in a reasonable manner at its own expense and with
its own counsel in any proceeding conducted by Lessee 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 Default or 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.
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 ARTICLE 8 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
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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
ARTICLE 8, Lessee shall, if Lessee is permitted by Laws, timely prepare and
file such report, return or statement; PROVIDED, HOWEVER, that if Lessee is
not permitted by Laws to file any such report Lessee will promptly so notify
in writing in accordance with SECTION 15.3 hereof to the Lessor and each
Holder, in which case the appropriate person 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 Certificate for
the account of any Holder not incorporated under the laws of the United
States or a state thereof, such Holder agrees that it will have delivered to
each of the Lessee and the Trustee two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that
such Holder is entitled to receive payments under the Operative Documents
without deduction or withholding of any United States Federal income taxes.
Each Holder that delivers a Form 1001 or 4224 further undertakes to deliver
to each of the Lessee and the Trustee two additional copies of such form (or
a successor form) on or before the date that such form expires (currently,
three successive calendar years for Form 1001 and one calendar year for Form
4224) or becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by
the Lessee or the Trustee, in each case certifying that such Holder is
entitled to receive payments under the Operative Documents without deduction
or withholding of any United States Federal income taxes, unless an event
(including any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Holder from duly
completing and delivering any such form with respect to it and such Holder
advises the Lessee and the Trustee that it is not capable of receiving
payments without any withholding of United States Federal income tax.
SECTION 8.7 TAX CHARACTER OF TRANSACTION. It is the intention of all
parties to this Agreement that for Federal and state income tax purposes
only: (a) Lessee or a corporation that is an Affiliate of Lessee shall be
entitled to claim depreciation on the Equipment and to deduct the interest
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component of the Rents; (b) Periodic Rents payable to Trustee under the Lease
constitute payments of interest except for the principal amortization
component of Periodic Rent which constitutes principal; and (c) the Trust
will be treated as a grantor trust or as Lessee's agent. The Trustee and the
Holders agree that neither they nor any corporation controlled by them, or
under common control with them, directly or indirectly will at any time take
any action or fail to take any action with respect to the filing of any
income tax return, including an amended income tax return, inconsistent with
the intention of the parties expressed in the preceding sentence.
SECTION 8.8 TAX SAVINGS. If, by reason of any Tax payment made by
Lessee to or for the account of an Indemnitee pursuant to this Article 8,
such Indemnitee or any Affiliate of such Indemnitee realizes a net tax
benefit, savings, deduction or credit (a "TAX BENEFIT") with respect to Taxes
not otherwise indemnified against hereunder and which Tax Benefit was not
previously taken into account in computing such payment, then such Indemnitee
who (or whose Affiliate) realizes such net Tax Benefit shall promptly pay to
Lessee an amount equal to the actual net reduction in Taxes realized by such
Indemnitee (or its Affiliate) which is attributable to such net Tax Benefit
plus the amount of any additional tax savings realized as a result of such
payment to Lessee; PROVIDED, HOWEVER, that no Indemnitee shall be obligated
to make any payment pursuant to this SECTION 8.8 to the extent that the
amount of such payment would exceed (A) the amount of all prior Taxes paid by
Lessee to or for the account of such Indemnitee pursuant to ARTICLE 8 less
(B) the amount of all prior payments by such Indemnitee to Lessee pursuant to
this SECTION 8.8, but any such excess shall reduce PRO TANTO any amount that
Lessee is subsequently obligated to pay pursuant to this ARTICLE 8; PROVIDED
FURTHER, HOWEVER, that no Indemnitee shall be required to make any payment to
Lessee pursuant to this SECTION 8.8 so long as a Lease Event of Default shall
be continuing.
Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of any Tax Benefit (other than by reason of a
foreign tax liability arising in a subsequent year) referred to in this
subsection as to which an Indemnitee has made in full the payment to Lessee
required hereby shall be treated as a Tax for which Lessee is obligated to
indemnify an Indemnitee pursuant to the provisions of Section 8.1 hereof but
without regard to the provisions of Section 8.2 (other than SECTION 8.2.6,
8.2.8 or 8.2.11).
If any Indemnitee shall receive a refund of, or receive a credit for (or
would have received such a refund or credit but for a counterclaim or other
claim not indemnified by Lessee hereunder (a "DEEMED REFUND OR CREDIT")) all
or any part of any Taxes paid, reimbursed or advanced by Lessee pursuant to
this Article 8, such Indemnitee shall pay to Lessee an amount equal to the
sum of (1) any interest received with such refund fairly attributable to the
Taxes paid, reimbursed or advanced by Lessee (or, in the case of a deemed
refund or credit, the interest that would have been received but for the
counterclaim or other claim not indemnified by Lessee) (after reduction by
any Taxes incurred by such Indemnitee by reason of the receipt or accrual of
such interest and increased by the amount of Taxes
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that would be saved by reason of the payment or accrual of the amount
described in this clause (1)) and (2) the lesser of (A) the amount of such
refund or credit or deemed refund or credit (after reduction by any Taxes
incurred by such Indemnitee by reason of the receipt of such refund or credit
or deemed refund or credit and increased by the amount of Taxes that would be
saved by reason of the payment or accrual of the amount described in this
clause (A)) and (B) such Tax payment, reimbursement or advance by Lessee to
such Indemnitee plus any other payment in respect of Taxes (but not the cost
of the contest thereof) by Lessee to such Indemnitee theretofore made
pursuant to this Article 8, it being intended that such Indemnitee shall
retain a net Tax Benefit pursuant to this Article 8 only if Lessee shall
first have been reimbursed for any payments in respect of Taxes by it to such
Indemnitee pursuant to this Article 8; PROVIDED, HOWEVER, that such
Indemnitee shall not be obligated to make any payment to Lessee pursuant to
this sentence while a Lease Event of Default shall have occurred and be
continuing. If any Indemnitee shall have paid Lessee any refund of all or
part of any Tax paid by Lessee and it is subsequently determined that such
Indemnitee was not entitled to the refund, such determination shall be
treated as the imposition of a Tax for which Lessee is obligated to indemnify
such Indemnitee pursuant to the provisions of this Article 8 without regard
to any exclusions.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers,
privileges and remedies of the Trustee and the Holders provided herein or in
any Certificate or other Operative Document are cumulative and not exclusive
of any right, power, privilege or remedy provided by Law or equity. No
failure or delay on the part of the Trustee or any Holder in exercising any
right, power, privilege or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power,
privilege or remedy preclude any other or further exercise of the same or any
other right, power, privilege or remedy. The terms and conditions of Section
2.1 and ARTICLE III hereof are inserted for the sole benefit of the Trustee
and the Holders; the same may be waived in whole or in part, with or without
terms or conditions, in respect of any Certificate Advance without
prejudicing the Trustee's or the Holders' rights to assert them in whole or
in part in respect of any other Certificate Advance.
SECTION 9.2 COSTS, EXPENSES AND TAXES. Lessee shall pay within five
(5) Business Days after demand, accompanied by an invoice therefor, the
reasonable costs and expenses of the Trustee and Arranger in connection with
the negotiation, preparation, syndication, execution and delivery of the
Operative Documents and any amendment thereto or waiver thereof. Lessee
shall also pay on demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Trustee and the Holders in connection with the
refinancing, restructuring, reorganization (INCLUDING a bankruptcy
reorganization) and enforcement or attempted enforcement of the Operative
Documents, and any matter related thereto. The foregoing costs
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and expenses shall include filing fees, recording fees, title insurance fees,
appraisal fees, search fees, and other out-of-pocket expenses and the
reasonable fees and out-of-pocket expenses of any legal counsel (INCLUDING
reasonably allocated costs of legal counsel employed by the Trustee or any
Holder), independent public accountants and other outside experts retained by
the Trustee or any Holder, whether or not such costs and expenses are
incurred or suffered by the Trustee or any Holder in connection with or
during the course of any bankruptcy or insolvency proceedings of Lessee or
any Subsidiary thereof. Such costs and expenses shall also include, in the
case of any amendment or waiver of any Operative Document requested by
Lessee, the administrative costs of the Trustee reasonably attributable
thereto. Lessee shall pay any and all documentary and other taxes pursuant
to Article 8. Any amount payable to the Trustee or any Holder under this
Section shall bear interest from the second Business Day following the date
of demand for payment at the Default Rate.
SECTION 9.3 NATURE OF HOLDERS' OBLIGATIONS. The obligations of the
Holders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Operative Document and no action
taken by the Trustee or the Holders or any of them pursuant hereto or thereto
may, or may be deemed to, make the Holders a partnership, an association, a
joint venture or other entity, either among themselves or with the Lessee or
any Affiliate of Lessee. Each Holder's obligation to make any Advance
pursuant hereto is several and not joint or joint and several, and in the
case of the initial Certificate Advance only is conditioned upon the
performance by all other Holders of their obligations to make initial
Advances. A default by any Holder will not increase the Commitment
Percentage of any other Holder. Any Holder not in default may, if it
desires, assume in such proportion as the nondefaulting Holders agree the
obligations of any Holder in default, but is not obligated to do so.
SECTION 9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or in any other Operative
Document, or in any certificate or other writing delivered by or on behalf of
any one or more of the parties to any Operative Document, will survive the
making of the Advances hereunder and the execution and delivery of the
Certificates, and have been or will be relied upon by the Trustee and each
Holder, notwithstanding any investigation made by the Trustee or any Holder
or on their behalf.
SECTION 9.5 NOTICES. EXCEPT as otherwise expressly provided in the
Operative Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Operative Document
must be in writing and must be mailed, telegraphed, telecopied, dispatched by
commercial courier or delivered to the appropriate party at the address set
forth on the signature pages of this Agreement or other applicable Operative
Document or, as to any party to any Operative Document, at any other address
as may be designated by it in a written notice sent to all other parties to
such Operative Document in accordance with this Section. EXCEPT as otherwise
expressly provided in any Operative Document, if any notice, request, demand,
direction or other communication required or permitted by any Operative
Document is given by mail it will be effective
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on the earlier of receipt or the fourth Business Day after deposit in the
United States mail with first class or airmail postage prepaid; if given by
telegraph or cable, when delivered to the telegraph company with charges
prepaid; if given by telecopier, when sent; if dispatched by commercial
courier, on the scheduled delivery date; or if given by personal delivery,
when delivered.
SECTION 9.6 EXECUTION OF OPERATIVE DOCUMENTS. Unless the Trustee
otherwise specifies with respect to any Operative Document, (a) this
Agreement and any other Operative Document may be executed in any number of
counterparts and any party hereto or thereto may execute any counterpart,
each of which when executed and delivered will be deemed to be an original
(except to the extent set forth in Section 15.3 of the Lease) and all of
which counterparts of this Agreement or any other Operative Document, as the
case may be, when taken together will be deemed to be but one and the same
instrument and (b) execution of any such counterpart may be evidenced by a
telecopier transmission of the signature of such party. The execution of
this Agreement or any other Operative Document by any party hereto or thereto
will not become effective until counterparts hereof or thereof, as the case
may be, have been executed by all the parties hereto or thereto.
SECTION 9.7 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties
of Lessee the Trustee and the Holders in connection with the Advances, and is
made for the sole benefit of Lessee the Trustee and the Holders, and the
Trustee's and the Holders' successors and assigns. EXCEPT as provided in
Sections 6.2 and 6.3, no other Person shall have any rights of any nature
hereunder or by reason hereof.
SECTION 9.8 CONFIDENTIALITY. Each Holder agrees to hold any
confidential information that it may receive from Lessee pursuant to this
Agreement or other Operative Documents in confidence, EXCEPT for disclosure:
(a) to other Holders; (b) to legal counsel and accountants for Lessee or any
Holder; (c) to other professional advisors to Lessee or any Holder, provided
that the recipient has accepted such information subject to a confidentiality
agreement substantially similar to this Section; (d) to regulatory officials
having jurisdiction over that Holder; (e) to any Gaming Board having
regulatory jurisdiction over Lessee or its Subsidiaries, provided that each
Holder agrees to notify Lessee of any such disclosure unless prohibited by
applicable Laws; (f) as required by Law or legal process, provided that such
Holder agrees to notify Lessee of any such disclosures unless prohibited by
applicable Laws or in connection with any legal proceeding to which that
Holder and Lessee are adverse parties; and (g) to another financial
institution in connection with a disposition or proposed disposition to that
financial institution of all or part of that Holder's interests hereunder or
a participation interest in its Certificate, provided that the recipient has
accepted such information subject to a confidentiality agreement
substantially similar to this Section. For purposes of the foregoing,
"confidential information" shall mean any information respecting Lessee or
its Subsidiaries reasonably considered by Lessee to be confidential, OTHER
THAN (i) information previously filed with any Governmental Agency and
available to the public,
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(ii) information previously published in any public medium from a source
other than, directly or indirectly, that Holder, and (iii) information
previously disclosed by Lessee to any Person not associated with Lessee
without a confidentiality agreement or obligation substantially similar to
this Section. Nothing in this Section shall be construed to create or give
rise to any fiduciary duty on the part of the Trustee or the Holders to
Lessee.
SECTION 9.9 INTEGRATION. This Agreement, together with the other
Operative Documents to which Lessor, Lessee, the Holders or any of them are
party, the Arranger Fee Letter and the letters referred to in SECTION 2.1.6,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and supersedes all prior agreements, written or oral, on the
subject matter hereof. In the event of any conflict between the provisions
of this Agreement and those of such other Operative Document, the provisions
of this Agreement shall control and govern; PROVIDED that the inclusion of
supplemental rights or remedies in favor of the Trustee or the Holders in any
other Operative Document shall not be deemed a conflict with this Agreement.
Each Operative Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
SECTION 9.10 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the local Laws of Nevada
applicable to contracts made and performed in Nevada.
SECTION 9.11 SEVERABILITY OF PROVISIONS. Any provision in any
Operative Document that is held to be inoperative, unenforceable or invalid
as to any party or in any jurisdiction shall, as to that party or
jurisdiction, be inoperative, unenforceable or invalid without affecting the
remaining provisions or the operation, enforceability or validity of that
provision as to any other party or in any other jurisdiction, and to this end
the provisions of all Operative Documents are declared to be severable.
SECTION 9.12 HEADINGS. Article and Section headings in this Agreement
and the other Operative Documents are included for convenience of reference
only and are not part of this Agreement or the other Operative Documents for
any other purpose.
SECTION 9.13 TIME OF THE ESSENCE. Time is of the essence of the
Operative Documents.
SECTION 9.14 GAMING BOARDS. The Trustee and each of the Holders agree
to cooperate with all Gaming Boards in connection with the administration of
their regulatory jurisdiction over Lessee and its Subsidiaries, INCLUDING the
provision of such documents or other information as may be requested by any
such Gaming Board relating to Lessee or any of its Subsidiaries or to the
Operative Documents.
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SECTION 9.15 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 no such termination, amendment, supplement, waiver or modification shall
be effective unless a signed copy thereof shall have been delivered to the
Trustee and the Lessee. Trustee and the Lessee shall not be permitted to
amend, modify or supplement the Lease or any other Operative Document
(subject, in the case of the Sublease, to Section 5.15) without the written
consent of the Requisite Holders; PROVIDED, that without the prior written
consent of each Holder, the Trustee shall not:
9.15.1 modify any of the provisions of this SECTION 9.15, change the
definition of "Requisite Holders", or modify or waive any provision of any
Operative Document requiring action by any of the foregoing, or release any
of the interest of the Holders in the Equipment (except as otherwise
specifically provided in any Operative Document);
9.15.2 reduce the amount or change the time of payment of any amount
of principal owing or payable under any Certificate or Yield or interest
(however characterized) owing or payable on any Certificate, or modify any
of the provisions of Section 2.2 of the Trust Agreement;
9.15.3 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;
9.15.4 reduce, modify, amend or waive any indemnities in favor of any
Holder;
9.15.5 reduce the amount or change the time of payment of Rent or
the Lease Balance;
9.15.6 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; or
9.15.7 permit the creation of any Lien on the Trust Estate or any
part thereof except as contemplated by the Operative Documents, or deprive
any Holder of the benefit of the security interest and Lien secured by the
Trust Estate.
SECTION 9.16 RELEASE OF LIEN. Each Holder hereby instructs the Trustee
to release the Lien created by the Lease against the Equipment at the expense
of Lessee 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; PROVIDED that nothing in this Section or in any
instrument effecting such a release shall release the Lien of the Lender
Group under the Secured Credit Agreement in the Equipment.
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Each Holder, 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 9.17 BROKERS. None of the parties has engaged or authorized
any broker, finder, investment banker or other third party to act on its
behalf, directly or indirectly, as a broker, finder, investment banker, agent
or any other like capacity in connection with this Lease or the transactions
contemplated hereby, except that Lessee has engaged the Arranger to act as
such.
SECTION 9.18 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY OPERATIVE DOCUMENT OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY
HERETO OR ANY OF THEM WITH RESPECT TO ANY OPERATIVE DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY
TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 9.19 PURPORTED ORAL AMENDMENTS. LESSEE EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 9.15. LESSEE AGREES THAT IT
WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE TRUSTEE OR ANY HOLDER THAT
DOES NOT COMPLY WITH SECTION 9.15 TO EFFECT AN AMENDMENT, MODIFICATION,
WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS.
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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.
STATION CASINOS, INC., as Lessee
By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Executive Vice President,
Chief Financial Officer
and Treasurer
Address:
Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, Nevada 89102
Attn: Glenn C. Christenson
Executive Vice President
Telecopier: (702) 367-2424
Telephone: (702) 367-2484
With a copy to:
Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, Nevada 89102
Attn: Bill Warner
Director of Finance
Telecopier: (702) 221-2424
Telephone: (702) 221-6620
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FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity except as
expressly stated herein, but solely as
Lessor and Trustee
By: /s/ Nancy M. Dahl
-----------------------------------
Nancy M. Dahl
Trust Officer
Address:
First Security Trust Company of Nevada
c/o First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Services
Telecopier: (801) 246-5053
Telephone: (801) 246-5630
BA LEASING & CAPITAL CORPORATION, as a
Holder
By: /s/ Sara Fitch
----------------------------------
Sara Fitch
Vice President
Address:
BA Leasing & Capital Corporation
555 California Street, 4th Floor
San Francisco, California 94104
Attn: Contract Administration
Telecopier: (415) 765-7373
Telephone: (415) 765-7427
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BANCBOSTON LEASING INC., as a Holder
By: /s/ James D Tighe
----------------------------------
James D. Tighe; Vice President
----------------------------------
Address:
BancBoston Leasing Inc.
100 Federal Street,
Mail Stop 01-09-07
Boston, Massachusetts 02110
Attn: Linda Crothers
Manager - Indirect Origination
Telecopier: (617) 434-0112
Telephone: (617) 434-7874
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ABN AMRO BANK N.V. SAN FRANCISCO
INTERNATIONAL BRANCH, as a Holder
By: ABN AMRO NORTH AMERICA, INC.
as Agent
By: /s/ Bradford H. Lehy
----------------------------------
Bradford H. Lehy, Officer
----------------------------------
By: /s/ Jan-Paul Kranendonk
----------------------------------
Jan-Paul Kranendonk
Vice President and Director
----------------------------------
Address:
ABN AMRO Bank N.V. San Francisco
International Branch
101 California Street, Suite 4550
San Francisco, California 94111
Attn: Jeffrey French
Vice President and Director
Telecopier: (415) 362-3524
Telephone: (415) 984-3703
SOCIETE GENERALE FINANCIAL CORPORATION,
as a Holder
By: /s/ Castellano
----------------------------------
John Castellano
Vice President
Address:
Societe Generale Financial Corporation
1221 Avenue of the Americas
New York, New York 10020
Attn: Edward Grimm
Telecopier: (212) 278-6789
Telephone: (212) 278-6450
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ORIX USA CORPORATION, as a Holder
By /s/ Frank Anton
----------------------------------
Frank Anton
Vice President
Address:
ORIX USA Corporation
One Bush Street, Suite 250
San Francisco, California 94104
Attn: Frank Anton
Vice President
Telecopier: (415) 433-7343
Telephone: (415) 433-0300
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY, as a Holder
By: /s/ Paul Clifford
----------------------------------
Paul Clifford
Deputy General Manager
Address:
The Long-Term Credit Bank of Japan, Ltd.,
Los Angeles Agency
350 South Grand Avenue, Suite 3000
Los Angeles, California 90071
Attn: Paul Clifford
Deputy General Manager
Telecopier: (213) 622-6908
Telephone: (213) 629-5777
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THE NIPPON CREDIT BANK, LTD., LOS
ANGELES AGENCY, as a Holder
By: /s/ Jay Schwartz
----------------------------------
Jay Schwartz
Vice President and Manager
Address:
The Nippon Credit Bank, Ltd.,
Los Angeles Agency
550 South Hope Street, Suite 2500
Los Angeles, California 90071
Attn: Jay Schwartz
Vice President and Manager
Telecopier: (213) 892-0111
Telephone: (213) 243-5722
PNC LEASING CORP, as a Holder
By: /s/ David J. Keener
----------------------------------
David J. Keener
Vice President
Address:
PNC Leasing Corp
620 Liberty Avenue
2 PNC Plaza, 13th Floor
Pittsburgh, Pennsylvania 15265
Attn: Manager, Administration
Telecopier: (412) 762-7575
Telephone: (412) 762-4981
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BANK OF THE WEST, as a Holder
By: /s/ Dale Kobser
----------------------------------
Dale Kobsar
Regional Vice President
Address:
Bank of the West
1450 Treat Boulevard
Walnut Creek, California 94596
Attn: Dale Kobsar
Regional Vice President
Telecopier: (510) 930-5635
Telephone: (510) 942-8463
FIRST SECURITY BANK, N.A., as a Holder
By: /s/ David Williams
----------------------------------
David Williams
Vice President
Address:
First Security Bank, N.A.
Commercial Banking Division
15 East 100 South, 2nd Floor
Salt Lake City, Utah 84111
Attn: David Williams
Vice President
Telecopier: (801) 246-5532
Telephone: (801) 246-5540
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MCDONNELL DOUGLAS FINANCE CORPORATION,
as a Holder
By: /s/ Daniel O. Anderson
----------------------------------
Daniel O. Anderson
Vice President - Operations
Address:
McDonnell Douglas Finance Corporation
4060 Lakewood Boulevard, 6th Floor
Long Beach, California 90808
Attn: Jim Hammersmith
Director - Operations
Telecopier: (310) 627-3002
Telephone: (310) 627-3238
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APPENDIX 1
to
Participation Agreement
DEFINITIONS AND INTERPRETATION
A. INTERPRETATION. In each Operative Document, unless a clear
contrary intention appears:
(i) USE OF DEFINED TERMS. Any defined term used in the
plural shall refer to all members of the relevant class, and any defined
term used in the singular shall refer to any one or more of the members
of the relevant class.
(ii) ACCOUNTING TERMS. All accounting terms not
specifically defined in this Appendix shall be construed in conformity
with, and all financial data required to be submitted by the
Participation Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, EXCEPT as otherwise specifically
prescribed herein. In the event that GAAP changes during the term of
the Participation Agreement such that the covenants contained in
Section 5.17 of the Participation Agreement would then be calculated in a
different manner or with different components, (a) Lessee and the
Holders agree to amend such covenants in such respects as are necessary
to conform those covenants as criteria for evaluating Lessee's financial
condition to substantially the same criteria as were effective prior to
such change in GAAP and (b) Lessee shall be deemed to be in compliance
with the covenants contained in the aforesaid Section if and to the
extent that Lessee would have been in compliance therewith under GAAP as
in effect immediately prior to such change, and shall have the
obligation to deliver each of the materials described in Section 5.14 of
the Participation Agreement to the Trustee and the Holders, on the dates
therein specified, with financial data presented in a manner which conforms
with GAAP as in effect immediately prior to such change.
(iii) ROUNDING. Any financial ratios required to be maintained
by Lessee pursuant to Section 5.17 of the Participation Agreement shall
be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places
by which such ratio is expressed in the Participation Agreement and
rounding the result up or down to the nearest number (with a round-up if
there is no nearest number) to the number of places by which such ratio
is expressed in the Participation Agreement.
(iv) EXHIBITS AND SCHEDULES. All Exhibits and Schedules to
the Participation Agreement, either as originally existing or as the
same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
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(v) REFERENCES TO "LESSEE AND ITS SUBSIDIARIES". Any
reference herein to "Lessee and its Subsidiaries" or the like shall refer
solely to Lessee during such times, if any, as Lessee shall have no
Subsidiaries.
(vi) MISCELLANEOUS TERMS. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory; the term "may"
is permissive. Masculine terms also apply to females; feminine terms also
apply to males. The term "including" is by way of example and not
limitation.
B. DEFINED TERMS. Unless a clear contrary intention appears,
terms defined herein have the respective meanings indicated below when used
in each Operative Document.
"ADDITIONAL COSTS" means the amounts payable pursuant to
Sections 7.3 and 7.4 of the Participation Agreement.
"ADVANCE" means, as the context may require, the advance of
funds by the Holders to the Trustee, and the advance by the Trustee to the
Lessee pursuant to Articles II and III of the Participation Agreement to
finance the acquisition of the Equipment.
"ADVANCE DATE" means the actual date on which the Advance is
made pursuant to the Participation Agreement.
"ADVANCE REQUEST" is defined in Section 2.4.1 of the
Participation Agreement.
"AFFILIATE" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and the
correlative terms, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise);
PROVIDED that, in any event, any Person that owns, directly or indirectly,
10% or more of the securities having ordinary voting power for the election
of directors or other governing body of a corporation that has more than 100
record holders of such securities, or 10% or more of the partnership or other
ownership interests of any other Person that has more than 100 record holders
of such interests, will be deemed to be an Affiliate of such corporation,
partnership or other Person.
"AFTER-TAX BASIS" means, with respect to any payment to be
received (taking into account any tax savings or reductions in the amount of
any Tax not indemnifiable hereunder as a result of circumstances giving rise
to a Tax for which an indemnity payment has been made), the amount of such
payment increased so that, after deduction of the amount of all taxes
required to be paid by the recipient with respect to the receipt by the
recipient of such amounts, such increased payment (as so reduced) is equal to
the payment otherwise required to be made. In making
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a determination of the increased payment, it shall be assumed that the
Indemnitee was subject to taxation at the highest marginal Federal rates
applicable to widely-held corporations for the year in which such income is
taxed and the state and local income tax rate shall be assumed to be 8.5%.
"ALTERATION" means a Permitted Alteration and a Required
Alteration.
"ALTERNATE BASE RATE" means, as of any date of determination,
the rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to the HIGHER OF (a) the Reference Rate in effect on such date and (b)
the Federal Funds Rate in effect on such date plus 1/2 of 1% (50 basis
points).
"ALTERNATE BASE RATE CERTIFICATE ADVANCE" means a Certificate
Advance bearing interest by reference to the Alternate Base Rate.
"ALTERNATE BASE RATE MARGIN" means, for any Alternate Base
Rate Certificate Advance, the number of basis points which, when added to the
Alternate Base Rate as of the date the Alternate Base Rate Certificate
Advance was made as or converted into an Alternate Base Rate Certificate
Advance, would have resulted in an interest rate equal to the sum of the
Eurodollar Rate that would have applied on that date for a Eurodollar Rate
Certificate Advance with a three month Eurodollar Period plus 2.25% (225
basis points).
"AMORTIZATION SCHEDULE" is defined in Section 3.2 of the
Participation Agreement.
"APPLICABLE EURODOLLAR MARGIN" means a margin above the
Eurodollar Rate equal to 2.25% (225 basis points).
"APPLICABLE YIELD RATE" means the rate per annum at which
interest accrues
(a) on a Certificate Advance maintained from time to time
as an Alternate Base Rate Certificate Advance equal to the Alternate Base
Rate from time to time in effect plus the Alternate Base Rate Margin; and
(b) on a Certificate Advance maintained as a Eurodollar
Rate Certificate Advance, during each Yield Period applicable thereto,
equal to the Eurodollar Rate then in effect PLUS the Applicable Eurodollar
Margin.
"APPRAISAL REPORT CONFIRMATION" means a report by the
Appraiser confirming that the specific Equipment to be purchased on an
Advance Date is within the pertinent Category of Equipment identified in the
Preliminary Appraisal Report and identifying the applicable Category.
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"APPRAISER" means The Rice Group or such other independent
qualified appraiser acceptable to the Requisite Holders.
"ARRANGEMENT FEE" means the arrangement fee payable to the
Arranger in the amount set forth in the Arranger Fee Letter.
"ARRANGER" means BA Leasing & Capital Corporation.
"ARRANGER FEE LETTER" means the letter dated July 19, 1996,
issued by the Arranger to the Lessee.
"ASSIGNMENT OF SUBLEASE" means the Assignment of Sublease,
dated as of the Closing Date, between Lessee and Trustee, substantially in
the form of Exhibit D to the Participation Agreement.
"BASE PERIOD" means the period commencing on the date
immediately following the last day of the Interim Period and ending on the
Maturity Date, unless earlier terminated.
"BASE SUBLEASE PERIOD" means the period commencing on the date
immediately following the last day of the Interim Sublease Period and ending
on the Maturity Date, unless earlier terminated.
"BASE VALUE" means, as of any date of determination, the sum
of (a) Lessor's Cost as of such date plus (b) the capitalized value
(determined in accordance with GAAP) of the Interim Rent payable through such
date.
"BILL OF SALE" means a bill of sale, substantially in the form
of Exhibit G to the Participation Agreement, to be delivered by Lessee to the
Trustee pursuant to the provisions of the Participation Agreement.
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday
or Friday, OTHER THAN a day on which banks are authorized or required to be
closed in California, Nevada or New York.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of
a Person under any leasing or similar arrangement which, in accordance with
GAAP, is classified as a capital lease.
"CASUALTY" means (a) as to an item of Equipment, an event or
occurrence in which an item of Equipment is lost, stolen, totally destroyed,
irreparably damaged from any cause whatsoever, damaged beyond economic
repair, or rendered permanently unfit for normal use for any reason
whatsoever (other than obsolescence) or damaged so as to result in an
insurance settlement on the basis of a total loss or a constructive or
compromised total loss, or taken or requisitioned by Condemnation and (b) as
to all of the Equipment, the passage of thirty (30) days after the
commencement of the Base Period, if a Failure of Completion has occurred.
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"CASUALTY RECOVERIES" means the proceeds of any recovery in
respect of any Casualty from insurance, a Governmental Agency or otherwise.
"CATEGORY OF EQUIPMENT" means, individually, each of the ten
categories of Equipment set forth in Schedule V to the Participation
Agreement.
"CERTIFICATE" means a Certificate, dated as of the Closing
Date executed by the Trustee and delivered to each Holder substantially in
the form of Exhibit A to the Trust Agreement.
"CERTIFICATE OF ACCEPTANCE" means each Certificate of
Acceptance, fully executed by the Lessee and the Sublessee, accepting the
Equipment under the Lease and the Sublease, substantially in the form of
Exhibit H to the Participation Agreement.
"CERTIFICATE ADVANCE" means an Advance made by the Holder to
the Trustee pursuant to Section 2.4 of the Participation Agreement.
"CHANGE OF CONTROL" means (a) any transaction or series of
related transactions in which any Unrelated Person or two or more Unrelated
Persons acting in concert acquire beneficial ownership (within the meaning of
Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of 40% or more of the outstanding Common Stock and at
such time the Existing Equity Holders together shall fail to beneficially
own, directly or indirectly, at least the same percentage of Common Stock as
is beneficially owned by such Unrelated Person, (b) Lessee consolidates with
or merges into another Person or conveys, transfers or leases its properties
and assets substantially as an entirety to any Person or any Person
consolidates with or merges into Lessee, in either event pursuant to a
transaction in which the outstanding Common Stock is changed into or
exchanged for cash, securities or other property, with the effect that any
Unrelated Person (OTHER THAN the Existing Equity Holders) becomes the
beneficial owner, directly or indirectly, of 40% or more of Common Stock and
at such times the Existing Equity Holders together shall fail to beneficially
own, directly or indirectly, at least the same percentage of Common Stock as
is beneficially owned by such Unrelated person or (c) during any period of 24
consecutive months, individuals who at the beginning of such period
constituted the board of directors of Lessee (together with any new or
replacement directors whose election by the board of directors, or whose
nomination for election, was approved by a vote of at least a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for reelection was previously so
approved) cease for any reason to constitute a majority of the directors then
in office. For purposes of the foregoing, the term "UNRELATED PERSON" means
any Person OTHER THAN (i) a Subsidiary of Lessee, (ii) an employee stock
ownership plan or other employee benefit plan covering the employees of
Lessee and its Subsidiaries or (iii) any of the Existing Equity Holders, the
term "EXISTING EQUITY HOLDERS" means Frank J. Fertitta III, Blake L. Sartini,
Delise F. Sartini, Lorenzo J. Fertitta, Glenn C. Christenson,
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Joseph F. Canfora and Scott M. Nielson and their executors, administrators or
the legal representatives of their estates, their heirs, distributees and
beneficiaries, any trust as to which any of the foregoing is a settlor or
co-settlor and any corporation, partnership or other entity which is an
Affiliate of any of the foregoing, and any lineal descendants of such
Persons, but only to the extent that the beneficial ownership of Common Stock
held by such lineal descendants was directly received (by gift, trust or
sale) from any such Person and the term "COMMON STOCK" means the voting
common stock of Lessee.
"CHARGES" means freight, installation and applicable sales or
use taxes (or similar taxes, subject to the approval of the Holders) imposed
upon an item of Equipment.
"CLAIMS" means liabilities, obligations, damages, losses,
demands, penalties, fines, claims, actions, suits, administrative and
judicial proceedings, judgments, orders, enforcement actions of any kind and
settlements, and any costs, fees, expenses and disbursements (including
reasonable legal fees and expenses and reasonable costs of investigation) of
any kind and nature whatsoever related to any of the foregoing.
"CLOSING DATE" is defined in Section 2.1 of the Participation
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended or
replaced and in effect from time to time.
"COMMITMENT" means (i) with respect to each Holder, the
obligation of the Holder to make Certificate Advances to Trustee at the
request of Lessee in an aggregate principal amount not to exceed the amount
set forth opposite the Holder's name on SCHEDULE I to the Participation
Agreement, and (ii) with respect to Trustee, the obligation of Trustee to
make the Advance (to the extent Trustee receives Certificate Advances from
the Holders).
"COMMITMENT AMOUNT" means $40,000,000.
"COMMITMENT PERCENTAGE" means, as to any Holder at a
particular time, the percentage of the aggregate Commitments in effect at
such time represented by such Holder's Commitment or, if the Commitments are
not then in effect, the percentage of the aggregate Certificate Advances
represented by such Holder's Certificate Advances.
"COMMITMENT PERIOD" means the period commencing on the Closing
Date and ending on the End Date nearest the earlier of (i) the Outside
Delivery Date and (ii) the date the aggregate Commitments are reduced to zero.
"COMPLETION" means, as of any date of determination, that on
such date substantially all of the Equipment is assembled, installed, in
operation and available to perform its function (if any) set forth in the
Construction Plans, and has been accepted by Lessee under the Lease.
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"COMPLETION DATE" means the date upon which the Project is
open for business to the general public with (a) at least 95% of the hotel
rooms provided for in the Construction Plans ready for occupancy, (b) at
least 95% of the square footage of casino space provided for in the
Construction Plans ready for gaming and (c) substantially all other amenities
of the Project substantially complete.
"CONDEMNATION" means any condemnation, requisition,
confiscation, seizure or other taking or sale of the use, access, occupancy,
easement rights or title to the Equipment or any part thereof, wholly or
partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain or otherwise, or any transfer made in lieu
of any such proceeding or action. A Condemnation shall be deemed to have
occurred on the earliest of the dates that use, occupancy or title vests in
the condemning authority.
"CONSENT TO SUBLEASE ASSIGNMENT" means a Consent to Sublease
Assignment substantially in the form of Exhibit E to the Participation
Agreement, to be delivered by Sublessee to the Trustee pursuant to the
provisions of the Participation Agreement.
"CONSTRUCTION PLANS" means all drawings, plans and
specifications relating to the Project prepared by or for Lessee or
Sublessee, as the same may be amended or supplemented from time to time, and,
if required, submitted to and approved by the Clark County Building
Department, all of which plans and specifications describe and set forth the
plans and specifications for the construction of the Project and the labor
and materials necessary for the construction thereof.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any outstanding security issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a party
or by which it or any of its property is bound.
"CORPORATE TRUST DEPARTMENT" means the principal corporate
trust office of Trustee, located at 530 Las Vegas Boulevard South, Las Vegas,
Nevada 89101, Attention: Corporate Trust Department, or such other office at
which the corporate trust business of Trustee is administered and which
Trustee specifies by notice in writing to Lessee, Sublessee and each Holder.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws from
time to time in effect affecting the rights of creditors generally.
"DEFAULT" means any event that, with the giving of notice or
passage of time, or both, would be an Event of Default.
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"DEFAULT RATE" means the lesser of (a) the highest interest
rate permitted by Law and (b) an interest rate per annum equal to the average
of the then Applicable Yield Rates plus 2% per annum.
"DESIGNATED EURODOLLAR MARKET" means, with respect to a
Eurodollar Certificate Advance, (a) the London Eurodollar Market, (b) if
prime banks in the London Eurodollar Market are at the relevant time not
accepting deposits of Dollars or if Requisite Holders determine in good faith
that the London Eurodollar Market does not represent at the relevant time the
effective pricing to the Holders for deposits of Dollars in the London
Eurodollar Market, the Cayman Islands Eurodollar Market or (c) if prime banks
in both the London and Cayman Islands Eurodollar Markets are at the relevant
time not accepting deposits of Dollars or if Requisite Holders determine in
good faith that neither the London nor the Cayman Islands Eurodollar Market
represents at the relevant time the effective pricing to the Holders for
deposits of Dollars in such Eurodollar Market, such other Eurodollar Market
as may from time to time be selected by Requisite Holders with the approval
of Lessee.
"DOLLARS" or "$" mean United States dollars.
"ELIGIBLE ASSIGNEE" means (a) another Holder, (b) with respect
to any Holder, any Affiliate of that Holder, (c) any commercial bank having a
combined capital and surplus of $100,000,000 or more, (d) any (i) savings
bank, savings and loan association or similar financial institution or (ii)
insurance company engaged in the business of writing insurance which, in
either case (A) has a net worth of $100,000,000 or more, (B) is engaged in
the business of lending money and extending credit under credit facilities
substantially similar to those extended under the Participation Agreement and
(C) is operationally and procedurally able to meet the obligations of a
Holder under the Participation Agreement to the same degree as a commercial
bank and (e) any other financial institution (INCLUDING a mutual fund or
other fund) having total assets of $100,000,000 or more which meets the
requirements set forth in subclauses (B) and (C) of clause (d) above;
PROVIDED that (I) each Eligible Assignee must either (a) be organized under
the Laws of the United States of America, any State thereof or the District
of Columbia or (b) be organized under the Laws of the Cayman Islands or any
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, and (i) act
hereunder through a branch, agency or funding office located in the United
States of America and (ii) be exempt from withholding of tax on interest and
deliver the documents related thereto pursuant to Section 12.21 and (II) to
the extent required under applicable Gaming Laws, each Eligible Assignee must
be registered with, approved by, or not disapproved by (whichever may be
required under applicable Gaming Laws), all applicable Gaming Boards.
"END DATE" means the last day of a Eurodollar Period.
"EQUIPMENT" means, individually, each item of equipment set
forth in a Certificate of Acceptance as generally described on Schedule V of
the Participation Agreement, and, collectively, each of the
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foregoing, together with any substitutions therefor, replacements thereof and
additions thereto from time to time pursuant to the Operative Documents.
"EQUIPMENT COST" means, as to any item of Equipment, the
invoice cost of such item of Equipment, plus related Charges; PROVIDED that
the aggregate Charges for all items of Equipment shall not exceed twenty
percent (20%) of the aggregate invoice cost for all items of Equipment.
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or replaced and
as in effect from time to time.
"ERISA AFFILIATE" means each Person (whether or not
incorporated) which is required to be aggregated with the Lessee pursuant to
the requirements of Section 414 of the Code.
"EURODOLLAR BUSINESS DAY" means any Business Day on which
dealings in Dollar deposits are conducted by and among banks in the
Designated Eurodollar Market.
"EURODOLLAR MARKET" means a regular established market located
outside the United States of America by and among banks for the solicitation,
offer and acceptance of Dollar deposits in such banks.
"EURODOLLAR OFFICE" means, as to each Holder, its office or
branch so designated by written notice to Lessee and the Trustee as its
Eurodollar Lending Office. If no Eurodollar Office is designated by a
Holder, its Eurodollar Office shall be its office at its address for purposes
of notices hereunder.
"EURODOLLAR OBLIGATIONS" means eurocurrency liabilities, as
defined in Regulation D or any comparable regulation of any Governmental
Agency having jurisdiction over any Holder.
"EURODOLLAR PERIOD" means, as to each Eurodollar Rate
Certificate Advance, the three (3) month period commencing on the related
Eurodollar Period Commencement Date, PROVIDED that:
(a) On and after July 1, 2000, Lessee may by written notice to
the Trustee designate Eurodollar Periods of one (1) or two (2) months
for all or a portion of any Eurodollar Rate Certificate Advance
expiring on or after that date;
(b) Lessee may at any time after the Permitted Refi Date
deliver to the Trustee written notice of its good faith intention
to elect the early termination option in the Lease within the
period ending on the last day of the Eurodollar Period that is then
approximately three months from such date and, on and after such
date and for so long as Lessee continues to hold such good faith
intention, Lessee may by written notice to the Trustee designate
Eurodollar Periods of one (1) or
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two (2) months for all or any part of any Eurodollar Rate Loan
expiring during such period;
(c) Any Eurodollar Period that would otherwise end on a day
that is not a Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day unless such Eurodollar Business
Day falls in another calendar month, in which case such Eurodollar
Period shall end on the next preceding Eurodollar Business Day;
(d) In the event that, absent this clause, there would not be
an End Date occurring during the period from September 25, 1997
through October 5, 1997, then Lessee shall designate a Eurodollar
Period commencing during the preceding two month period to be a one
month or a two month Eurodollar Period such that an End Date will
occur during the period from September 25, 1997 through October 5,
1997;
(e) No Eurodollar Period shall extend beyond the Maturity Date.
"EURODOLLAR PERIOD COMMENCEMENT DATE" means (a) in the case of
a Eurodollar Rate Certificate Advance into which an Alternate Base Rate
Certificate Advance is converted pursuant to Section 2.3.2 of the
Participation Agreement the Eurodollar Business Day nearest to the first day
of the calendar month following the calendar month in which such Alternate
Base Rate Certificate Advance was made (or, if there is no such nearest
Eurodollar Banking Day, then the last Eurodollar Banking Day in the calendar
month in which such Alternate Base Rate Certificate Advance was made);
PROVIDED, however, that (i) if such Eurodollar Business Day is not at least
three (3) Eurodollar Business Days after the date such Alternate Base Rate
Loan was made, then the Eurodollar Period Commencement Date shall be the
first Eurodollar Business Day that is at least three (3) Eurodollar Business
Days after the date such Alternate Base Rate Certificate Advance was made and
(ii) in any event, if such Eurodollar Business Day does not coincide with the
last day of the Eurodollar Period for another Eurodollar Rate Certificate
Advance (if any) expiring on or about the first day of such calendar month,
then the Eurodollar Commencement Date shall be the last day of the Eurodollar
Period for such expiring other Eurodollar Rate Certificate Advance and (b) in
the case of a Eurodollar Rate Certificate Advance into which an expiring
Eurodollar Rate Certificate Advance is converted pursuant to Section 2.3.2 of
the Participation Agreement, the last day of the Eurodollar Period for that
expiring Eurodollar Rate Certificate Advance.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Certificate Advance, the interest rate per annum (rounded upward, if
necessary, to the next 1/100 of 1%) at which deposits in Dollars are offered
by Bank of America NT&SA (or other designee of Trustee) to prime banks in the
Designated Eurodollar Market at or about 11:00 a.m. local time in the
Designated Eurodollar Market, two (2) Eurodollar Business Days before the
first day of the applicable Eurodollar Period in an aggregate
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amount approximately equal to the amount of such Eurodollar Rate Certificate
Advance and for a period of time comparable to the number of days in the
applicable Eurodollar Period.
"EURODOLLAR RATE CERTIFICATE ADVANCE" means a Certificate
Advance bearing interest by reference to the Eurodollar Rate.
"EVENT OF DEFAULT" means a Lease Event of Default.
"FAILURE OF COMPLETION" is defined in Section 5.18 of the
Participation Agreement.
"FAIR MARKET SALES VALUE" shall mean, with respect to any item
of Equipment as of any date, the retail price which a purchaser would pay to
purchase such item in an arm's-length transaction between a willing buyer and
a willing seller, neither of them being under any compulsion to buy or sell.
In making any determination of Fair Market Sales Value, Appraiser may assume
(except for any determination made pursuant to Section 7.4 of the
Participation Agreement) that such Equipment has been maintained in
accordance with the requirements of the Lease, that such Equipment is in the
condition in which it is required to be under the Lease as of the date for
which such determination is made, that such Equipment has been installed and
is in operation as contemplated by the Lease and that Lessee has and will
have discharged all of its other obligations under the Lease. The Final
Appraisal may also take into account appropriate capitalized costs with
respect to the Equipment.
"FEDERAL FUNDS RATE" means, as of any date of determination,
the rate set forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such date opposite the
caption "Federal Funds (Effective)". If for any relevant date such rate is
not yet published in H.15(519), the rate for such date will be the rate set
forth in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") for such date under the
caption "Federal Funds Effective Rate". If on any relevant date the
appropriate rate for such date is not yet published in either H.15(519) or
the Composite 3:30 p.m. Quotations, the rate for such date will be the
arithmetic mean of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that date by each
of three leading brokers of Federal funds transactions in New York City
selected by Bank of America NT&SA (or other designee of Trustee). Any change
in the Alternate Base Rate due to a change in the Federal Funds Rate shall be
effective as of the opening of business on the effective date of such change.
"FINAL APPRAISAL" is defined in Section 5.17 of the
Participation Agreement.
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"GAAP" means, as of any date of determination, accounting
principles (a) set forth as generally accepted in then currently effective
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (b) set forth as generally accepted in then
currently effective Statements of the Financial Accounting Standards Board or
(c) that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "CONSISTENTLY APPLIED," as used in connection therewith,
means that the accounting principles applied are consistent in all material
respects with those applied at prior dates or for prior periods.
"GAMING BOARD" means, collectively, (a) the Nevada Gaming
Commission, (b) the Nevada State Gaming Control Board and (c) any other
Governmental Agency that holds regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Lessee and its
Subsidiaries within its jurisdiction.
"GAMING LAWS" means all Laws pursuant to which any Gaming
Board possesses regulatory, licensing or permit authority over gambling,
gaming or casino activities conducted by Lessee and its Subsidiaries within
its jurisdiction.
"GOVERNMENTAL ACTION" means all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required
by, any Governmental Agency, or required by any Law, and shall include all
environmental and operating permits and licenses that are required for the
full use, occupancy, zoning and operation of the Project.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body (INCLUDING any
Gaming Board) or (c) any court or administrative tribunal of competent
jurisdiction.
"GUARANTY OBLIGATION" means, as to any Person (without
duplication), any (a) guarantee by that Person of Indebtedness of, or other
obligation performable by, any other Person or (b) assurance given by that
Person to an obligee of any other Person with respect to the performance of
an obligation by, or the financial condition of, such other Person, whether
direct, indirect or contingent, INCLUDING any purchase or repurchase
agreement covering such obligation or any collateral security therefor, any
agreement to provide funds (by means of loans, capital contributions or
otherwise) to such other Person, any agreement to support the solvency or
level of any balance sheet or income or cash flow statement item of such
other Person or any "keep-well" or other arrangement of whatever nature given
for the purpose of assuring or holding harmless such obligee against loss
with respect to any obligation of such other Person; PROVIDED, HOWEVER, that
the term Guaranty Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of
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business. The amount of any Guaranty Obligation of Indebtedness shall be
deemed to be an amount equal to the stated or determinable amount of the
related Indebtedness (unless the Guaranty Obligation is limited by its terms
to a lesser amount, in which case to the extent of such amount) or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Person in good faith. The amount of any
other Guaranty Obligation shall be deemed to be zero unless and until the
amount thereof has been (or in accordance with Financial Accounting Standards
Board Statement No. 5 should be) quantified and reflected or disclosed in the
consolidated financial statements (or notes thereto) of Lessee and its
Subsidiaries.
"HAZARDOUS MATERIALS" means substances defined as "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., or as
"hazardous", "toxic" or "pollutant" substances or as "solid waste" pursuant
to the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., or as "friable asbestos" pursuant to the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq. or any other applicable Hazardous Materials
Law, in each case as such Laws are amended from time to time.
"HAZARDOUS MATERIALS LAWS" means all Laws governing the
treatment, transportation or disposal of Hazardous Materials applicable to
the Real Property.
"HOLDER" means a holder of a Certificate.
"INDEBTEDNESS" means, as to any Person (without duplication),
(a) indebtedness of such Person for borrowed money or for the deferred
purchase price of Property (excluding trade and other accounts payable in the
ordinary course of business in accordance with ordinary trade terms),
INCLUDING any Guaranty Obligation for any such indebtedness, (b) indebtedness
of such Person of the nature described in clause (a) that is non-recourse to
the credit of such Person but is secured by assets of such Person, to the
extent of the fair market value of such assets as determined in good faith by
such Person, (c) Capital Lease Obligations of such Person, (d) indebtedness
of such Person arising under bankers' acceptance facilities or under
facilities for the discount of accounts receivable of such Person, (e) any
direct or contingent obligations of such Person under letters of credit
issued for the account of such Person and (f) any net obligations of such
Person under Swap Agreements; PROVIDED that in no event shall the obligations
of a Person under an operating lease (as such term is defined under GAAP) be
deemed Indebtedness of that Person. Lessee, Trustee and Holders acknowledge
that the Sublease is an operating lease and not Indebtedness.
"INDEMNITEE" means the Trustee, in its individual and in its
trust capacity, each Holder, any additional separate or co-trustee appointed
in accordance with the terms of the Trust Agreement and the respective
successors, assigns, directors, shareholders, partners, officers, employees
and agents of each of the foregoing.
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"INITIAL SCHEDULED PRINCIPAL PAYMENT DATE" means the End Date
nearest the earlier of (a) the date that is six (6) months after the
Completion Date or (b) March 31, 1998.
"INSURANCE REQUIREMENTS" means all terms and conditions of any
insurance policy required under the Lease to be maintained by the Lessee and
all requirements of the issuer of any such policy.
"INTERCREDITOR AGREEMENT" means an Intercreditor Agreement,
dated as of the Closing Date, between the Trustee (on behalf of the Holders)
and Bank of America National Trust and Savings Association, as managing
agent, under the Secured Credit Agreement (on behalf of the Lender Group) in
the form of Exhibit H to the Secured Credit Agreement.
"INTEREST DIFFERENTIAL" means, with respect to any prepayment
of a Eurodollar Rate Certificate Advance on a day other than the last day of
the applicable Eurodollar Period (a) the Eurodollar Rate payable with respect
to the Eurodollar Rate Certificate Advance MINUS (b) the Eurodollar Rate on,
or as near as practicable to, the date of the prepayment for a Eurodollar
Rate Certificate Advance with a Eurodollar Period commencing on such date and
ending on the last day of the Eurodollar Period of the Eurodollar Rate
Certificate Advance so prepaid.
"INTERIM PERIOD" means the period commencing on the Lease
Commencement Date and ending on (and including) the End Date nearest to the
earlier of (a) the Completion Date, (b) the date the aggregate Commitments
are reduced to zero, (c) Completion, (d) the date that is thirty (30) days
after Failure of Completion and (e) September 30, 1997.
"INTERIM SUBLEASE PERIOD" means the period commencing on the
Sublease Commencement Date and ending on (and including) the End Date nearest
to the earlier of (a) the Completion Date, (b) the date the aggregate
Commitments are reduced to zero, (c) Completion, (d) the date that is thirty
(30) days after Failure of Completion and (e) September 30, 1997.
"INVESTMENT COMPANY ACT" means the Investment Company Act of
1940, as amended, together with the rules and regulations promulgated
thereunder.
"INVESTOR'S LETTER" means the Investor's Letter, dated as of
the Closing Date, in substantially the form of Exhibit I to the Participation
Agreement.
"LAWS" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations, ordinances,
codes and administrative or judicial precedents.
"LEASE" means the Lease Intended for Security, dated as of the
Closing Date, between the Lessor and the Lessee, substantially in the form of
Exhibit A to the Participation Agreement.
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"LEASE BALANCE" means, as of any date of determination, the
sum of the aggregate unrepaid Advances made by the Holders represented by the
Certificates.
"LEASE COMMENCEMENT DATE" means the date all or any portion of
the Equipment is initially funded under the Lease by the Lessee.
"LEASE EVENT OF DEFAULT" is defined in Article X of the Lease.
"LEASE TERM" is defined in Section 2.3 of the Lease.
"LEASE TERMINATION DATE" means the last day of the Lease Term,
or any other date on which the Lease is terminated, including pursuant to
Section 5.4 or Article X of the Lease.
"LENDER GROUP" means each of the lenders that is party to the
Secured Credit Agreement.
"LENDING OFFICE" means, as to each Holder, the office or
offices of such Holder specified as its "Lending Office" on Schedule II of
the Participation Agreement, or such other office as such Holder may from
time to time designate by written notice to the Lessee and the Trustee.
"LESSEE" means Station Casinos, Inc., a Nevada corporation, as
lessee under the Lease.
"LESSEE BANK CREDIT AGREEMENT" means that certain Amended and
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
certain Subsidiaries of Lessee, Bank of America National Trust and Savings
Association, as managing agent and the banks party thereto, as the same may
from time to time be amended.
"LESSEE COLLATERAL" is defined in Section 14.1 of the Lease.
"LESSOR" means the Trustee as lessor or mortgagor under the
Lease.
"LESSOR LIEN" means any Lien on or against any or all of the
Equipment, the Lease, the Trust Estate or any payment of Rent which results
from (a) any act of, or any Claim against, Trustee, in its individual
capacity, or any Holder, in its individual capacity, in any case unrelated to
the transactions contemplated by the Operative Documents or (b) any Tax owed
by any such Person, except for any Tax required to be paid by Lessee under
the Operative Documents, including any Tax for which Lessee is obligated to
indemnify such Person.
"LESSOR'S COST" means the aggregate Equipment Cost paid with
proceeds of the Advances.
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"LICENSE REVOCATION" means (a) the revocation, involuntary
failure to renew or suspension of any casino, gambling or gaming license
issued by any Gaming Board covering any casino or gaming facility of Lessee,
(b) the appointment by any Gaming Board of a receiver, supervisor or similar
official with respect to any such gaming facility or (c) the involuntary
closure of any such casino or gaming facility pursuant to an order of any
Gaming Board.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance, lien
or charge of any kind, whether voluntarily incurred or arising by operation
of Law or otherwise, affecting any property, INCLUDING any currently
effective agreement to grant any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature of a security
interest, and/or the filing of or currently effective agreement to give any
financing statement (OTHER THAN a precautionary financing statement with
respect to a lease that is not in the nature of a security interest) under
the Uniform Commercial Code or comparable Law of any jurisdiction with
respect to any property.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any
Operative Document (other than as a result of any action or inaction of the
Trustee or any Holder), (b) is or could reasonably be expected to be material
and adverse to the business or condition (financial or otherwise) of Lessee
and its Subsidiaries, taken as a whole or (c) materially impairs or could
reasonably be expected to materially impair the ability of Lessee to perform
the Obligations.
"MATERIAL SUBSIDIARY" means each Subsidiary of Lessee that
owns or operates a casino-hotel (including a riverboat casino).
"MATURITY DATE" means October 31, 2000.
"MULTIEMPLOYER PLAN" means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA to which Lessee or any of its
ERISA Affiliates contribute or are obligated to contribute.
"NON-CASUALTY LOSS" is defined in Section 9.2 of the Lease.
"NON-CASUALTY RECOVERIES" means the proceeds of any recovery
in respect of any Non-Casualty Loss from insurance, a Governmental Agency or
otherwise.
"OBLIGATIONS" means all obligations (monetary or otherwise) of
the Lessee and Sublessee under the Operative Documents.
"OPERATIVE DOCUMENTS" means the following:
(a) the Participation Agreement;
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(b) the Certificates;
(c) the Lease;
(d) the Certificates of Acceptance;
(e) the Trust Agreement;
(f) the Sublease;
(g) the Sublease Assignment;
(h) the Consent to Sublease Assignment; and
(i) the Purchase Order Assignment.
"OTHER TAXES" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, any Operative Document.
"OUTSIDE DELIVERY DATE" means the earlier of (a) the date that
is ninety (90) days after the Completion Date or (b) December 31, 1997.
"PARTICIPATING ENTITY" is defined in Section 6.3.1 of the
Participation Agreement.
"PARTICIPATION AGREEMENT" means the Participation Agreement,
dated as of the Closing Date, among the Lessee, Trustee and the Holders.
"PARTY" means any Person other than the Trustee and the
Holders, which now or hereafter is a party to any of the Operative Documents.
"PAYMENT DATE" means (a) the Maturity Date; (b) the date of
any payment (whether or not scheduled) of principal outstanding on a
Certificate Advance; (c) with respect to the payment of interest on Alternate
Base Rate Certificate Advances which are converted into a Eurodollar Rate
Certificate Advance pursuant to the first sentence of Section 2.3.2 of the
Participation Agreement, the Eurodollar Period Commencement Date for such
Eurodollar Rate Certificate Advance; (d) with respect to the payment of
interest on any other Alternate Base Rate Certificate Advance, the next
Quarterly Payment Date; (e) with respect to the payment of interest on
Eurodollar Rate Certificate Advances, the End Date of each applicable
Eurodollar Period; and (f) each Scheduled Principal Payment Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"PENSION PLAN" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), OTHER THAN a Multiemployer
Plan, which is subject to Title IV of ERISA and is maintained by Lessee or
any of its ERISA Affiliates or to which Lessee or any of its ERISA Affiliates
contributes or has any obligation to contribute.
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"PERIODIC RENT" means an amount payable on each Payment Date
by the Lessee during the Lease Term measured by (a) during the Interim
Period, an amount equal to (i) interest on each Certificate Advance from the
date when made equal to the Alternate Base Rate plus the Alternate Base Rate
Margin through the next following Eurodollar Period Commencement Date, at
which time such Alternate Base Rate Certificate Advance shall automatically
convert to a Eurodollar Rate Certificate Advance and (ii) interest on each
such Eurodollar Rate Certificate Advance at the Eurodollar Rate then in
effect plus the Applicable Eurodollar Margin through the End Date of its
Eurodollar Period, at which time such Eurodollar Rate Certificate Advance
shall automatically convert to a new Eurodollar Rate Certificate Advance and
(b) during the Base Period, the aggregate of the Yield determined pursuant to
CLAUSE (a) above plus the amortization amount, if any, payable pursuant to
the Amortization Schedule by the Lessor to the Holders on such Payment Date
on the Certificates.
"PERIODIC SUBLEASE RENT" means an amount payable on each
Payment Date by the Sublessee during the Sublease Term equal to the Periodic
Rent payable on that date.
"PERMITTED ALTERATION" is defined in Section 7.2(b) of the
Lease.
"PERMITTED ENCUMBRANCES" means: (a) the respective rights and
interests of Lessee, the Holders and Trustee, as provided in any of the
Operative Documents; (b) Lessor Liens; (c) inchoate Liens incident to
construction on or maintenance of the Equipment; or Liens incident to
construction on or maintenance of the Equipment now or hereafter filed of
record for which adequate reserves have been set aside (or deposits made
pursuant to applicable Law) and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment, PROVIDED that, by
reason of nonpayment of the obligations secured by such Liens, no such
Equipment is subject to a material impending risk of loss or forfeiture; (d)
Liens for taxes and assessments on the Equipment which are not yet past due;
or Liens for taxes and assessments on the Equipment for which adequate
reserves have been set aside and are being contested in good faith by
appropriate proceedings and have not proceeded to judgment, PROVIDED that, by
reason of nonpayment of the obligations secured by such Liens, no such
Equipment is subject to a material impending risk of loss or forfeiture; (e)
rights reserved to or vested in any Governmental Agency to control or
regulate, or obligations or duties to any Governmental Agency with respect
to, the use of any Equipment; (f) present or future laws and ordinances
restricting the occupancy, use, or enjoyment of the Equipment; (g) statutory
Liens, other than those described in clauses (c) or (d) above securing
payment of the purchase price of goods or services rendered, arising in the
ordinary course of business with respect to obligations which are not
delinquent or are being contested in good faith, PROVIDED that, if
delinquent, adequate reserves have been set aside with respect thereto and,
by reason of nonpayment, no Equipment is subject to a material impending risk
of loss or forfeiture; (h) the rights of any sublessee or assignee under a
sublease or an assignment permitted by the terms of the Lease; (i) Liens
created by or resulting from any litigation or legal
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proceeding in the ordinary course of its business which is currently being
contested in good faith by appropriate proceedings, PROVIDED that such Lien
is junior to the Lien of the Lease, adequate reserves have been set aside and
no material Equipment is subject to a material impending risk of loss or
forfeiture and such Lien does not constitute an Event of Default; and (j) so
long as Lessee has not exercised the Sale Option, other non-consensual Liens
incurred in the ordinary course of business but not in connection with the
incurrence of any Indebtedness, which do not in the aggregate, when taken
together with all other Liens, materially impair the fair market value or use
of the Equipment for the purposes for which it is or may reasonably be
expected to be held.
"PERMITTED REFI DATE" means the date that is fifteen (15)
months after the Closing Date.
"PERSON" means any individual or entity, INCLUDING a trustee,
corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated organization,
business association, firm, joint venture, Governmental Agency, or other
entity.
"PRELIMINARY APPRAISAL REPORT" shall mean a report by the
Appraiser satisfactory in form and substance to Holders identifying up to ten
(10) Categories of Equipment among the equipment types identified by Lessee
to be included in the Equipment and setting forth the Fair Market Sales Value
of the Equipment in each Category of Equipment (as a percentage of its
initial cost) as of the last day of the Lease Term.
"PROCEEDS" shall have the meaning specified in Section 5.1(b)
of the Lease.
"PROJECT" means the hotel/casino known as the "Sunset Station
Hotel and Casino" to be constructed on the Land, consisting generally of an
approximately 500 room hotel and an approximately 80,000 square foot casino.
"PROJECT PROPERTY" means the real property located in
Henderson, Nevada on which the Project is to be constructed, comprised of
approximately (i) 51.4 acres of fee simple real property owned by Sublessee
and (ii) 47.6 acres of an adjacent leasehold estate in real property leased
by Sublessee under the Realty Lease, and all existing and future improvements
thereto and all related appurtenances.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PROJECTIONS" means the financial projections contained in the
Confidential Memorandum distributed by or on behalf of Lessee to the Holders
on or about July 3, 1996.
"PURCHASE OPTION" shall have the meaning specified in Section
5.1(a) of the Lease.
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"PURCHASE OPTION EXERCISE AMOUNT" shall mean, as of any date
of determination, the sum of (a) the then outstanding Lease Balance, PLUS (b)
all accrued but unpaid Periodic Rent, PLUS (c) all Supplemental Rent and
other sums then due and payable under the Operative Documents by Lessee or
any of its Affiliates.
"PURCHASE OPTION SUBLEASE EXERCISE AMOUNT" shall mean, as of
any date of determination, the greater of (a) the sum of (i) the then
outstanding Sublease Balance, PLUS (ii) all accrued but unpaid Periodic
Sublease Rent, PLUS (iii) all Supplemental Sublease Rent and other sums then
due and payable under the Operative Documents by Sublessee or any of its
Affiliates, or (b) the fair market value of the Equipment.
"PURCHASE ORDER ASSIGNMENT" means a Purchase Order Assignment
between Lessee and Trustee, substantially in the form of Exhibit J to the
Participation Agreement.
"QUARTERLY PAYMENT DATE" means each September 30, December 31,
March 31 and June 30.
"REAL PROPERTY" means, as of any date of determination, all
real property then or theretofore owned, leased or occupied by Lessee or any
of its Subsidiaries.
"REALTY LEASE" means that certain Ground Lease dated as of
June 17, 1994 between Navillus Investment Co. and certain associated Persons,
as lessors, and Lessee as lessee, covering the portion of the Project
Property described in clause (ii) of the definition of such term, as assigned
to and assumed by Sublessee pursuant to that certain Assignment and
Assumption dated as of August __, 1996.
"REFERENCE RATE" means the rate of interest publicly announced
from time to time by Bank of America, N.T. & S.A. in San Francisco,
California as its "reference rate." It is a rate set by Bank of America,
N.T. & S.A. based upon various factors including its costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or
below such announced rate. Any change in the Reference Rate announced by
Bank of America, N.T. & S.A. shall take effect at the opening of business on
the day specified in the public announcement of such change.
"REGULATION D" means Regulation D, as at any time amended, of
the Board of Governors of the Federal Reserve System, or any other regulation
in substance substituted therefor.
"REGULATIONS G, T, U AND X" means Regulations G, T, U and X,
as at any time amended, of the Board of Governors of the Federal Reserve
System, or any other regulations in substance substituted therefor.
"RELEASE" means any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow,
discharge, disposal or emission of a Hazardous Material.
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"RENT" means Periodic Rent and Supplemental Rent.
"REPLACEMENT BANK CREDIT AGREEMENT" means a credit agreement
governing a credit facility extended to Lessee that (a) replaces the credit
facility extended under the Lessee Bank Credit Agreement (or a prior
Replacement Bank Credit Agreement) in whole or in part, (b) is extended by a
bank or a syndicate of lenders for which a bank is the agent and (c) if there
is more than one credit facility that satisfies the requirements of clauses
(a) and (b), is the largest such credit facility.
"REQUIRED ALTERATION" is defined in Section 7.2(a) of the Lease.
"REQUIREMENTS OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any Law, or judgment, award, decree, writ or
determination of a Governmental Agency, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"REQUISITE HOLDERS" means, as of any date of determination,
(i) during the Commitment Period, Holders having aggregate Commitment
Percentages equal to at least 66 2/3 % of all Commitment Percentages and (ii)
thereafter, Holders having aggregate investments in the transactions
contemplated by the Operative Documents (as measured by the outstanding
principal amount of the Certificate Advances then outstanding) equal to at
least 66 2/3 % of all such investments.
"RESPONSIBLE OFFICIAL" means (a) when used with reference to a
Person other than an individual, any officer or manager of such Person,
general partner of such Person, officer of a corporate or limited liability
company general partner of such Person, officer of a corporate or limited
liability company general partner of a partnership that is a general partner
of such Person, or any other responsible official thereof duly acting on
behalf thereof, and (b) when used with reference to a Person who is an
individual, such Person. The Trustee and the Holders shall be entitled to
conclusively rely upon any document or certificate that is signed or executed
by a Responsible Official of Lessee or any of its Subsidiaries as having been
authorized by all necessary corporate, limited liability company, partnership
and/or other action on the part of Lessee or such Subsidiary; provided that
such Responsible Official has been designated as a Responsible Official for
purposes of the Operative Documents in a written notice signed by a Senior
Officer and delivered to the Trustee, which notice has not been cancelled or
superseded.
"RIGHT OF OTHERS" means, as to any property in which a Person
has an interest, any legal or equitable right, title or interest (other than
a Lien) held by any other Person in that property, and any option or right
held by any other Person to acquire any such right, title or interest in that
property, INCLUDING any option or right to acquire a Lien; PROVIDED, however,
that (a) any covenant restricting the use or disposition of property of such
Person contained in any Contractual
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Obligation of such Person and (b) any provision contained in a contract
creating a right of payment or performance in favor of a Person that
conditions, limits, restricts, diminishes, transfers or terminates such
right, shall not be deemed to constitute a Right of Others.
"SALE OPTION" shall have the meaning provided in Section
5.1(b) of the Lease.
"SALE RECOURSE AMOUNT" shall mean the applicable percentage of
the Lessor's Cost for the Equipment as is set forth in Schedule IV to the
Participation Agreement.
"SCHEDULED PRINCIPAL PAYMENT DATE" means (a) the Initial
Scheduled Principal Payment Date, (b) the End Dates nearest the dates that
are every three (3) months after the Initial Scheduled Principal Payment
Date, and (c) the Maturity Date.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SECURED CREDIT AGREEMENT" means that certain
Construction/Term Loan Agreement of even date herewith among Sublessee, Bank
of America National Trust and Savings Association, as managing agent and the
Lender Group party thereto.
"SENIOR OFFICER" means the (a) chief executive officer, (b)
president, (c) executive vice president, (d) senior vice president, (e) chief
financial officer or (f) treasurer of Lessee.
"SPECIAL EURODOLLAR CIRCUMSTANCE" means the application or
adoption after the Closing Date of any Law or interpretation, or any change
therein or thereof, or any change in the interpretation or administration
thereof by any Governmental Agency, central bank or comparable authority
charged with the interpretation or administration thereof, or compliance by
any Holder or its Eurodollar Lending Office with any request or directive
(whether or not having the force of Law) of any such Governmental Agency,
central bank or comparable authority.
"SPECIFIC ADVANCES" means the total Equipment Cost advanced by
the Holders with respect to a specific Category of Equipment.
"SUBLEASE" means the Sublease dated as of the Closing Date
between the Lessee, as lessor, and the Sublessee, as lessee, substantially in
the form of Exhibit B to the Participation Agreement.
"SUBLEASE BALANCE" means, as of any date of determination, the
sum of the aggregate unrepaid Advances made by the Holders represented by the
Certificates.
"SUBLEASE COMMENCEMENT DATE" means the date all or any portion
of the Equipment is initially accepted under the Sublease by the Sublessee.
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"SUBLEASE EVENT OF DEFAULT" is defined in Article X of the
Sublease.
"SUBLEASE RENT" means Periodic Sublease Rent and Supplemental
Sublease Rent.
"SUBLEASE TERM" is defined in Section 2.3 of the Sublease.
"SUBLEASE TERMINATION DATE" means the last day of the Sublease
Term, or any other date on which the Sublease is terminated, including
pursuant to Section 5.4 or Article X of the Sublease.
"SUBLESSEE" means Sunset Station, Inc., a Nevada corporation.
"SUBLESSOR" means Station Casinos, Inc., a Nevada corporation.
"SUBLESSOR LIEN" means any Lien on or against any or all of
the Equipment, the Sublease or any payment of Rent which results from (a) any
act of, or any Claim against, Sublessor, in any case unrelated to the
transactions contemplated by the Operative Documents or (b) any Tax owed by
any such Person, except for any Tax required to be paid by Sublessee under
the Operative Documents, including any Tax for which Sublessee is obligated
to indemnify such Person.
"SUBSIDIARY" means, as of any date of determination and with
respect to any Person, any corporation, limited liability company or
partnership (whether or not, in either case, characterized as such or as a
"joint venture"), whether now existing or hereafter organized or acquired:
(a) in the case of a corporation or limited liability company, of which a
majority of the securities having ordinary voting power for the election of
directors or other governing body (other than securities having such power
only by reason of the happening of a contingency) are at the time
beneficially owned by such Person and/or one or more Subsidiaries of such
Person, or (b) in the case of a partnership, of which a majority of the
partnership or other ownership interests are at the time beneficially owned
by such Person and/or one or more of its Subsidiaries.
"SUNSET STATION 1996 TRUST" means the trust created by the
Trust Agreement.
"SUPPLEMENTAL RENT" means any and all amounts, liabilities and
obligations which Lessee agrees or is otherwise obligated or designated to
pay (other than Periodic Rent) under the Lease or any other Operative
Document (whether or not designated as Supplemental Rent) to Trustee, the
Holders or any other Person, including Additional Costs and damages for
breach of any representations, warranties or agreements.
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"SUPPLEMENTAL SUBLEASE RENT" means any and all amounts,
liabilities and obligations which Sublessee agrees or is otherwise obligated
or designated to pay (other than Periodic Sublease Rent) under the Sublease
or any other Operative Document (whether or not designated as Supplemental
Sublease Rent) to Sublessor, Trustee, the Holders or any other Person,
including Additional Costs and damages for breach of any representations,
warranties or agreements.
"SWAP AGREEMENT" means a written agreement between Lessee and
one or more financial institutions providing for "swap", "cap", "collar" or
other interest rate protection with respect to any Indebtedness.
"TAXES" and "TAX" are defined in Section 8.1 of the
Participation Agreement.
"TRANSACTION COSTS" means legal and other fees, costs and
expenses incurred by the Arranger, Trustee and the Holders in connection with
the consummation and closing of the transactions contemplated by the
Operative Documents, and the preparation, negotiation, execution and delivery
of the Operative Documents, including (i) fees of Trustee and Trustee's legal
counsel; (ii) reasonable fees and expenses of Sheppard, Mullin, Richter &
Hampton, special counsel to the Holders; (iii) all appraisal, filing and
recording fees, and other search costs required by the Operative Documents;
(iv) an upfront fee payable on the Closing Date to each Holder; and (v)
without duplication of any of the foregoing, fees owing to the Arranger
pursuant to the Arranger Fee Letter.
"TRUST" is defined in Section 2.1 of the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement dated as of the
Closing Date, between the Lessee and the Trustee, substantially in the form
of Exhibit C to the Participation Agreement.
"TRUST CLAIMS" is defined in Section 3.1 of the Trust Agreement.
"TRUST COMPANY" is defined in Section 4.3 of the Participation
Agreement.
"TRUSTEE" means First Security Trust Company of Nevada, a
Nevada trust company, not in its individual capacity, but solely as Trustee
under the Trust Agreement, and any successor or replacement Trustee expressly
permitted under the Operative Documents.
"TRUST ESTATE" is defined in Section 2.4 of the Trust Agreement.
"TRUSTEE INDEMNIFIED PERSON" is defined in Section 3.1 of the
Trust Agreement.
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"UCC FINANCING STATEMENTS" means collectively the Holder
financing statements and the Lessor financing statements.
"UNIFORM COMMERCIAL CODE" and "UCC" means the Uniform
Commercial Code as in effect in any applicable jurisdiction.
"UNITED STATES OF AMERICA" or "U.S." means the United States
of America, its fifty States and the District of Columbia.
"YIELD" means an amount equal to the Applicable Yield Rate on
the aggregate outstanding investment amounts represented by the Certificates.
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<PAGE>
LEASE AGREEMENT
dated as of September 25, 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
STATION CASINOS, INC.,
as Lessee.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COUNTERPART NO. __ OF __ SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS; LESSEE LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
LEASE OF EQUIPMENT; LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Acceptance and Lease of Equipment. . . . . . . . . . . . . . . . 1
2.2 Acceptance Procedure . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
RENT; QUIET ENJOYMENT; NET LEASE . . . . . . . . . . . . . . . . . . . . . . 2
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. . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
LEASE TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Lessee's Options Upon Termination. . . . . . . . . . . . . . . . 6
5.2 Election of Options. . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Option Procedures. . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Early Termination. . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Return of Equipment. . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
DISCLAIMER AND ASSIGNMENT OF WARRANTIES. . . . . . . . . . . . . . . . . . . 10
6.1 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . 10
6.2 Assignment of Warranties . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII
MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS . . . . . . . . . . . . . 10
7.1 Maintenance and Repair; Compliance With Law. . . . . . . . . . . 10
7.2 Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Maintenance and Repair Reports . . . . . . . . . . . . . . . . . 12
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ARTICLE VIII
USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.1 Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IX
CASUALTY; REPLACEMENT; INSURANCE . . . . . . . . . . . . . . . . . . . . . . 13
9.1 Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Required Coverages . . . . . . . . . . . . . . . . . . . . . . . 14
9.3 Delivery of Insurance Certificates . . . . . . . . . . . . . . . 15
ARTICLE X
EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Sale of Equipment . . . . . . . . . . . . . . . . . . . . . . . 19
10.4 Right to Perform Obligations. . . . . . . . . . . . . . . . . . 20
10.5 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 20
10.6 Remedies Cumulative; No Waiver; Consents. . . . . . . . . . . . 20
ARTICLE XI
LESSOR'S RIGHT TO CURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.1 Lessor's Right to Cure Lessee's Defaults. . . . . . . . . . . . 21
ARTICLE XII
WARRANT OF TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.1 Warrant of Title. . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIII
ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE XIV
GRANT OF LIEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.1 Grant of Lien . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.2 Retention of Title or Proceeds in the Case of Default . . . . . 22
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.1 Cumulative Remedies; No Waiver. . . . . . . . . . . . . . . . . 23
15.2 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . 23
15.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.4 No Third Parties Benefited. . . . . . . . . . . . . . . . . . . 24
15.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 24
15.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.8 Severability of Provisions. . . . . . . . . . . . . . . . . . . 25
15.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.10 Limitation of Liability. . . . . . . . . . . . . . . . . . . . 25
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15.11 Waiver of Right to Trial by Jury . . . . . . . . . . . . . . . 26
15.12 Purported Oral Amendments. . . . . . . . . . . . . . . . . . . 26
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<PAGE>
LEASE INTENDED FOR SECURITY
---------------------------
This LEASE INTENDED FOR SECURITY (as amended, supplemented, or
otherwise modified from time to time, this "LEASE"), dated as of September 25,
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 STATION CASINOS, INC., 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 the date hereof (the
"PARTICIPATION AGREEMENT"), among Lessee; Lessor; and the Holders identified
therein. All obligations imposed on the "LESSEE" in this Lease shall be the
full recourse liability of Lessee irrespective of the performance by Sublessee
of its obligations to Lessee under the Sublease.
ARTICLE II
LEASE OF EQUIPMENT; LEASE TERM
SECTION 2.1 ACCEPTANCE AND LEASE OF EQUIPMENT. With respect to
each Advance under Section 2.4.2 of the Participation Agreement, on the Advance
Date for that Advance, subject to satisfaction or waiver of the conditions
precedent set forth in Article III of the Participation Agreement, Lessor shall
lease to Lessee hereunder, and Lessee shall lease from Lessor hereunder, the
Equipment accepted on that Advance Date by Lessee under a Certificate of
Acceptance pursuant to the Participation Agreement for the Lease Term. With
respect to each Advance made under Section 2.4.3 of the Participation Agreement,
on the date the Equipment to which that Advance is related is acquired, subject
to satisfaction or waiver of the conditions precedent set forth in Article III
of the Participation Agreement, Lessor shall lease to Lessee hereunder, and
Lessee shall lease from Lessor hereunder, the Equipment accepted on the date
such Equipment is acquired under a Certificate of Acceptance pursuant to the
Participation Agreement for the Lease Term.
SECTION 2.2 ACCEPTANCE PROCEDURE. Lessor hereby authorizes one
or more employees of Sublessee, to be designated by the Sublessee, as the
authorized representative or representatives of the Lessor to accept delivery of
the Equipment on each Advance Date. Lessee hereby agrees that such acceptance
of delivery by such authorized representative or representatives on behalf of
Lessor shall, without further act, irrevocably
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<PAGE>
constitute acceptance by Lessee of all of the terms and conditions of this
Lease with respect to items of Equipment delivered on each Advance Date.
Sublessee's acceptance of the items of Equipment to be accepted on any
Advance Date shall be evidenced by a Certificate of Acceptance, in each case
executed by Sublessee and Lessee and delivered to Lessor.
SECTION 2.3 LEASE TERM. The term of this Lease (the "LEASE
TERM") shall consist of the Interim Period and the Base Period, subject to
Article V.
ARTICLE III
RENT; QUIET ENJOYMENT; NET LEASE
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.
SECTION 3.3 PLACE AND MANNER OF PAYMENT. Rent and all other
sums due to Lessor or any Holder 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, Holder 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 Default 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 SECTION 5.3, so long as no Lease Event of Default exists 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 or Sublessee or their respective successors
and assigns) with respect to any matters arising from and after the Closing
Date. Such right of quiet enjoyment is independent of, and shall not affect
Lessor's rights otherwise to initiate legal action to enforce Lessor's rights
and Lessee's obligations 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
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<PAGE>
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 Requirements of Law, 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, including eviction;
(c) any prohibition, restriction, prevention or curtailment of or
interference with any use of any item of Equipment by any Person, including
eviction; (d) the attachment of any Lien of any third party to any item of
Equipment; (e) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by Lessor
or any Holder; (f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to
Lessee, Lessor, any Holder or any other Person, or any action taken with
respect to this Lease by any trustee or receiver of Lessee, Lessor, any
Holder or any other Person, or by any court, in any such proceeding; (g) any
claim that Lessee has or might have against any Person, including, without
limitation, Lessor or any Holder; (h) 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; (i) 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; (j) the impossibility of performance by Lessee, Lessor or both;
(k) any action by any court, administrative agency or other Governmental
Agency; or (l) 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 V or IX of
this Lease, this Lease shall be noncancellable by Lessee for any reason
whatsoever, and Lessee, to the extent permitted by 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 V or IX of this Lease, Lessee shall, unless
prohibited by Laws, nonetheless pay to Lessor (or, in the case of
Supplemental Rent, to whom ever 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 or any party to any
agreements related thereto for any reason whatsoever. Lessee assumes the
sole responsibility for the condition, use,
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<PAGE>
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.
SECTION 3.8 INTENT OF THE PARTIES.
(a) It is the intent of the parties that (1) the
transaction contemplated by the Operative Documents (a) constitutes an
operating lease from Lessor, for the benefit of the Holders, to Lessee
for purposes of Lessee's financial reporting pursuant to GAAP, and
(b) constitutes a financing lease intended as security and effects
ownership of the Equipment in Lessee for Federal and state income tax,
bankruptcy and UCC purposes, and (2) the obligations of Lessee to pay
Periodic Rent shall be treated as payments of principal and interest.
Except as specifically provided for herein, Lessor, for the benefit of
the Holders, shall retain title to the Equipment, free and clear of
all Liens other than Permitted Encumbrances and Permitted Rights of
Others, as security for the obligations of Lessee under the Operative
Documents. Each of the parties to the Operative Documents agrees that
it will not, nor will any Person controlled by it, or under common
control with it, directly or indirectly, at any time take any action
or fail to take any action with respect to the filing of any income
tax return, including an amended income tax return, inconsistent with
the intention of the parties expressed in this SECTION 3.8.
(b) Lessor and Lessee further intend and agree that for the
purpose of securing Lessee's obligations for the repayment of the
Certificate Advances and Yield, (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
Holders, of a security interest in all of Lessee's present and future
right, title and interest in and to the Equipment and proceeds
therefrom, (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 Requirements of
Law. Lessor and Lessee shall, to the extent consistent with this
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 deemed to be
created in accordance with this Section will be
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<PAGE>
deemed to be a perfected security interest with priority over all
Liens other than Permitted Encumbrances and Permitted Rights of
Others and will be maintained as such throughout the Lease Term.
ARTICLE IV
POSSESSION AND SUBLEASING
SECTION 4.1 POSSESSION. EXCEPT PURSUANT TO SECTION 4.2, 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.
SECTION 4.2 SUBLEASE. Lessee shall sublease the items of
Equipment on each Advance Date to the Sublessee pursuant to the terms of the
Sublease. The Sublease shall be expressly subject and subordinate to this Lease
and the Liens created hereby, and expressly prohibit any further assignment,
sublease or transfer. All of Lessee's right, title and interest in, to and
under the Sublease shall be pledged by Lessee to Lessor, as collateral for
Lessee's obligations under the Operative Documents, by delivery of an executed
copy of this Lease, marked as the sole original execution copy for UCC purposes,
to Lessor, and Lessee shall do any further act and execute, acknowledge,
deliver, file, register and record any further documents which Lessor (pursuant
to a request under SECTION 7.2 of the Trust Agreement) may reasonably request in
order to create, perfect, preserve and protect Lessor's security interest in the
Sublease. Lessee shall remain primarily liable hereunder for the performance of
all of the terms of this Lease to the same extent as if the Sublease had not
been entered into.
ARTICLE V
LEASE TERMINATION
SECTION 5.1 LESSEE'S OPTIONS UPON TERMINATION. Not later than
360 days prior to the last day of the Lease Term, Lessee shall, by delivery of
written notice to the Lessor and the Holders, exercise one of the following
options:
(a) to purchase for cash for the Purchase Option Exercise
Amount all, but not less than all, of the Equipment subject to this
Lease on the last day of the Lease Term (the "PURCHASE OPTION"); or
(b) to sell on behalf of the Lessor, for the benefit of the
Holders, for cash to a purchaser or purchasers not in any way
affiliated with Lessee or Sublessee all, but not less than all, of the
Equipment subject to this Lease on the last day of the Lease Term (the
"SALE OPTION"). Simultaneously with a sale pursuant to the Sale
Option, Lessee shall pay to Lessor, as Supplemental Rent for the
benefit of the Holders, from the gross proceeds of the sale of the
Equipment, without deductions or expense reimbursements (the
"PROCEEDS"), the aggregate outstanding Lease Balance as of the Lease
Termination Date (as
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<PAGE>
determined after any payment of Rent on such date). If the
Proceeds exceed the aggregate outstanding Lease Balance, Lessee
will retain the portion of the Proceeds in excess thereof. If the
Proceeds are less than the aggregate outstanding Lease Balance,
Lessee will pay or will cause to be paid to Lessor, as Supplemental
Rent for the benefit of the Holders, on the Lease Termination Date,
in addition to the Proceeds, the Sale Recourse Amount up to the
then outstanding Lease Balance (as determined after payment of Rent
and Proceeds on such date), it being understood, however, that the
amount payable pursuant to this SECTION 5.1(b) shall in no event be
construed to limit any other obligation of Lessee under the
Operative Documents. The obligation of Lessee to pay the amounts
determined pursuant to this SECTION 5.1(b) shall be a recourse
obligation of Lessee and shall be payable on the Lease Termination
Date.
SECTION 5.2 ELECTION OF OPTIONS. Lessee's election of the
Purchase Option will be irrevocable at the time made, but if Lessee fails to
make a timely election, Lessee will be deemed to have irrevocably elected the
Purchase Option. In addition, the Sale Option shall automatically be revoked if
there exists a Default or Lease Event of Default at any time after the Sale
Option is properly elected and Lessor shall be entitled to exercise all rights
and remedies provided in ARTICLE X. Lessee may not elect the Sale Option if
there exists on the date the election is made a Default or Lease Event of
Default.
SECTION 5.3 OPTION PROCEDURES. (a) If Lessee elects the
Purchase Option, Lessee shall provide to Lessor a certificate signed by a Senior
Officer of Lessee stating whether Sublessee has properly exercised the Purchase
Option (as such term is defined in the Sublease) under Section 5.3(a) of the
Sublease (and, if it has been exercised, attaching a copy of such Sublessee
notice of exercise) and Lessor shall execute and deliver to Lessee (if Lessee
pays the Purchase Option Exercise Amount to Lessor) or Sublessee (if Sublessee
has exercised its Purchase Option in the Sublease and Sublessee pays the
Purchase Option Exercise Amount to Lessor) such documents as may be reasonably
required to release the Equipment from the terms and scope of this Lease and to
transfer the right, title and interest of Lessor in the Equipment to Lessee or
Sublessee (as the case may be), without representations or warranties except
that the Equipment is free and clear of Lessor Liens, in such form as may be
reasonably requested by Lessee or Sublessee (as the case may be), all at
Lessee's or Sublessee's (as the case may be) sole cost and expense. Lessee
hereby directs, and Lessor hereby agrees to, accept the Purchase Option Exercise
Amount from Sublessee and upon receipt thereof to transfer the right, title and
interest of Lessor in the Equipment to Sublessee if Sublessee has exercised its
Purchase Option under the Sublease. If the Purchase Option is elected and the
payment of the Purchase Option Exercise Amount is at any time thereafter
rescinded or must otherwise be restored or returned upon the occurrence of an
event of the type specified in SECTIONS 10.1(f) or 10.1(g), the obligations of
the Lessee hereunder to pay the Purchase Option Exercise Amount shall be
reinstated as though such payment had been due but not paid as of such time.
(b) If Lessee elects the Sale Option, Lessee shall use its best
commercial efforts to obtain the highest all cash purchase price for the
Equipment. All costs related to such sale and delivery, including, without
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limitation, the cost of sales agents, removal of the Equipment, delivery of
documents and Equipment to any location designated by a buyer within the
continental United States, certification, operation and testing of the
Equipment in its final configuration in any location chosen by the buyer or
prospective buyer, legal costs, costs of notices, any advertisement or other
similar costs, or other information and of any parts, configurations, repairs
or modifications desired by a buyer or prospective buyer shall be borne
entirely by Lessee, without regard to whether such costs were incurred by
Lessor, Lessee or any potentially qualified buyer, and shall in no event be
paid from any of the Proceeds. Lessor shall not have any responsibility for
procuring any purchaser. If, nevertheless, Lessor, at the direction of the
Requisite Holders, undertakes any sales efforts, Lessee shall promptly
reimburse Lessor and/or any such Holder for any charges, costs and expenses
incurred in such effort, including any allocated time charges, costs and
expenses of internal counsel or other attorneys' fees. Upon a sale pursuant
to the Sale Option, the Equipment shall be in the condition required by
SECTION 5.5. Lessor, at the direction of the Requisite Holders, shall
determine whether to accept the highest all cash offer for the Equipment.
Any purchaser or purchasers of the Equipment shall not in any way be
affiliated with Lessee or Sublessee or have any understanding or arrangement
with Lessee or Sublessee regarding the future use of the Equipment. On the
Lease Termination Date, so long as no Lease Event of Default or Default
exists: (i) Lessee shall transfer all of Lessee's right, title and interest
in the Equipment, or cause the Equipment to be so transferred, to such
purchaser or purchasers, if any, in accordance with all of the terms of this
Lease; (ii) subject to the simultaneous payment by Lessee of all amounts due
under CLAUSE (iii) of this sentence, Lessor shall, without recourse or
warranty, except as to the absence of Lessor Liens, transfer by quitclaim
Lessor's right, title and interest in and to the Equipment to such purchaser
or purchasers; and (iii) Lessee shall simultaneously pay to Lessor all of the
amounts contemplated in SECTION 5.1(b).
SECTION 5.4 EARLY TERMINATION. If no Default or Lease Event of
Default shall exist, and provided that Lessee provides to Lessor a certificate
signed by Senior Officer of Lessee stating either that (a) the Secured Credit
Agreement is no longer in effect or (b) the Secured Credit Agreement remains in
effect and Sublessee has properly exercised its early termination option under
Section 5.4 of the Sublease to purchase the Equipment on any Scheduled Payment
Date (attaching a copy of such Sublessee notice of exercise), Lessee may, on
such Scheduled Payment Date, at its option, upon at least thirty (30) days'
advance written notice to Lessor, effect a purchase of all, but not less than
all, of the Equipment subject to this Lease for an exercise price equal to the
sum of (i) all accrued unpaid Periodic Rent payable on or prior to such
Scheduled Payment Date, (ii) the Lease Balance, (iii) for any purchase made
pursuant to this SECTION 5.4 on or before the Permitted Refi Date, an amount
equal to one percent (1%) of the Lease Balance to be repaid in connection with
such purchase pursuant to clause (ii) above, and (iv) all other fees and
expenses and other amounts then due and payable by Lessee to Lessor pursuant to
this Lease and the other Operative Documents to which Lessee is a party. On the
date of the full payment of such exercise price to Lessor by Lessee or by
Sublessee (and Lessee hereby directs that Lessor, and Lessor hereby agrees to,
accept the exercise price payable in connection with a purchase pursuant to this
SECTION 5.4 from Sublessee) in accordance
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with the provisions of the preceding sentence: (a) the obligations of Lessee
to pay Rent hereunder shall cease, (b) the term of this Lease shall end and
this Lease shall terminate, and (c) Lessor shall execute and deliver to
Lessee or Sublessee (as the case may be) such documents as may be reasonably
required to release the Equipment from the terms and scope of this Lease and
to transfer the right, title and interest of Lessor in the Equipment to
Lessee or Sublessee (as the case may be), without representations or
warranties except that the Equipment is free and clear of Lessor Liens and
free and clear of any interest in the Holders, in such form as may be
reasonably requested by Lessee or Sublessee (as the case may be), all at
Lessee's sole cost and expense.
SECTION 5.5 RETURN OF EQUIPMENT. Unless the Equipment is
purchased by Lessee pursuant to SECTIONS 5.1(a) OR 5.4, or otherwise sold by the
Lessee pursuant to SECTION 5.1(b), at the expiration of the Lease Term, Lessee
shall forthwith deliver exclusive possession of the Equipment to Lessor, for the
benefit of the Holders, at a location designated by Lessor, together with a copy
of an inventory list of the Equipment then subject to this Lease, all then
current plans, specifications and operating, maintenance and repair manuals
relating to the Equipment that have been received or prepared by Lessee,
appropriately protected and in the condition required by ARTICLE VII (and in any
event in condition to be placed in immediate service). If Lessor shall
rightfully demand possession of the Equipment pursuant to this Lease or
otherwise, Lessee, at its expense, shall forthwith deliver possession of such
Equipment to Lessor by delivering the Equipment, appropriately protected and in
the condition required by ARTICLE VII, to Lessor at such place or places as may
be specified by Lessor. In addition, if Lessor has terminated this Lease
pursuant to SECTION 10.2, Lessee shall, for 180 days after redelivery of the
Equipment, maintain (or cause to be maintained) the Equipment in the condition
required by ARTICLE VII, store the Equipment without cost to Lessor or any
Holder, and keep all of the Equipment insured in accordance with SECTION 9.3.
This SECTION 5.5 shall survive termination of this Lease.
ARTICLE VI
DISCLAIMER AND ASSIGNMENT OF WARRANTIES
SECTION 6.1 DISCLAIMER OF WARRANTIES. THE EQUIPMENT IS LEASED
BY LESSEE "AS IS" IN ITS PRESENT OR THEN CONDITION, AS THE CASE MAY BE. LESSEE
ACKNOWLEDGES AND AGREES THAT (a) THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY
AND MANUFACTURE SELECTED BY LESSEE, (b) LESSEE IS SATISFIED THAT THE SAME IS
SUITABLE FOR ITS PURPOSES, (c) NEITHER LESSOR NOR ANY HOLDER IS A MANUFACTURER
THEREOF OR A DEALER IN PROPERTY OF SUCH KIND, (d) NEITHER LESSOR NOR ANY HOLDER
SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT DEFECT IN ANY EQUIPMENT, OR THE
FAILURE OF ANY EQUIPMENT TO COMPLY WITH REQUIREMENTS OF LAW AND (e) NEITHER
LESSOR NOR ANY HOLDER HAS MADE, OR DOES OR WILL MAKE, (i) ANY REPRESENTATION OR
WARRANTY OR COVENANT, WITH RESPECT TO THE TITLE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, CONDITION, QUALITY, DESCRIPTION, DURABILITY OR SUITABILITY
OF ANY ITEM OF EQUIPMENT IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE
PURPOSES AND USES OF LESSEE OR SUBLESSEE OR (ii) ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY SUCH ITEM OF
EQUIPMENT, IT BEING AGREED
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THAT ALL RISKS, AS BETWEEN LESSOR AND HOLDERS, ON THE ONE HAND, AND LESSEE,
ON THE OTHER HAND, SHALL BE BORNE BY LESSEE EXCEPT THAT ON THE DATE OF ITS
DELIVERY TO LESSEE, EACH ITEM OF EQUIPMENT SHALL BE FREE AND CLEAR OF ANY
LESSORS' LIEN ATTRIBUTABLE TO TRUSTEE AND THE HOLDERS.
SECTION 6.2 ASSIGNMENT OF WARRANTIES. Lessor assigns to Lessee,
for the benefit of the Sublessee, 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 Lease 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.
(a) Without limiting Lessee's obligations under Section 5.5
of the Participation Agreement, Lessee, directly or through the
Sublessee, 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 set forth in the
manufacturer's manuals pertaining to the Equipment (and in any event
to at least as high a standard of maintenance and repair as Lessee
observes with respect to similar equipment owned or leased by it) 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 Requirements of Law and the standards imposed
by insurance policies required to be maintained hereunder with respect
to the Equipment.
(b) In addition, subject to Article IX, Lessee, directly or
through Sublessee, 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 by CLAUSE (a) above.
(c) Leased items of Equipment that have replaced other
items of Equipment pursuant to this SECTION 7.1 shall become the
property of Lessor, and title thereto shall automatically vest in
Lessor upon such permitted substitution or replacement. Title to the
replaced item of Equipment shall automatically vest in Lessee (subject
to the rights of any casualty insurance insurer) and such item of
Equipment shall no longer be subject to any right or interest of
Lessor or any Holder.
(d) Notwithstanding any other provision in this Lease,
Lessee may remove any item of Equipment from service for the purpose
of maintenance, repair, service, overhaul or testing of such item of
Equipment.
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SECTION 7.2 ALTERATIONS.
(a) If any item of Equipment or individual component
thereof is required to be altered, added to, replaced, improved or
modified in order to comply with Requirements of Law (a "REQUIRED
ALTERATION"), Lessee shall notify Lessor and Lessor shall notify the
Holders and Lessee, directly or through Sublessee, shall diligently
proceed to make such Required Alteration at its own expense; and
(b) Lessee, directly or through Sublessee, at its own
expense, may make any alteration, addition, replacement, improvement
or modification to 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
and Sublessee; and
(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; and
(d) Lessor need not inquire into or confirm that
Alterations were made in conformity with these requirements.
SECTION 7.3 REMOVAL. No component used in a Required Alteration
may be removed or severed from the item of Equipment to which it is attached. A
component used in a Permitted Alteration 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
Requirements of Law and (iii) no Default or Lease Event of Default is
continuing.
SECTION 7.4 MAINTENANCE AND REPAIR REPORTS. Lessee shall keep
maintenance and repair reports in sufficient detail, and as customary for owners
or operators of hotels or casinos, to indicate the nature and date of major work
done. 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 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. Lessee shall use and operate the Equipment in
compliance with any and all Requirements of Law. Lessee shall procure and
maintain in effect all licenses, registrations, certificates, permits,
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approvals and consents required by applicable Requirements of Law or any
Governmental Agency 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 Sublessee pursuant to the Sublease,
subject, however, to ARTICLES IV and IX and shall in no event be located
outside of the Project except to the extent necessary to effect maintenance,
repair or servicing thereof.
ARTICLE IX
CASUALTY; REPLACEMENT; INSURANCE
SECTION 9.1 CASUALTY.
(a) If a Casualty occurs with respect to an item of
Equipment, Lessee shall (i) give prompt written notice of such
occurrence and the date thereof to Lessor and (ii) replace such item
of Equipment with respect to which the Casualty has occurred pursuant
to the following provisions of SECTION 9.1(b). If a Casualty occurs
with respect to all or substantially all of the Equipment, Lessee
shall purchase the Equipment from Lessor, no later than the next
Payment Date occurring after such Casualty (but in no event later than
the Lease Termination Date), at a purchase price equal to the Lease
Balance, together with all other amounts payable under this Lease.
(b) If any item of Equipment is to be replaced, within
ninety (90) days thereafter 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 it must be of the same general type, year of manufacture
(or a later year of manufacture), function, utility, economic life,
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 Encumbrances. 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
equipment to this Lease. Lessee shall also provide Lessor and the
Holders with (i) a certificate of insurance in accordance with
SECTION 9.3 evidencing Lessee's compliance with the insurance
provisions of SECTION 9.2 with respect to such replacement Equipment,
and (ii) if the replacement Equipment has a value of $500,000 or more,
an opinion of counsel to Lessee in form and substance reasonably
satisfactory to the Holders and their counsel as to the creation and
perfection of the Lien of the Lessor on such replacement Equipment,
which opinion may be in a form substantially similar to such counsel's
opinion as to such matters delivered on the Closing Date except as
necessary, in the Holders' reasonable determination, to reflect a
change in applicable Requirements of Law or the existence of
materially different factual circumstances.
(c) If no Lease Event of Default exists and Lessee elects
to replace any item of Equipment suffering a Casualty, Lessee shall be
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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. 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 $500,000 in
respect of a Casualty to any item of Equipment shall be paid directly
to Lessor, or if paid to Lessee, such excess funds shall be
immediately paid by Lessee to Lessor. If a Lease Event of Default
exists, Lessor may retain all Casualty Recoveries as cash collateral
or, if no Lease Event of Default exists, Lessee shall be entitled to
apply all Casualty Recoveries in accordance with SECTION 9.1(b), and
any balance remaining after compliance with SECTION 9.1(b), 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 $500,000
until it applies all amounts received of less than or equal to such
amount in repair or replacement of the affected item of Equipment.
SECTION 9.2 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, on a
replacement cost basis, be less than one hundred and ten percent of
the then outstanding 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 $100,000,000 per occurrence with such
deductibles as are carried by similarly situated companies involved in
operating similar facilities and equipment.
(c) OTHER INSURANCE. Such other insurance including
workmen's compensation and business interruption insurance, in each
case as generally carried by owners of similar facilities and
equipment in the State of Nevada, in such amounts and against such
risks as are then customary for equipment and property similar in use.
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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, it shall name Lessor and Holders as
additional insureds and, in the case of casualty insurance, it shall name Lessor
and Holders as loss payees. Each policy referred to in this SECTION 9.2 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 Lessor; (ii) the interests of Lessor and all Holders shall not be invalidated
by any act or negligence of Lessee or any person having an interest in any item
of Equipment (other than the failure to pay premiums or other amounts payable to
the insurer after giving effect to the required notice period referred to in
clause (i) above); (iii) such insurance is primary with respect to any other
insurance carried by or available to Lessor and all Holders; (iv) the insurer
shall waive any right of subrogation, setoff, counterclaim, or other deduction,
whether by attachment or otherwise, against the Lessor; and (v) such policy
shall contain a cross-liability clause providing for coverage of Lessor and each
Holder as if separate policies had been issued to each of them. Lessee will
notify Lessor promptly of any policy cancellation, reduction in policy limits,
modification or amendment.
SECTION 9.3 DELIVERY OF INSURANCE CERTIFICATES. On or before
the Closing Date, upon renewal of any policy and upon written request of Lessor
after a Lease Event of Default, Lessee shall deliver to Lessor certificates of
insurance satisfactory to Lessor 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
EVENTS OF DEFAULT
SECTION 10.1 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 Periodic Rent, Proceeds, Sale Recourse
Amount, the Purchase Option Exercise Amount or payment in respect of a
Casualty shall not be paid within two (2) Business Days after the date
when due;
(b) any payment of Supplemental Rent or any other payment
payable by Lessee hereunder or under any other Operative Document
shall not be paid within ten (10) Business Days after the date when
due;
(c) any representation or warranty on the part of Lessee
contained in any Operative Document to which it is a party or in any
certificate or other writing furnished or delivered to Lessor or any
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Holder shall at any time prove to have been incorrect in any material
respect when made, deemed made or reaffirmed, as the case may be;
(d) Lessee shall default in the performance of its
obligations under Section 5.13(i) of the Participation Agreement or
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 ARTICLE IX;
(e) Lessee shall default in any material respect in the
performance or observance of any other term, covenant, condition or
agreement on its part to be performed or observed hereunder or under
any other Operative Document to which it is a party (and not
constituting a Lease Event of Default under any other clause of this
SECTION 10.1), and such Default shall continue unremedied for a period
of ten (10) Business Days after written notice thereof by Lessor or
any Holder to Lessee;
(f) (i) Lessee or any Material Subsidiary 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;
(g) involuntary proceedings or an involuntary petition
shall be commenced or filed against Lessee or any Material Subsidiary,
under any bankruptcy, insolvency or similar law or seeking the
dissolution, liquidation or reorganization of Lessee or any Material
Subsidiary or the appointment of a receiver, trustee, custodian or
liquidator for Lessee or any Material Subsidiary or of a substantial
part of the property, assets or business of Lessee or any Material
Subsidiary, 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 or any Material
Subsidiary or 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) any Plan maintained by Lessee is determined to have a
material "accumulated funding deficiency" as that term is defined in
Section 302 of ERISA in excess of an amount equal to 5% of the
consolidated total assets of Lessee as of the most-recently ended
fiscal quarter; or
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(i) any Operative Document to which Lessee is a party shall
for any reason other than the agreement or action (or omissions to
act) of Lessor or the Holders (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
Lessee shall, directly or indirectly, contest in any manner the
effectiveness, validity, binding nature or enforceability thereof; or
the Lien securing Lessee's obligations under the Operative Documents
to which it is a party shall, in whole or in part, cease (except in
accordance with the terms of the Operative Documents) to be a
perfected first priority Lien, subject only to Permitted Encumbrances
and Permitted Rights of Others and the junior and subordinate lien in
favor of the Lender Group under the Secured Credit Agreement;
(j) (i) Lessee or any Material Subsidiary fails to pay the
principal, or any principal installment, of any present or future
Indebtedness of $10,000,000 or more, or any guaranty of present or
future Indebtedness of $10,000,000 or more, on its part to be paid,
when due (or within any stated grace period), whether at the stated
maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fails to perform or observe any other term, covenant
or agreement on its part to be performed or observed, or suffers any
event of default to occur, in connection with any present or future
Indebtedness of $10,000,000 or more, or of any guaranty of present or
future Indebtedness of $10,000,000 or more, if as a result of such
failure or sufferance any holder or holders thereof (or an agent or
trustee on its or their behalf) has the right to declare such
Indebtedness due before the date on which it otherwise would become
due or the right to require Lessee or any Material Subsidiary to
redeem or purchase, or offer to redeem or purchase, all or any portion
of such Indebtedness (PROVIDED, that for the purpose of this
clause (j), the principal amount of Indebtedness consisting of a Swap
Agreement shall be the amount which is then payable by the
counterparty to close out the Swap Agreement); or
(k) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Lessee or any Material Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 30 days, PROVIDED that the
aggregate of all such judgments exceeds $10,000,000;
(l) there has occurred any License Revocation which
continues for more than three (3) consecutive days;
(m) any Sublease Event of Default under and as defined in
the Sublease has occurred and is continuing;
(n) any Event of Default under and as defined in the
Secured Credit Agreement or Lessee Bank Credit Agreement (or under any
documentation evidencing a refinancing or replacement of the
respective Indebtedness created thereunder) has occurred and is
continuing;
(o) any interest in the Sublease shall have been assigned
to any Person other than the Lender Group or assignees of the Lender
Group;
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(p) there shall have occurred a Change of Control;
(q) a Failure of Completion shall occur;
(r) any representation or warranty on the part of Sublessee
contained in the Consent to Sublease Assignment, any other Operative
Document to which it is a party or in any certificate or other writing
furnished or delivered by Sublessee to Lessor shall at any time prove
to have been incorrect in any material respect when made, deemed made
or reaffirmed, as the case may be; or
(s) Sublessee shall default in any material respect in the
performance or observance of any other term, covenant, condition or
agreement on its part to be performed or observed under the Consent to
Sublease Assignment or under any other Operative Document to which it
is a party, and such Default shall continue unremedied for a period of
ten (10) Business Days after written notice thereof by Lessor or any
Holder to Sublessee.
SECTION 10.2 REMEDIES. If any Lease Event of Default exists,
Lessor shall have the rights, options and remedies of a secured party under the
UCC and, without limiting the foregoing, Lessor also may exercise in any order
one or more or all of the following remedies (it being understood that no remedy
herein conferred is intended to be exclusive of any other remedy or remedies,
but each and every remedy shall be cumulative and shall be in addition to every
other remedy given herein or now or hereafter existing at law or in equity or by
statute): (i) terminate this Lease by notice in writing to Lessee, but Lessee
shall remain liable as hereinafter provided; (ii) declare the entire outstanding
Lease Balance to be due and payable, together with accrued unpaid Periodic Rent,
and any other amounts payable under the Operative Documents; (iii) enforce the
Lien given hereunder pursuant to the UCC or any other law; (iv) enter upon the
premises where any of the Equipment may be and take possession of all or any of
such Equipment; (v) 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; and (vi) require Lessee
to assemble and return the Equipment as provided in SECTION 5.5.
If any Lease Event of Default with respect to Lessee described in
SECTION 10.1(f) OR 10.1(g) shall have occurred and be continuing, then the
entire outstanding Lease Balance, and all accrued Periodic Rent and other
amounts payable under the Operative Documents shall automatically and
immediately become due and payable, without presentment, demand, notice,
declaration, protest or other requirements of any kind, all of which are hereby
expressly waived.
If the Event of Default described in SECTION 10.1(q) shall have
occurred and be continuing, then Lessor shall be entitled to recover from
Lessee, as a result solely of such Event of Default, an amount equal to the sum
of (a) 89% of the Lease Balance plus (b) all other damages suffered by Lessor,
the Holders, Trustee or any other Indemnitee as a result of such Event of
Default.
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SECTION 10.3 SALE OF EQUIPMENT. In addition to the remedies set
forth in SECTION 10.2, if any Lease Event of Default shall occur, Lessor may,
but is not required to, sell the Equipment in one or more sales. Any Holder or
Lessor may purchase all or any part of the Equipment at such sale. Lessee
acknowledges that sales for cash or on credit to a wholesaler, retailer or user
of such Equipment, or at public or private auction, are all commercially
reasonable. Any notice required by law of intended disposition by Lessor shall
be deemed reasonably and properly given if given at least 10 days before such
disposition.
SECTION 10.4 RIGHT TO PERFORM OBLIGATIONS. If Lessee fails to
perform any of its agreements contained herein, whether or not a Lease Event of
Default exists, Lessor may perform such agreement, and the reasonable fees and
expenses incurred by Lessor in connection with such performance together with
interest thereon shall be payable by Lessee upon demand.
SECTION 10.5 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 Requirements of Law, in its
name and stead and on its behalf, for the purpose of executing and delivering
all such deeds, bills of sale, assignments, releases (including releases of this
Lease on the records of any Governmental Agency) and other proper instruments as
Lessor may reasonably consider necessary or appropriate in connection with any
sale, assignment, transfer or disposition pursuant to Section 10.3, if a Lease
Event of Default exists, whether pursuant to foreclosure or power of sale or
otherwise. Lessee hereby 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 specifically ratify and confirm any such lawful sale,
assignment, transfer or disposition 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 10.6 REMEDIES CUMULATIVE; NO WAIVER; CONSENTS. To the
extent permitted by, and subject to the mandatory requirements of, Requirements
of Law, 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
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permitted by Requirements of Law, 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 an 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 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 Holder, 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 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, enter upon the real property where the Equipment
is located 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 and allocated time charges of internal counsel), together
with interest thereon at the Default 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
WARRANT OF TITLE
SECTION 12.1 WARRANT OF TITLE. Nothing contained in this Lease
shall be construed as constituting the consent or request of Lessor, expressed
or implied, to or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the furnishing
of any materials for any construction, alteration, addition, repair or
demolition of or to the Project or any part thereof. NOTICE IS HEREBY GIVEN
THAT NEITHER LESSOR NOR ANY HOLDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES
OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE
EQUIPMENT OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR
OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LESSOR OR ANY HOLDER IN AND TO THE EQUIPMENT.
ARTICLE XIII
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
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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 XIV
GRANT OF LIEN
SECTION 14.1 GRANT OF LIEN. 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 for the benefit of the
Holders a Lien in the Equipment and its rights under the Sublease, and the
proceeds thereof, 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.
If at any time any payment of Rent or any other amount due under the Operative
Documents is rescinded or must be otherwise restored or returned upon a Lease
Event of Default described in SECTIONS 10.1(f) or 10.1(g) the obligations of
Lessee hereunder and under the other Operative Documents, and all rights in the
Equipment released in connection therewith, shall be reinstated as though such
payment had been due but not paid as of such time. The Lessee agrees that,
notwithstanding the assignment of the Sublease and Lessor's acceptance of any
payment from the Sublessee as a credit to the obligations of the Lessee to pay
any Rent, the Purchase Option Exercise Amount (if the Purchase Option has been
elected) or any other amount due under this Lease or any other Operative
Document, if at any time any such payment so accepted is rescinded or must be
otherwise restored or returned upon the occurrence of any event of the type
specified in SECTION 10.1(f) or 10.1(g) of the Sublease, the obligations of the
Lessee hereunder and under the other Operative Documents, and all rights in the
Equipment released in connection therewith, shall be reinstated as though such
payment had been due but not paid as of such time.
SECTION 14.2 RETENTION OF TITLE OR PROCEEDS IN THE CASE OF
DEFAULT. If Lessee would be entitled to any amount (including any Casualty
Recoveries) or title to any item of Equipment hereunder but for the existence of
any Lease Event of Default or event which with the giving of notice and/or
passage of time could become a Lease Event of Default, Lessor shall hold such
amount or item of Equipment 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 Lease Event of Default or Default exists.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers,
privileges and remedies of the Lessor provided herein or in any other
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Operative Document are cumulative and not exclusive of any right, power,
privilege or remedy provided by Law or equity. No failure or delay on the
part of the Lessor in exercising any right, power, privilege or remedy may
be, or may be deemed to be, a waiver thereof; nor may any single or partial
exercise of any right, power, privilege or remedy preclude any other or
further exercise of the same or any other right, power, privilege or remedy.
SECTION 15.2 COSTS, EXPENSES AND TAXES. Lessee shall pay within
five (5) Business Days after demand, accompanied by an invoice therefor, the
reasonable costs and expenses of the Lessor in connection with the
negotiation, preparation, syndication, execution and delivery of the
Operative Documents and any amendment thereto or waiver thereof. Lessee
shall also pay on demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Lessor and the Holders in connection with the
refinancing, restructuring, reorganization (INCLUDING a bankruptcy
reorganization) and enforcement or attempted enforcement of the Operative
Documents, and any matter related thereto. The foregoing costs and expenses
shall include filing fees, recording fees, title insurance fees, appraisal
fees, search fees, and other out-of-pocket expenses and the reasonable fees
and out-of-pocket expenses of any legal counsel (INCLUDING reasonably
allocated costs of legal counsel employed by the Lessor or any Holder),
independent public accountants and other outside experts retained by the
Lessor or any Holder, whether or not such costs and expenses are incurred or
suffered by the Lessor or any Holder in connection with or during the course
of any bankruptcy or insolvency proceedings of Lessee or any Subsidiary
thereof. Such costs and expenses shall also include, in the case of any
amendment or waiver of any Operative Document requested by Lessee, the
administrative costs of the Lessor reasonably attributable thereto. Lessee
shall pay any and all documentary and other taxes pursuant to ARTICLE 8 of
the Participation Agreement. Any amount payable to the Lessee under this
Section shall bear interest from the second Business Day following the date
of demand for payment at the Default Rate.
SECTION 15.3 NOTICES. EXCEPT as otherwise expressly provided in the
Operative Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Operative Document must
be in writing and must be mailed, telegraphed, telecopied, dispatched by
commercial courier or delivered to the appropriate party at the address set
forth on the signature pages of this Lease or other applicable Operative
Document or, as to any party to any Operative Document, at any other address as
may be designated by it in a written notice sent to all other parties to such
Operative Document in accordance with this Section. EXCEPT as otherwise
expressly provided in any Operative Document, if any notice, request, demand,
direction or other communication required or permitted by any Operative Document
is given by mail it will be effective on the earlier of receipt or the fourth
Business Day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telecopier, when sent; if dispatched
by commercial courier, on the scheduled delivery date; or if given by personal
delivery, when delivered.
SECTION 15.4 NO THIRD PARTIES BENEFITED. This Lease is made for the
purpose of defining and setting forth certain obligations, rights and
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duties of Lessee and the Lessor in connection with the leasing the Equipment,
and is made for the sole benefit of Lessee and the Lessor, and the Lessee's
and Lessor's successors and assigns. EXCEPT as provided in Section 6.1 and
6.2 of the Participation Agreement, no other Person shall have any rights of
any nature hereunder or by reason hereof.
SECTION 15.5 CONFIDENTIALITY. The Lessor agrees to hold any
confidential information that it may receive from Lessee pursuant to this Lease
or other Operative Documents in confidence, EXCEPT for disclosure: (a) to the
Holders; (b) to legal counsel and accountants for Lessor or any Holder; (c) to
other professional advisors to Lessor or any Holder, provided that the recipient
has accepted such information subject to a confidentiality agreement
substantially similar to this Section; (d) to regulatory officials having
jurisdiction over that Holder; (e) to any Gaming Board having regulatory
jurisdiction over Lessee or its Subsidiaries, provided that Lessor agrees to
notify Lessee of any such disclosure unless prohibited by applicable Laws; and
(f) as required by Law or legal process, provided that Lessor agrees to notify
Lessee of any such disclosures unless prohibited by applicable Laws or in
connection with any legal proceeding to which Lessor and Lessee are adverse
parties. For purposes of the foregoing, "confidential information" shall mean
any information respecting Lessee or its Subsidiaries reasonably considered by
Lessee to be confidential, OTHER THAN (i) information previously filed with any
Governmental Agency and available to the public, (ii) information previously
published in any public medium from a source other than, directly or indirectly,
Lessor, and (iii) information previously disclosed by Lessee to any Person not
associated with Lessee without a confidentiality agreement or obligation
substantially similar to this Section. Nothing in this Section shall be
construed to create or give rise to any fiduciary duty on the part of Lessor to
Lessee.
SECTION 15.6 INTEGRATION. This Lease, together with the other
Operative Documents, comprises the complete and integrated agreement of the
parties on the subject matter hereof and supersedes all prior agreements,
written or oral, on the subject matter hereof. In the event of any conflict
between the provisions of this Lease and those of any other Operative Document,
the provisions of this Lease shall control and govern; PROVIDED that the
inclusion of supplemental rights or remedies in favor of Lessor in any other
Operative Document shall not be deemed a conflict with this Lease. Each
Operative Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.
SECTION 15.7 GOVERNING LAW. This Lease shall be governed by, and
construed and enforced in accordance with, the local Laws of Nevada applicable
to contracts made and performed in Nevada.
SECTION 15.8 SEVERABILITY OF PROVISIONS. Any provision in any
Operative Document that is held to be inoperative, unenforceable or invalid as
to any party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to
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this end the provisions of all Operative Documents are declared to be
severable.
SECTION 15.9 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 15.10 LIMITATION OF LIABILITY. It is expressly understood
and agreed by the parties hereto that (a) this Lease is executed and delivered
by Trust Company, 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 Trust Company,
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 Trust Company 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 Trust Company 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 15.11 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS
LEASE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY OPERATIVE DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR
ANY OF THEM WITH RESPECT TO ANY OPERATIVE DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS LEASE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
SECTION 15.12 PURPORTED ORAL AMENDMENTS. LESSEE EXPRESSLY
ACKNOWLEDGES THAT THIS LEASE AND THE OTHER OPERATIVE DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 9.15 OF THE PARTICIPATION
AGREEMENT. LESSEE AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE
OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE
LESSOR THAT DOES NOT COMPLY WITH SECTION 9.15 OF THE PARTICIPATION AGREEMENT TO
EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS LEASE OR THE
OTHER OPERATIVE DOCUMENTS.
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[Signature page to follow]
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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, as Lessor
By: /s/Nancy M. Dahl
----------------------------------
Nancy M. Dahl
Trust Officer
STATION CASINOS, INC., as Lessee
By: /s/Glenn C. Christensen
-----------------------------------
Glenn C. Christenson
Executive Vice President,
Chief Financial Officer
and Treasurer
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SUBLEASE AGREEMENT
dated as of September 25, 1996
between
STATION CASINOS, INC.,
as Sublessor
and
SUNSET STATION, INC.,
as Sublessee.
COUNTERPART NO. __ OF __ SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; SUBLESSEE LIABILITY . . . . . . . . . . . . . 1
ARTICLE II SUBLEASE OF EQUIPMENT; SUBLEASE TERM . . . . . . . . . . . 1
2.1 Acceptance and Sublease of Equipment . . . . . . . . . . . . . . 1
2.2 Acceptance Procedure . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Sublease Term. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III RENT; QUIET ENJOYMENT; NET SUBLEASE . . . . . . . . . . . . 2
3.1 Periodic Sublease Rent . . . . . . . . . . . . . . . . . . . . . 2
3.2 Supplemental Sublease Rent . . . . . . . . . . . . . . . . . . . 2
3.3 Place and Manner of Payment. . . . . . . . . . . . . . . . . . . 2
3.4 Late Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.5 Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . . 2
3.6 Net Sublease; No Setoff, Etc . . . . . . . . . . . . . . . . . . 3
3.7 No Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE V SUBLEASE TERMINATION . . . . . . . . . . . . . . . . . . . 5
5.1 Sublessee's Options Upon Termination . . . . . . . . . . . . . . 5
5.2 Election of Options. . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Option Procedures. . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Early Termination. . . . . . . . . . . . . . . . . . . . . . . . 5
5.5 Return of Equipment. . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI DISCLAIMER AND ASSIGNMENT OF WARRANTIES . . . . . . . . . . 6
6.1 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . 6
6.2 Assignment of Warranties . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS . . . . . 7
7.1 Maintenance and Repair; Compliance With Law. . . . . . . . . . . 7
7.2 Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.3 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Maintenance and Repair Reports . . . . . . . . . . . . . . . . . 9
ARTICLE VIII USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IX CASUALTY; REPLACEMENT; INSURANCE . . . . . . . . . . . . . 10
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9.1 Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Required Coverages . . . . . . . . . . . . . . . . . . . . . . . 11
9.3 Delivery of Insurance Certificates . . . . . . . . . . . . . . . 12
ARTICLE X EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 12
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 12
10.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.3 Right to Perform Obligations. . . . . . . . . . . . . . . . . . 15
10.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 15
10.5 Remedies Cumulative; No Waiver; Consents. . . . . . . . . . . . 16
ARTICLE XI SUBLESSOR'S RIGHT TO CURE . . . . . . . . . . . . . . . . . 16
11.1 Sublessor's Right to Cure Sublessee's Defaults. . . . . . . . . 16
ARTICLE XII WARRANT OF TITLE . . . . . . . . . . . . . . . . . . . . . 17
12.1 Warrant of Title. . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XIII ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XIV TRUE LEASE - SECURITY INTEREST . . . . . . . . . . . . . . 18
ARTICLE XV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 18
15.1 Cumulative Remedies; No Waiver. . . . . . . . . . . . . . . . . 18
15.2 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . 18
15.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.4 No Third Parties Benefited. . . . . . . . . . . . . . . . . . . 19
15.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 19
15.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.8 Severability of Provisions. . . . . . . . . . . . . . . . . . . 20
15.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.10 Subordination to Lease . . . . . . . . . . . . . . . . . . . . 21
15.11 Waiver of Right to Trial by Jury . . . . . . . . . . . . . . . 21
15.12 Purported Oral Amendments. . . . . . . . . . . . . . . . . . . 21
15.13 General Indemnification. . . . . . . . . . . . . . . . . . . . 22
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SUBLEASE
This SUBLEASE (as amended, supplemented, or otherwise modified
from time to time, this "SUBLEASE"), dated as of September 25, 1996, is between
STATION CASINOS, INC., a Nevada corporation, as Sublessor ("SUBLESSOR") and
SUNSET STATION, INC., a Nevada corporation, as Sublessee ("SUBLESSEE").
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; SUBLESSEE 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 the date hereof (the
"PARTICIPATION AGREEMENT"), among First Security Trust Company of Nevada, as
trustee ("LESSOR"), Sublessor and the Holders identified therein. All
obligations imposed on the "SUBLESSEE" in this Sublease shall be the full
recourse liability of Sublessee.
ARTICLE II
SUBLEASE OF EQUIPMENT; SUBLEASE TERM
SECTION 2.1 ACCEPTANCE AND SUBLEASE OF EQUIPMENT. With respect
to each Advance under Section 2.4.2 of the Participation Agreement, on the
Advance Date for that Advance Sublessor shall lease to Sublessee hereunder, and
Sublessee shall lease from Sublessor hereunder, the Equipment accepted on that
Advance Date by Sublessor under a Certificate of Acceptance pursuant to the
Participation Agreement for the Sublease Term. With respect to each Advance
made under Section 2.4.3 of the Participation Agreement, on the date the
Equipment to which that Advance is related is acquired Sublessor shall lease to
Sublessee hereunder, and Sublessee shall lease from Sublessor hereunder, the
Equipment accepted on the date such Equipment is acquired under a Certificate of
Acceptance pursuant to the Participation Agreement for the Sublease Term.
SECTION 2.2 ACCEPTANCE PROCEDURE. Sublessee's acceptance of the
items of Equipment to be accepted on any Advance Date shall be evidenced by a
Certificate of Acceptance, in each case executed by Sublessee and delivered to
Sublessor.
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SECTION 2.3 SUBLEASE TERM. The term of this Sublease (the
"SUBLEASE TERM") shall consist of the Interim Sublease Period and the Base
Sublease Period, subject to Article V.
ARTICLE III
RENT; QUIET ENJOYMENT; NET SUBLEASE
SECTION 3.1 PERIODIC SUBLEASE RENT. During the Sublease Term,
Sublessee shall pay to Sublessor Periodic Sublease Rent on each Payment Date in
the amount determined in accordance with the definition of "PERIODIC SUBLEASE
RENT."
SECTION 3.2 SUPPLEMENTAL SUBLEASE RENT. During the Sublease
Term, Sublessee shall pay to Sublessor, or to whomever shall be entitled to
payment thereof as expressly provided herein or in any other Operative Document
(and Sublessor hereby directs Sublessee, on behalf of Sublessor, so to pay any
such other Person) any and all Supplemental Sublease Rent promptly as the same
shall become due and payable, and, in the event of any failure on the part of
Sublessee to pay any Supplemental Sublease Rent, Sublessor 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 Sublease Rent.
SECTION 3.3 PLACE AND MANNER OF PAYMENT. Sublease Rent and all
other sums due to Sublessor shall be paid in accordance with Section 2.7 of the
Participation Agreement; PROVIDED, however, that so long as the Sublease remains
in effect all such payments shall be made directly to Lessor for the account of
Sublessor (and Sublessor hereby specifically and irrevocably instructs Sublessee
to make such payments directly to Lessor so long as the Lease remains in
effect).
SECTION 3.4 LATE PAYMENT. If any Periodic Sublease Rent shall
not be paid when due, Sublessee shall pay to Sublessor, or if any Supplemental
Sublease Rent payable to or on behalf or for the account of Sublessor, Holder or
any other Indemnitee is not paid when due, Sublessee shall pay to whomever shall
be entitled thereto, in each case as Supplemental Sublease Rent, interest at the
Default 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 and subordinate in any
event to the rights of the Lessor under the Lease, so long as no Sublease Event
of Default exists Sublessee shall, peaceably and quietly have, hold and enjoy
the Equipment for the Sublease Term, free of any claim or other action by
Sublessor or anyone claiming by, through or under Sublessor (other than its
successors and assigns) with respect to any matters arising from and after the
Closing Date. Such right of quiet enjoyment is independent of, and shall not
affect Sublessor's rights otherwise to initiate legal action to enforce
Sublessor's rights and Sublessee's obligations under this Sublease.
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SECTION 3.6 NET SUBLEASE; NO SETOFF, ETC. THIS SUBLEASE SHALL
CONSTITUTE A NET LEASE AND, NOTWITHSTANDING ANY OTHER PROVISION OF THIS
SUBLEASE, IT IS INTENDED THAT PERIODIC SUBLEASE RENT AND SUPPLEMENTAL SUBLEASE
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 SUBLESSEE'S OBLIGATION TO PAY ALL SUCH AMOUNTS, THROUGHOUT THE
SUBLEASE TERM IS ABSOLUTE AND UNCONDITIONAL. The obligations and liabilities of
Sublessee 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 Requirements of Law,
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, including
eviction; (c) any prohibition, restriction, prevention or curtailment of or
interference with any use of any item of Equipment by any Person, including
eviction; (d) the attachment of any Lien of any third party to any item of
Equipment; (e) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by Sublessor
or Lessor; (f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to
Sublessee, Sublessor, Lessor or any other Person, or any action taken with
respect to this Sublease by any trustee or receiver of Sublessor, Lessor or any
other Person, or by any court, in any such proceeding; (g) any claim that
Sublessee has or might have against any Person, including, without limitation,
Sublessor or Lessor; (h) any failure on the part of Sublessor to perform or
comply with any of the terms of this Sublease, any other Operative Document or
of any other agreement whether or not related to the transactions contemplated
by the Operative Documents; (i) any invalidity or unenforceability or
disaffirmance against or by Sublessee of this Sublease or any provision hereof
or any of the other Operative Documents or any provision of any thereof; (j) the
impossibility of performance by Sublessee, Sublessor or both; (k) any action by
any court, administrative agency or other Governmental Agency; or (l) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Sublessee shall have notice or knowledge of any of the foregoing. Except
as specifically set forth in ARTICLES V or IX of this Sublease, this Sublease
shall be noncancellable by Sublessee for any reason whatsoever, and Sublessee,
to the extent permitted by Laws, waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate or surrender this Sublease, or to any
diminution, abatement or reduction of Rent payable by Sublessee hereunder. If
for any reason whatsoever this Sublease shall be terminated in whole or in part
by operation of law or otherwise, except as expressly provided in ARTICLES V or
IX of this Sublease, Sublessee shall, unless prohibited by Laws, nonetheless pay
to Sublessor (or, in the case of Supplemental Sublease Rent, to whom ever shall
be entitled thereto) an amount equal to each Sublease Rent payment at the time
and in the manner that such payment would have become due and payable under the
terms of this Sublease if it had not been terminated in whole or in part, and in
such case, so long as such payments are made and no Sublease Event of Default
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shall have occurred and be continuing, Sublessor will deem this Sublease to
have remained in effect. Each payment of Sublease Rent made by Sublessee
hereunder shall be final and, absent manifest error in the determination of
the amount thereof, Sublessee shall not seek or have any right to recover all
or any part of such payment from Sublessor or any party to any agreements
related thereto for any reason whatsoever. Sublessee assumes the sole
responsibility for the condition, use, operation, maintenance and management
of the Equipment, and Sublessor shall have no responsibility in respect
thereof and shall have no liability for damage to the property of Sublessee
or any subtenant of Sublessee on any account or for any reason whatsoever
other than by reason of Sublessor'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 Sublessee's right or ability to bring and pursue any action for monetary
damages against Sublessor or any other Person for any breach or alleged breach
of its obligations hereunder.
ARTICLE IV
POSSESSION
SECTION 4.1 POSSESSION. SUBLESSEE SHALL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF SUBLESSOR, 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 (OTHER THAN AS PERMITTED
BY ARTICLE XIII OR IN CONNECTION WITH REPAIR AND MAINTENANCE OF THE EQUIPMENT)
BY SUBLESSEE SHALL BE NULL AND VOID.
ARTICLE V
SUBLEASE TERMINATION
SECTION 5.1 SUBLESSEE'S OPTIONS UPON TERMINATION. Not later
than (i) 360 days prior to the last day of the Sublease Term or
(ii) notwithstanding any election made under clause (i), 20 days prior to the
last day of the Sublease Term if a Lease Event of Default then exists, Sublessee
shall, by delivery of written notice to the Sublessor and Lessor, exercise one
of the following options:
(a) to purchase for cash for the Purchase Option Exercise
Amount all, but not less than all, of the Equipment subject to this
Sublease on the last day of the Sublease Term (the "PURCHASE OPTION");
or
(b) to return the Equipment to Sublessor.
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SECTION 5.2 ELECTION OF OPTIONS. Sublessee's election of the
Purchase Option will be irrevocable at the time made, but if Sublessee fails to
make a timely election, Sublessee will be deemed to have irrevocably elected the
Purchase Option.
SECTION 5.3 OPTION PROCEDURES. If Sublessee elects the Purchase
Option, Sublessor shall execute and deliver to Sublessee such documents as may
be reasonably required to release the Equipment from the terms and scope of this
Sublease and to transfer the right, title and interest of Sublessor in the
Equipment to Sublessee without representations or warranties except that the
Equipment is free and clear of the Lease, in such form as may be reasonably
requested by Sublessee all at Sublessee's sole cost and expense.
SECTION 5.4 EARLY TERMINATION. Sublessee may, on any Scheduled
Payment Date, at its option, upon at least thirty (30) days' advance written
notice to Sublessor, effect a purchase of all, but not less than all, of the
Equipment subject to this Sublease for an exercise price equal to the greater of
(A) the sum of (i) all accrued unpaid Periodic Rent payable on or prior to such
Scheduled Payment Date, (ii) the Sublease Balance, (iii) for any purchase made
pursuant to this SECTION 5.4 on or before the Permitted Refi Date, an amount
equal to one percent (1%) of the Sublease Balance to be repaid in connection
with such purchase pursuant to clause (ii) above, (iv) all other fees and
expenses and other amounts then due and payable by Sublessee to Sublessor
pursuant to this Sublease and the other Operative Documents to which Sublessee
is a party and (v) such additional amount (if any) as may be required to permit
Sublessor to exercise its early termination option under Section 5.4 of the
Lease or (B) the fair market value of the Equipment. On the date of the full
payment of such exercise price to Sublessor by Sublessee (and Sublessor hereby
directs Sublessee, and Sublessee agrees, to pay the amounts payable in
connection with a purchase of the Equipment pursuant to this Section 5.4
directly to Lessor) in accordance with the provisions of the preceding
sentence:(a) the obligations of Sublessee to pay Sublease Rent hereunder shall
cease, (b) the term of this Sublease shall end and this Sublease shall
terminate, and (c) Sublessor shall execute and deliver and shall cause Lessor,
by exercising Sublessor's rights under Section 5.4 of the Lease, to execute and
deliver to Sublessee such documents as may be reasonably required to release the
Equipment from the terms and scope of this Sublease and to transfer the right,
title and interest of Sublessor in the Equipment to Sublessee without
representations or warranties except that the Equipment is free and clear of the
Lease, in such form as may be reasonably requested by Sublessee all at
Sublessee's sole cost and expense.
SECTION 5.5 RETURN OF EQUIPMENT. Unless the Equipment is
purchased by Sublessee pursuant to Sections 5.1(a) or 5.4, at the expiration of
the Sublease Term, Sublessee shall forthwith deliver exclusive possession of the
Equipment to Sublessor, at a location designated by Sublessor, together with a
copy of an inventory list of the Equipment then subject to this Sublease, all
then current plans, specifications and operating, maintenance and repair manuals
relating to the Equipment that have been received or prepared by Sublessee,
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priately protected and in the condition required by ARTICLE VII (and in any
event in condition to be placed in immediate service). If Sublessor shall
rightfully demand possession of the Equipment pursuant to this Sublease or
otherwise, Sublessee, at its expense, shall forthwith deliver possession of
such Equipment to Sublessor by delivering the Equipment, appropriately
protected and in the condition required by ARTICLE VII, to Sublessor at such
place or places as may be specified by Sublessor.
ARTICLE VI
DISCLAIMER AND ASSIGNMENT OF WARRANTIES
SECTION 6.1 DISCLAIMER OF WARRANTIES. THE EQUIPMENT IS
SUBLEASED BY SUBLESSEE "AS IS" IN ITS PRESENT OR THEN CONDITION, AS THE CASE MAY
BE. SUBLESSEE ACKNOWLEDGES AND AGREES THAT (a) THE EQUIPMENT IS OF A SIZE,
DESIGN, CAPACITY AND MANUFACTURE SELECTED BY SUBLESSEE, (b) SUBLESSEE IS
SATISFIED THAT THE SAME IS SUITABLE FOR ITS PURPOSES, (c) NEITHER SUBLESSOR NOR
LESSOR IS A MANUFACTURER THEREOF OR A DEALER IN PROPERTY OF SUCH KIND, (d)
NEITHER SUBLESSOR NOR LESSOR SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT
DEFECT IN ANY EQUIPMENT, OR THE FAILURE OF ANY EQUIPMENT TO COMPLY WITH
REQUIREMENTS OF LAW AND (e) NEITHER SUBLESSOR NOR LESSOR HAS MADE, OR DOES OR
WILL MAKE, (i) ANY REPRESENTATION OR WARRANTY OR COVENANT, WITH RESPECT TO THE
TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITION, QUALITY,
DESCRIPTION, DURABILITY OR SUITABILITY OF ANY ITEM OF EQUIPMENT IN ANY RESPECT
OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES OF SUBLESSEE OR SUBLESSEE OR
(ii) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY SUCH ITEM OF EQUIPMENT, IT BEING AGREED THAT ALL RISKS, AS
BETWEEN SUBLESSOR AND LESSOR, ON THE ONE HAND, AND SUBLESSEE, ON THE OTHER HAND,
SHALL BE BORNE BY SUBLESSEE EXCEPT THAT ON THE DATE OF ITS DELIVERY TO
SUBLESSEE, EACH ITEM OF EQUIPMENT SHALL BE FREE AND CLEAR OF ANY SUBLESSORS'
LIEN ATTRIBUTABLE TO SUBLESSOR OR LESSOR.
SECTION 6.2 ASSIGNMENT OF WARRANTIES. Sublessor assigns to
Sublessee, for the benefit of the Sublessee, 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 Sublease Event of Default exists; and PROVIDED,
FURTHER, that any action taken by Sublessee by reason thereof shall be at the
expense of Sublessee and shall be consistent with Sublessee's obligations
pursuant to this Sublease.
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ARTICLE VII
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS
SECTION 7.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW.
(a) Sublessee, 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 set forth in the manufacturer's manuals
pertaining to the Equipment (and in any event to at least as
high a standard of maintenance and repair as Sublessee observes
with respect to similar equipment owned or leased by it) 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 Requirements of Law and the standards
imposed by insurance policies required to be maintained
hereunder with respect to the Equipment.
(b) In addition, subject to Article IX, Sublessee
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 by clause (a) above.
(c) Leased items of Equipment that have replaced
other items of Equipment pursuant to this SECTION 7.1 shall
become the property of Sublessor, and title thereto shall
automatically vest in Sublessor upon such permitted substitution
or replacement. Title to the replaced item of Equipment shall
automatically vest in Sublessee (subject to the rights of any
casualty insurance insurer) and such item of Equipment shall no
longer be subject to any right or interest of Lessor or
Sublessor.
(d) Notwithstanding any other provision in this
Sublease, Sublessee may remove any item of Equipment from
service for the purpose of maintenance, repair, service,
overhaul or testing of such item of Equipment.
SECTION 7.2 ALTERATIONS.
(a) If any item of Equipment or individual
component thereof is required to be altered, added to, replaced,
improved or modified in order to comply with Requirements of Law
(a "REQUIRED ALTERATION"), Sublessee shall notify Sublessor and
Sublessor shall notify the Lessor, and Sublessee shall
diligently proceed to make such Required Alteration at its own
expense; and
(b) Sublessee at its own expense, may make any
alteration, addition, replacement, improvement or modification
to any item of Equipment (a "PERMITTED ALTERATION"), or remove
any part that becomes worn out, broken or obsolete, if Sublessee
continues to be in compliance
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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
Sublessee; and
(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; and
(d) Sublessor need not inquire into or confirm that
Alterations were made in conformity with these requirements.
SECTION 7.3 REMOVAL. No component used in a Required
Alteration may be removed or severed from the item of Equipment to which it
is attached. A component used in a Permitted Alteration may be removed by
Sublessee 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 Requirements of Law and (iii) no Sublease Default or
Sublease Event of Default is continuing.
SECTION 7.4 MAINTENANCE AND REPAIR REPORTS. Sublessee shall
keep maintenance and repair reports in sufficient detail, and as customary
for owners or operators of hotels or casinos, to indicate the nature and date
of major work done. Such reports shall be kept on file by Sublessee at its
offices during the Sublease Term, and shall be made available to Sublessor
upon reasonable request. Sublessee shall give notice to Sublessor of any
Condemnation or Casualty the cost to repair which is reasonably expected by
Sublessee to exceed $250,000, promptly after Sublessee has knowledge thereof.
ARTICLE VIII
USE
SECTION 8.1 USE. Sublessee shall use and operate the
Equipment in compliance with any and all Requirements of Law. Sublessee
shall procure and maintain in effect all licenses, registrations,
certificates, permits, approvals and consents required by applicable
Requirements of Law or any Governmental Agency 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
Sublessee pursuant to the Sublease, subject, however, to ARTICLE IX and shall
in no event be located outside of the Project except to the extent necessary
to effect maintenance, repair or servicing thereof.
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ARTICLE IX
CASUALTY; REPLACEMENT; INSURANCE
SECTION 9.1 CASUALTY.
(a) If a Casualty occurs with respect to an item of
Equipment, Sublessee shall (i) give prompt written notice of such
occurrence and the date thereof to Sublessor and (ii) replace such
item of Equipment with respect to which the Casualty has occurred
pursuant to the following provisions of SECTION 9.1(b). If a Casualty
occurs with respect to all or substantially all of the Equipment,
Sublessee shall purchase the Equipment from Sublessor, no later than
the next Payment Date occurring after such Casualty (but in no event
later than the Sublease Termination Date), at a purchase price equal
to the Sublease Balance, together with all other amounts payable under
this Sublease.
(b) If any item of Equipment is to be replaced, within
ninety (90) days thereafter Sublessee 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 it must be of the same general type, year of manufacture
(or a later year of manufacture), function, utility, economic life,
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 Encumbrances and in
any event sufficient to permit Sublessor to comply with the Lease.
Sublessee shall cause a Bill of Sale and a Certificate of Acceptance
to be executed and delivered to Sublessor in order to subject such
replacement equipment to this Sublease. Sublessee shall also provide
Sublessor with a certificate of insurance in accordance with
SECTION 9.3 evidencing Sublessee's compliance with the insurance
provisions of SECTION 9.2 with respect to such replacement Equipment.
(c) If no Sublease Event of Default exists and Sublessee
elects to replace any item of Equipment suffering a Casualty,
Sublessee shall be entitled to receive from Sublessor the Casualty
Recoveries with respect thereto, to be used to reimburse Sublessee for
the cost of replacement of such item of Equipment after Sublessee
fully applies the Casualty Recoveries properly received by it in
replacement of such item of Equipment. Sublessor, subject to the
rights of any insurer insuring such item of Equipment as provided
herein, shall execute and deliver to Sublessee, 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
Sublessor 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 Sublease, in such form as may reasonably be requested by
Sublessee. All fees, costs and expenses
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relating to a substitution as described herein shall be borne by
Sublessee.
(d) All Casualty Recoveries in excess of $500,000 in
respect of a Casualty to any item of Equipment shall be paid directly
to Sublessor, or if paid to Sublessee, such excess funds shall be
immediately paid by Sublessee to Sublessor. If a Sublease Event of
Default exists, Sublessor may retain all Casualty Recoveries as cash
collateral or, if no Sublease Event of Default exists, Sublessee shall
be entitled to apply all Casualty Recoveries in accordance with
SECTION 9.1(b), and any balance remaining after compliance with
SECTION 9.1(b), as the case may be, shall be retained by or returned
to Sublessee. Sublessee shall not be entitled to any Casualty
Recoveries in excess of $500,000 until it applies all amounts
received of less than or equal to such amount in repair or
replacement of the affected item of Equipment.
SECTION 9.2 REQUIRED COVERAGES. Sublessee 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 Sublessee
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, on a
replacement cost basis, be less than one hundred and ten percent of
the then outstanding Sublease 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 $100,000,000 per occurrence with such
deductibles as are carried by similarly situated companies involved in
operating similar facilities and equipment.
(c) OTHER INSURANCE. Such other insurance including
workmen's compensation and business interruption insurance, in each
case as generally carried by owners of similar facilities and
equipment in the State of Nevada, in such amounts and against such
risks as are then customary for equipment and property similar in use.
Such insurance shall be written by reputable insurance companies that are
financially sound and solvent and otherwise reasonably appropriate
considering the amount and type of insurance being provided by such
companies. In the case of liability insurance maintained by Sublessee, it
shall name Sublessor and Lessor as additional insureds and, in the case of
casualty insurance, it shall name Sublessor and Lessor as loss payees. Each
policy referred to in this SECTION 9.2 shall provide that: (i) it will not
be cancelled or its limits reduced, or allowed to lapse without
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renewal, except after not less than 30 days' prior written notice to
Sublessor; (ii) the interests of Sublessor and Lessor shall not be
invalidated by any act or negligence of Sublessor or Sublessee or any person
having an interest in any item of Equipment (other than the failure to pay
premiums or other amounts payable to the insurer after giving effect to the
required notice period referred to in clause (i) above); (iii) such insurance
is primary with respect to any other insurance carried by or available to
Sublessor and Lessor; (iv) the insurer shall waive any right of subrogation,
setoff, counterclaim, or other deduction, whether by attachment or otherwise,
against the Sublessor and Lessor; and (v) such policy shall contain a
cross-liability clause providing for coverage of Sublessor and Lessor as if
separate policies had been issued to each of them. Sublessee will notify
Sublessor promptly of any policy cancellation, reduction in policy limits,
modification or amendment.
SECTION 9.3 DELIVERY OF INSURANCE CERTIFICATES. On or before
the Closing Date, upon renewal of any policy and upon written request of
Sublessor after a Sublease Event of Default, Sublessee shall deliver to
Sublessor certificates of insurance satisfactory to Sublessor 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
EVENTS OF DEFAULT
SECTION 10.1 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
"SUBLEASE EVENT OF DEFAULT":
(a) any payment of Periodic Sublease Rent, the Purchase
Option Sublease Exercise Amount or payment in respect of a Casualty
shall not be paid within two (2) Business Days after the date when
due;
(b) any payment of Supplemental Sublease Rent or any other
payment payable by Sublessee hereunder or under any other Operative
Document shall not be paid within ten (10) Business Days after the
date when due;
(c) any representation or warranty on the part of Sublessee
contained in any Operative Document to which it is a party or in any
certificate or other writing furnished or delivered to Sublessor or
Lessor shall at any time prove to have been incorrect in any material
respect when made, deemed made or reaffirmed, as the case may be;
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(d) Sublessee 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 ARTICLE IX;
(e) Sublessee shall default in any material respect in the
performance or observance of any other term, covenant, condition or
agreement on its part to be performed or observed hereunder or under
any other Operative Document to which it is a party (and not
constituting a Sublease Event of Default under any other clause of
this SECTION 10.1), and such Default shall continue unremedied for a
period of ten (10) Business Days after written notice thereof by
Sublessor or Lessor to Sublessee;
(f) (i) Sublessee or any Material Subsidiary 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;
(g) involuntary proceedings or an involuntary petition
shall be commenced or filed against Sublessee or any Material
Subsidiary, under any bankruptcy, insolvency or similar law or seeking
the dissolution, liquidation or reorganization of Sublessee or any
Material Subsidiary or the appointment of a receiver, trustee,
custodian or liquidator for Sublessee or any Material Subsidiary or of
a substantial part of the property, assets or business of Sublessee or
any Material Subsidiary, 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 Sublessee or
any Material Subsidiary or 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) any Plan maintained by Sublessee is determined to have
a material "accumulated funding deficiency" as that term is defined in
Section 302 of ERISA in excess of an amount equal to 5% of the
consolidated total assets of Sublessee as of the most-recently ended
fiscal quarter; or
(i) the occurrence of a Lease Event of Default;
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(j) (i) Sublessee or any Material Subsidiary fails to pay
the principal, or any principal installment, of any present or future
Indebtedness of $10,000,000 or more, or any guaranty of present or
future Indebtedness of $10,000,000 or more, on its part to be paid,
when due (or within any stated grace period), whether at the stated
maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fails to perform or observe any other term, covenant
or agreement on its part to be performed or observed, or suffers any
event of default to occur, in connection with any present or future
Indebtedness of $10,000,000 or more, or of any guaranty of present or
future Indebtedness of $10,000,000 or more, if as a result of such
failure or sufferance any holder or holders thereof (or an agent or
trustee on its or their behalf) has the right to declare such
Indebtedness due before the date on which it otherwise would become
due or the right to require Sublessee or any Material Subsidiary to
redeem or purchase, or offer to redeem or purchase, all or any portion
of such Indebtedness (PROVIDED, that for the purpose of this
clause (j), the principal amount of Indebtedness consisting of a Swap
Agreement shall be the amount which is then payable by the
counterparty to close out the Swap Agreement); or
(k) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Sublessee or any Material Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 30 days, PROVIDED that the
aggregate of all such judgments exceeds $10,000,000; or
(l) there has occurred any License Revocation which
continues for more than three (3) consecutive days; or
(m) any Event of Default under and as defined in the
Secured Credit Agreement (or under any documentation evidencing a
refinancing or replacement of the Indebtedness created thereunder) has
occurred and is continuing.
SECTION 10.2 REMEDIES. If any Sublease Event of Default exists,
Sublessor may terminate this Sublease and take possession of the Equipment, and
shall have the other rights, options and remedies of a lessor under applicable
Laws (including the Nevada Uniform Commercial Code) or, if this Sublease is
determined not to be a true operating lease, the rights, options and remedies of
a secured party under the Nevada Uniform Commercial Code.
SECTION 10.3 RIGHT TO PERFORM OBLIGATIONS. If Sublessee fails
to perform any of its agreements contained herein, whether or not a Sublease
Event of Default exists, Sublessor may perform such agreement, and the
reasonable fees and expenses incurred by Sublessor in connection with such
performance together with interest thereon shall be payable by Sublessee upon
demand.
SECTION 10.4 POWER OF ATTORNEY. Sublessee unconditionally and
irrevocably appoints Sublessor as its true and lawful attorney-in-fact,
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with full power of substitution, to the extent permitted by Requirements of
Law, in its name and stead and on its behalf, for the purpose of executing
and delivering all such deeds, bills of sale, assignments, releases
(including releases of this Sublease on the records of any Governmental
Agency) and other proper instruments as Sublessor may reasonably consider
necessary or appropriate in connection with any sale, assignment, transfer or
disposition pursuant to Section 10.3, if a Sublease Event of Default exists,
whether pursuant to foreclosure or power of sale or otherwise. Sublessee
hereby ratifies and confirms all that such attorney or any substitute shall
lawfully do by virtue hereof. If requested by Sublessor or any purchaser,
Sublessee shall specifically ratify and confirm any such lawful sale,
assignment, transfer or disposition by executing and delivering to Sublessor
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, Requirements
of Law, each and every right, power and remedy herein specifically given to
Sublessor or otherwise in this Sublease 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 Sublessor, 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 Sublessor 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 Sublessee or be an acquiescence therein.
Sublessor's consent to any request made by Sublessee shall not be deemed to
constitute or preclude the necessity for obtaining Sublessor's consent, in the
future, to all similar requests. No express or implied waiver by Sublessor of
any Sublease Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Sublease Event of Default. To the extent
permitted by Requirements of Law, Sublessee hereby waives any rights now or
hereafter conferred by statute or otherwise that may require Sublessor to sell,
lease or otherwise use the Equipment in mitigation of Sublessor's damages upon
the occurrence of an Event of Default or that may otherwise limit or modify any
of Sublessor's rights or remedies under this ARTICLE X.
ARTICLE XI
SUBLESSOR'S RIGHT TO CURE
SECTION 11.1 SUBLESSOR'S RIGHT TO CURE SUBLESSEE'S DEFAULTS.
Sublessor, 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 Sublessor or Lessor,
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no notice shall be required), without waiving or releasing any obligation or
Sublease Event of Default, may (but shall be under no obligation to) remedy
any Sublease Default or Sublease Event of Default for the account and at the
sole cost and expense of Sublessee, including the failure by Sublessee 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 Sublessee, enter upon the real property where the Equipment is located 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
Sublessee. All reasonable out-of-pocket costs and expenses so incurred
(including fees and expenses of counsel and allocated time charges of
internal counsel), together with interest thereon at the Default Rate from
the date on which such sums or expenses are paid by Sublessor, shall be paid
by Sublessee to Sublessor on demand. All rights of Sublessor in this Article
11.1 are subject to Section 15.10.
ARTICLE XII
WARRANT OF TITLE
SECTION 12.1 WARRANT OF TITLE. Nothing contained in this
Sublease shall be construed as constituting the consent or request of Sublessor,
expressed or implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to the Project or any part thereof. NOTICE IS HEREBY GIVEN
THAT NEITHER SUBLESSOR NOR LESSOR IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES
OR MATERIALS FURNISHED OR TO BE FURNISHED TO SUBLESSEE, OR TO ANYONE HOLDING THE
EQUIPMENT OR ANY PART THEREOF THROUGH OR UNDER SUBLESSEE, AND THAT NO MECHANIC'S
OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF SUBLESSOR OR LESSOR IN AND TO THE EQUIPMENT.
ARTICLE XIII
ASSIGNMENTS
All or any of the right, title or interest and obligations of
Sublessor in and to this Sublease and the rights, benefits, advantages and
obligations of Sublessor 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 Sublessor only in
accordance with the provisions set forth in the Trust Agreement. All rights of
Sublessee (including under ARTICLE V) under this Sublease shall be assignable
without the consent of Lessor or Sublessor; PROVIDED that (a) Sublessee or any
such assignee shall notify Sublessor of such assignment in writing promptly
thereafter and (b) such assignee shall concurrently execute and deliver to
Lessor a Consent to Sublease Assignment. Sublessor agrees that it will
recognize any such assignee as the successor to Sublessee with respect to this
Sublease. Any assignment
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by Sublessee shall not relieve Sublessee of its obligations hereunder and
shall in any event be subject to Section 15.10.
ARTICLE XIV
TRUE LEASE - SECURITY INTEREST
It is the intent of the parties that this Sublease be a true
operating lease of the Equipment by Sublessor to Sublessee, including for all
purposes of the Nevada Uniform Commercial Code. In the event that the Sublease
is determined not to be a true operating lease, then as a precaution Sublessee
hereby grants to Sublessor a security interest in all of Sublessee's right,
title and interest in the Equipment to secure the obligations of Sublessee
hereunder.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers,
privileges and remedies of the Sublessor provided herein or in any other
Operative Document are cumulative and not exclusive of any right, power,
privilege or remedy provided by Law or equity. No failure or delay on the part
of the Sublessor in exercising any right, power, privilege or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power, privilege or remedy preclude any other or further exercise of
the same or any other right, power, privilege or remedy.
SECTION 15.2 COSTS, EXPENSES AND TAXES. Sublessee shall pay on
demand, accompanied by an invoice therefor, the reasonable costs and expenses of
Sublessor and Lessor in connection with the refinancing, restructuring,
reorganization (INCLUDING a bankruptcy reorganization) and enforcement or
attempted enforcement of the Operative Documents, and any matter related
thereto. The foregoing costs and expenses shall include filing fees, recording
fees, title insurance fees, appraisal fees, search fees, and other out-of-pocket
expenses and the reasonable fees and out-of-pocket expenses of any legal counsel
(INCLUDING reasonably allocated costs of legal counsel employed by Sublessor or
Lessor), independent public accountants and other outside experts retained by
the Sublessor or any Holder, whether or not such costs and expenses are
incurred or suffered by Sublessor or Lessor in connection with or during the
course of any bankruptcy or insolvency proceedings of Sublessee or any
Subsidiary thereof. Such costs and expenses shall also include, in the case of
any amendment or waiver of any Operative Document requested by Sublessee, the
administrative costs of Sublessor reasonably attributable thereto. Sublessee
shall pay any and all documentary and other taxes arising out of this Sublease
and shall reimburse Sublessor for all such taxes which Sublessor pays to Lessor
pursuant to ARTICLE 8 of the Participation Agreement. Any amount payable
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to the Sublessee under this Section shall bear interest from the second
Business Day following the date of demand for payment at the Default Rate.
SECTION 15.3 NOTICES. EXCEPT as otherwise expressly provided in the
Operative Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Operative Document must
be in writing and must be mailed, telegraphed, telecopied, dispatched by
commercial courier or delivered to the appropriate party at the address set
forth on the signature pages of this Sublease or other applicable Operative
Document or, as to any party to any Operative Document, at any other address as
may be designated by it in a written notice sent to all other parties to such
Operative Document in accordance with this Section. EXCEPT as otherwise
expressly provided in any Operative Document, if any notice, request, demand,
direction or other communication required or permitted by any Operative Document
is given by mail it will be effective on the earlier of receipt or the fourth
Business Day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telecopier, when sent; if dispatched
by commercial courier, on the scheduled delivery date; or if given by personal
delivery, when delivered.
SECTION 15.4 NO THIRD PARTIES BENEFITED. This Sublease is made for
the purpose of defining and setting forth certain obligations, rights and duties
of Sublessee and the Sublessor in connection with the leasing the Equipment, and
is made for the sole benefit of Sublessee and the Sublessor, and the Sublessee's
and Sublessor's successors and assigns. This Section 15.4 is subject to Section
15.10.
SECTION 15.5 CONFIDENTIALITY. The Sublessor agrees to hold any
confidential information that it may receive from Sublessee pursuant to this
Sublease or other Operative Documents in confidence, EXCEPT for disclosure:
(a) to Lessor; (b) to legal counsel and accountants for Sublessor or Lessor;
(c) to other professional advisors to Sublessor or Lessor, provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section; (d) to regulatory officials having
jurisdiction over Lessor; (e) to any Gaming Board having regulatory jurisdiction
over Sublessee or its Subsidiaries, provided that Sublessor agrees to notify
Sublessee of any such disclosure unless prohibited by applicable Laws; and
(f) as required by Law or legal process, provided that Sublessor agrees to
notify Sublessee of any such disclosures unless prohibited by applicable Laws or
in connection with any legal proceeding to which Sublessor and Sublessee are
adverse parties. For purposes of the foregoing, "confidential information"
shall mean any information respecting Sublessee or its Subsidiaries reasonably
considered by Sublessee to be confidential, OTHER THAN (i) information
previously filed with any Governmental Agency and available to the public,
(ii) information previously published in any public medium from a source other
than, directly or indirectly, Sublessor, and (iii) information previously
disclosed by Sublessee to any Person not associated with Sublessee without a
confidentiality agreement or obligation substantially similar to this Section.
Nothing in this Section shall be construed to
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create or give rise to any fiduciary duty on the part of Sublessor to
Sublessee.
SECTION 15.6 INTEGRATION. This Sublease, together with the other
Operative Documents to which Sublessee is a party, comprises the complete and
integrated agreement of the parties on the subject matter hereof and supersedes
all prior agreements, written or oral, on the subject matter hereof. In the
event of any conflict between the provisions of this Sublease and those of any
other Operative Document to which Sublessee is a party, the provisions of this
Sublease shall control and govern; PROVIDED that the inclusion of supplemental
rights or remedies in favor of Sublessor in any other Operative Document shall
not be deemed a conflict with this Sublease. Each Operative Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
SECTION 15.7 GOVERNING LAW. This Sublease shall be governed by, and
construed and enforced in accordance with, the local Laws of Nevada applicable
to contracts made and performed in Nevada.
SECTION 15.8 SEVERABILITY OF PROVISIONS. Any provision in any
Operative Document that is held to be inoperative, unenforceable or invalid as
to any party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all
Operative Documents are declared to be severable.
SECTION 15.9 COUNTERPARTS. This Sublease has been executed in
several counterparts. One counterpart has been prominently marked "Sublessor's
Copy" and the other counterparts have been prominently marked "Sublessee's Copy"
or "Copy." Only the counterpart marked "Sublessor's Copy" shall evidence a
monetary obligation of Sublessee 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 (so
long as the Lease remains in effect) or Sublessor.
SECTION 15.10 SUBORDINATION TO LEASE. It is expressly understood and
agreed by the parties hereto that this Sublease is expressly subject and
subordinate to all of the terms of the Lease and to all rights of Lessor
thereunder. Sublessee expressly acknowledges and confirms that Lessor may
exercise all remedies available to it with respect to the Equipment during the
existence of a Lease Event of Default, whether or not there then exists a
Sublease Event of Default.
SECTION 15.11 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS
SUBLEASE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY OPERATIVE DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO
OR ANY OF THEM WITH RESPECT TO ANY OPERATIVE DOCUMENT, OR THE
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TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY
TO THIS SUBLEASE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 15.12 PURPORTED ORAL AMENDMENTS. SUBLESSEE EXPRESSLY
ACKNOWLEDGES THAT THIS SUBLEASE AND THE OTHER OPERATIVE DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 9.15 OF THE PARTICIPATION
AGREEMENT. SUBLESSEE AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING,
COURSE OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF
THE SUBLESSOR THAT DOES NOT COMPLY WITH SECTION 9.15 OF THE PARTICIPATION
AGREEMENT TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS
SUBLEASE OR THE OTHER OPERATIVE DOCUMENTS.
SECTION 15.13 GENERAL INDEMNIFICATION. Sublessee hereby agrees that
it will indemnify Sublessor and its assigns (each of whom shall be a third party
beneficiary of this covenant) against the matters covered by Article 7 of the
Participation Areement (the terms of which are incorporated herein by this
reference) on each of the same terms and conditions set forth in such Article 7.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this
Sublease as of the day and year first above written.
STATION CASINOS, INC.,
a Nevada corporation
as Sublessor
By: /s/ Glenn C, Christenson
---------------------------
Glenn C. Christenson
Executive Vice President,
Chief Financial Officer
and Treasurer
SUNSET STATION, INC.,
a Nevada corporation
as Sublessee
By: /s/ Glenn C. Christenson
----------------------------
Glenn C. Christenson
Vice President, Chief
Financial Officer and
Treasurer
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SUNSET STATION 1996 TRUST AGREEMENT
dated as of September 25, 1996
between
STATION CASINOS, INC.,
as Grantor
and
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
TRUSTEE'S AUTHORIZATIONS AND DIRECTIONS. . . . . . . . . . . . . . . . . . . 1
Section 2.1 Creation of Trust. . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Authorization to Take Certain Actions. . . . . . . . . . 1
Section 2.3 Condition Precedent to Trustee's Obligations and
Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.4 Declaration of Trusts. . . . . . . . . . . . . . . . . . 3
Section 2.5 Security Interest in the Equipment . . . . . . . . . . . 3
ARTICLE III.
COVENANTS OF GRANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1 Indemnification of Trustee . . . . . . . . . . . . . . . 3
Section 3.2 Payment of Trustee's Fees, Costs and Expenses. . . . . . 4
ARTICLE IV.
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.1 The Certificates . . . . . . . . . . . . . . . . . . . . 5
Section 4.2 Registration, Transfers, Exchanges and Cancellation
of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.3 Persons Deemed Owners. . . . . . . . . . . . . . . . . . 8
Section 4.4 Mutilated, Destroyed, Lost or Stolen Certificates. . . . 8
Section 4.5 Terms of Certificates. . . . . . . . . . . . . . . . . . 9
Section 4.6 Prepayment of Certificates . . . . . . . . . . . . . . . 9
Section 4.7 Payments from Trust Estate . . . . . . . . . . . . . . . 10
Section 4.8 Method of Payment. . . . . . . . . . . . . . . . . . . . 10
Section 4.9 Application of Payments to Investment or Yield . . . . . 11
Section 4.10 Termination of Interest in Trust Estate . . . . . . . . 11
ARTICLE V.
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE. . . . 11
Section 5.1 Rent and other Lease Payments. . . . . . . . . . . . . . 11
Section 5.2 Payments After Event of Default. . . . . . . . . . . . . 12
Section 5.3 Payments for Other Specific Purposes . . . . . . . . . . 13
Section 5.4 Other Payments . . . . . . . . . . . . . . . . . . . . . 14
Section 5.5 Deposit Account. . . . . . . . . . . . . . . . . . . . . 14
Section 5.6 Investment of Amounts Held by the Trustee. . . . . . . . 14
ARTICLE VI.
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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Section 6.1 Action Upon Event of Default . . . . . . . . . . . . . . 15
Section 6.2 Waiver of Defaults . . . . . . . . . . . . . . . . . . . 15
Section 6.3 Proceedings by Holders . . . . . . . . . . . . . . . . . 15
ARTICLE VII.
DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.1 Action Upon Lease Event of Default . . . . . . . . . . . 16
Section 7.2 Action Upon Instructions Generally . . . . . . . . . . . 17
Section 7.3 Indemnification, etc.. . . . . . . . . . . . . . . . . . 18
Section 7.4 Duties to Remove Liens and Provide Reports, etc. . . . . 18
Section 7.5 No Action Except Under Trust Agreement or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII.
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.1 Acceptance of Trusts and Duties. . . . . . . . . . . . . 18
Section 8.2 Absence of Duties Except as Specified. . . . . . . . . . 19
Section 8.3 No Representations or Warranties . . . . . . . . . . . . 19
Section 8.4 No Segregation of Monies; No Interest. . . . . . . . . . 20
Section 8.5 Reliance; Agents; Advice of Counsel. . . . . . . . . . . 20
Section 8.6 No Compensation from Holders . . . . . . . . . . . . . . 21
Section 8.7 Not Acting in Individual Capacity. . . . . . . . . . . . 21
Section 8.8 Trustee May Own Certificates, etc. . . . . . . . . . . . 21
ARTICLE IX.
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES . . . . . . . . . . . . . . . . . . 22
Section 9.1 Resignation or Removal of Trustee; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.2 Appointment of Additional and Separate Trustees. . . . . 23
ARTICLE X.
SUPPLEMENTAL TRUST AGREEMENT AND AMENDMENTS TO OPERATIVE DOCUMENTS . . . . . 26
Section 10.1 Supplemental Trust Agreement and Amendments to
Operative Documents With Consent of Holders. . . . . . . . . . . 26
Section 10.2 Supplemental Trust Agreements Without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.3 Trustee Protected . . . . . . . . . . . . . . . . . . . 26
Section 10.4 Form of Request . . . . . . . . . . . . . . . . . . . . 27
Section 10.5 Documents Mailed to Holders . . . . . . . . . . . . . . 27
Section 10.6 This Article Exclusive. . . . . . . . . . . . . . . . . 27
ARTICLE XI.
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.1 Termination Upon Performance. . . . . . . . . . . . . . 27
Section 11.2 Termination Generally . . . . . . . . . . . . . . . . . 28
ARTICLE XII.
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MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 12.1 Sale of Equipment Binding . . . . . . . . . . . . . . . 29
Section 12.2 Trust Agreement for Benefit of Holders Only . . . . . . 30
Section 12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.4 Severability. . . . . . . . . . . . . . . . . . . . . . 30
Section 12.5 Successors and Assigns. . . . . . . . . . . . . . . . . 30
Section 12.6 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . 30
Section 12.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . 30
Section 12.8 Captions and Table of Contents. . . . . . . . . . . . . 30
Section 12.9 Further Assurances. . . . . . . . . . . . . . . . . . . 31
Section 12.10 Survival of Covenants. . . . . . . . . . . . . . . . . 31
Exhibit A Form of Certificate
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<PAGE>
SUNSET STATION 1996 TRUST AGREEMENT
This SUNSET STATION 1996 TRUST AGREEMENT, dated as of September 25, 1996,
is entered into between Station Casinos, Inc., a Nevada corporation (the
"GRANTOR" or "LESSEE"), and First Security Trust Company of Nevada, a Nevada
trust company (together with its successors and assigns, the "TRUSTEE").
WHEREAS, the Grantor wishes to create a trust to acquire its interest in
the Equipment and to lease the Equipment to the Lessee pursuant to the Lease and
to issue the Certificates all in accordance with the terms and conditions of the
Participation Agreement;
AND WHEREAS, the Equipment is subject to the Sublease, which will be
entered into concurrently with entering into of the Lease;
AND WHEREAS, the Trustee is willing to accept the duties and obligations
imposed hereby on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual terms, conditions and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used but not otherwise defined herein (including those
used in the foregoing recitals) shall have the meanings specified in Appendix 1
to the Participation Agreement, dated as of the date hereof, among Lessee, the
Persons listed on Schedule I thereto and the Trustee, not individually, except
as expressly set forth therein, but as Trustee, unless the context otherwise
requires.
ARTICLE II.
TRUSTEE'S AUTHORIZATIONS AND DIRECTIONS
Section 2.1 CREATION OF TRUST. Grantor and the Trustee hereby create a
trust (the "TRUST"), which Trust shall be designated as the Sunset Station 1996
Trust.
Section 2.2 AUTHORIZATION TO TAKE CERTAIN ACTIONS. The Grantor hereby
authorizes and directs the Trustee to take, in its capacity as trustee, the
following actions:
(a) To execute and deliver the Participation Agreement, in the form
heretofore or concurrently submitted to and approved by the Holders to be
conclusively evidenced by their execution thereof;
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(b) As of the Closing Date, to execute and deliver, or to accept
the Lease, the Sublease Assignment and each of the other documents,
certificates, and agreements, in the form heretofore or concurrently
submitted to and approved by the Holders, required to be executed and
delivered or accepted by the Trustee under the terms of the Participation
Agreement with regard to the items of Equipment identified in SCHEDULE V
to the Participation Agreement;
(c) As of the Closing Date, to take the actions the Trustee is
required to take under ARTICLE II of the Participation Agreement
including the delivery of the Certificates substantially in the form
attached hereto as EXHIBIT A;
(d) From time to time, to execute, deliver or accept Certificates
of Acceptance and such documents, certificates and agreements in the form
heretofore, concurrently or at such time approved by the Holders, which
are required to be executed and delivered or accepted by the Trustee
under the terms of the Participation Agreement;
(e) Subject to the terms of this Trust Agreement: (i) to exercise
all of the rights and perform all the obligations of the Lessor under the
Lease; (ii) to exercise such rights and perform such obligations as the
Trustee shall have the right to exercise or the obligation to perform
pursuant to this Trust Agreement and the documents the Trustee is
authorized to execute and deliver or accept pursuant to SECTIONs 2.2(a)
through (d) hereof; and (iii) to execute and deliver all other
agreements, instruments and certificates contemplated by the Operative
Agreements to be executed and delivered by the Lessor; and
(f) Subject to the terms of this Trust Agreement, to take such
other action in connection with any of the foregoing as the Requisite
Holders may from time to time direct.
SECTION 2.3 CONDITION PRECEDENT TO TRUSTEE'S OBLIGATIONS AND AUTHORITY.
The obligation and authority of the Trustee to take the actions referred to in
SECTIONS 2.2(b) through (f) hereof shall be subject to the condition precedent
that on the Closing Date, the conditions set forth in the Participation
Agreement with respect to the obligation of the Holders to proceed to closing
shall have been fulfilled to the satisfaction of, or waived by, the Holders
which shall be conclusively evidenced by their payment for the Certificates
pursuant to SECTION 2.2 of the Participation Agreement.
Section 2.4 DECLARATION OF TRUSTS. The Trustee hereby declares that it
does and will hold all estate, right, title and interest in and to the
Equipment, the Operative Documents and any funds transmitted to the Trustee
pursuant to the Operative Documents to which it is a party, including all
amounts of Rent, insurance proceeds, indemnity payments, Purchase Option
payments, Proceeds from the Lessee's exercise of the Sale Option and other
payments of any kind for or with respect to the Equipment, the Lease and
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the Operative Documents (other than indemnity payments to which the Trustee,
individually, is entitled pursuant to any Operative Document), upon the
trusts hereinafter set forth (all such estate, right, title and interest
called the "TRUST ESTATE") for the use and benefit of the Holders, subject,
however, to the terms and conditions of the Operative Documents.
Section 2.5 SECURITY INTEREST IN THE EQUIPMENT. It is the intent of the
Holders that the interest in the Equipment held by the Trustee constitutes a
first priority Lien in all right, title and interest in the Equipment, for the
benefit of the Holders to secure the performance by the Lessee of its
obligations pursuant to the Lease of its obligations to the Lessor pursuant to
the other Operative Documents to which it is a party.
ARTICLE III.
COVENANTS OF GRANTOR
Section 3.1 INDEMNIFICATION OF TRUSTEE. Grantor shall assume liability
for, and shall indemnify, protect, save and keep harmless the Trustee and its
Affiliates, agents and employees (each such person called a "TRUSTEE INDEMNIFIED
PERSON") from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (other than any income taxes on fees or other compensation
received by a Trustee Indemnified Person), claims, actions, proceedings, suits,
costs (including reasonable attorneys' fees), expenses and disbursements of any
kind and nature whatsoever ("TRUST CLAIMS") imposed on, incurred by or asserted
against any Trustee Indemnified Person, in any way relating to or arising out of
this Trust Agreement, the Trust created hereby, the Operative Documents or the
performance or enforcement of any of the terms hereof or thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, sublease, possession, use, operation, maintenance,
condition, sale, return, storage or other disposition of the Equipment, or in
any way relating to or arising out of the administration of the Trust and the
Trust Estate or the action or inaction of any Trustee Indemnified Person
hereunder; PROVIDED, HOWEVER, that: (a) the Grantor shall not be required to
indemnify any Trustee Indemnified Person for any Trust Claims resulting from:
(i) acts or omissions that would constitute the willful misconduct or gross
negligence of such Trustee Indemnified Person; or (ii) such Trustee Indemnified
Person's negligent handling of monies constituting part of the Trust Estate, but
the willful misconduct or gross negligence or, if appropriate, negligence of any
one Trustee Indemnified Person shall not affect the rights of any other Trustee
Indemnified Person hereunder; and (b) the Grantor shall not be required to
indemnify the Trustee with respect to Trust Claims resulting because any
representation or warranty of the Trustee made expressly in its individual
capacity and contained in any Operative Document proves to be untrue or
inaccurate or because any covenant or agreement made or undertaken by the
Trustee in any Operative Document shall have been breached or not complied with.
The indemnities contained in this SECTION 3.1 shall inure to the benefit of each
Trustee Indemnified Person whether or not the transactions contemplated by the
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Participation Agreement are consummated and shall survive the termination of
this Trust Agreement and of the Trust created hereby, and such indemnities are
expressly made for the benefit of, and shall be enforceable by, each Trustee
Indemnified Person even if such Trustee Indemnified Person is no longer a party
to this Trust Agreement or was not a party to this Trust Agreement on the date
of the execution hereof.
Section 3.2 PAYMENT OF TRUSTEE'S FEES, COSTS AND EXPENSES. Upon 30
days' prior written notice, the Grantor shall:
(a) Pay to the Trustee for its services hereunder such fees as may
heretofore and from time to time hereafter be agreed upon by the Trustee
and the Grantor and shall reimburse the Trustee for its costs and
expenses hereunder (including reasonable counsel fees);
(b) Pay to the Trustee such fees as may be reasonably charged and
such costs and expenses (including reasonable counsel fees and expenses)
as may be reasonably incurred by the Trustee in consequence of any
direction of the Grantor given to the Trustee pursuant to SECTION 2.2
hereof; and
(c) Pay to the Trustee such fees as may be reasonably charged and
such costs and expenses (including reasonable counsel fees and expenses)
as may be reasonably incurred in consequence of the Trustee's rendering
extraordinary services or incurring extraordinary costs and expenses,
including services rendered and costs and expenses incurred in connection
with any Lease Event of Default.
ARTICLE IV.
THE CERTIFICATES
Section 4.1 THE CERTIFICATES.
(a) Certificates shall be substantially in the form of EXHIBIT A
hereto (each, a "CERTIFICATE"), and shall, upon issue, be executed by the
Grantor and delivered to the Trustee and the Trustee shall authenticate
and deliver said Certificates to the Holders entitled thereto pursuant to
the Participation Agreement. All Certificates shall be identical in all
respects except for the denominations, dates and registration numbers
thereof and shall be equally and ratably entitled as provided herein to
the benefits hereof and pursuant to the Operative Documents without
preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms
and provisions of this Trust Agreement. The Certificates are
certificated securities in registered form, within the meaning of Article
8 of the UCC.
(b) The Certificates shall be issued in an original aggregate
investment amount of $40,000,000.
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(c) Each Certificate shall be executed by a duly authorized officer
of the Grantor and shall be authenticated by manual or facsimile
signature on behalf of the Trustee by an authorized officer of the
Trustee. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed,
authorized to sign on behalf of the Grantor or the Trustee shall not be
rendered invalid, notwithstanding that such individual has ceased to be
authorized prior to the authentication and delivery of such Certificates
or does not hold such office at the date such Certificates are issued.
No Certificate shall be entitled to any benefit under this Trust
Agreement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form
provided for below executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence needed,
that such Certificate has been duly authenticated and delivered
hereunder.
This Certificate is one of the Certificates referred to in the
within-mentioned Trust Agreement.
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Trustee
By:
Name Printed:
Title:
All Certificates shall be dated the date of their authentication and
delivery.
(d) The Certificates to be issued on the Closing Date shall
evidence the entire beneficial ownership of the Trust Estate as of the
Closing Date.
Section 4.2 REGISTRATION, TRANSFERS, EXCHANGES AND CANCELLATION OF
CERTIFICATES.
(a) The Trustee shall maintain at the Corporate Trust Department a
register for the purpose of registering all Certificates and transfers
(other than transfers of a participation in a Certificate pursuant to
SECTION 6.3 of the Participation Agreement and a pledge of a Certificate)
and exchanges thereof (the "CERTIFICATE REGISTER"). A Holder that
intends to transfer a Certificate, or to exchange Certificate(s) of
different denominations shall surrender such Certificate to the Trustee
at the Corporate Trust Department, together with a written request from
such holder for the issuance of one or more new Certificates. Such
notice shall specify the denomination or denominations of such new
Certificate(s) and, in the case of a surrender for registration of
transfer, the name and address of the Person in whose name such new
Certificate(s) are to be registered together with a duly executed letter
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substantially in the form of EXHIBIT H to the Participation Agreement,
from each such transferee. Promptly upon receipt of such documents by
the Trustee, the Grantor shall execute and deliver to the Trustee and the
Trustee shall authenticate and deliver to such Holder, new Certificates
in the same aggregate original investment amount, and dated the same date
as such surrendered Certificate(s). Such new Certificate(s) shall be in
such denomination or denominations and registered in such name or names
as shall be specified in the written request from such Holder. Each
Certificate so surrendered shall be accompanied by a written instrument
of transfer duly executed by the Holder of such Certificate or its
attorney duly authorized in writing. Each new Certificate issued
pursuant to this SECTION 4.2 shall bear a notation by the Trustee of:
(i) the aggregate amounts of investment of the Certificate so surrendered
that: (1) were paid to any Holder thereof at any time prior to the
delivery of such new Certificate(s); and (2) are allocable to such new
Certificate on the basis of the respective original investment amounts
thereof; and (ii) the date to which Yield on such Certificate had been
paid to any Holder thereof at the time of such delivery. All
Certificates issued upon any registration of transfer or exchange of
Certificates shall be valid obligations of the Trust, and shall be
entitled to the same security and benefits under this Trust Agreement as
the Certificates surrendered upon such registration of transfer or
exchange. No transfer of any Certificate shall be valid unless and until
such transfer is registered on the Certificate Register maintained by the
Trustee pursuant to this SECTION 4.2.
(b) The Certificate Register shall at all reasonable times be open
for inspection by any Participant. Upon request by any Holder, or the
Grantor, the Trustee shall furnish such Person, at the expense of such
Person, a list of the names and addresses of all Holders, indicating the
respective unpaid investment amounts and numbers of the Certificates held
by Holders. Every Holder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, nor any agents of the Trustee,
shall be held accountable by reason of the disclosure of any such
information.
(c) Each Certificate surrendered to the Trustee pursuant to this
SECTION 4.2, SECTION 4.4 or SECTION 4.8 shall be canceled by the Trustee,
and no Certificate shall be issued in lieu thereof except as expressly
permitted by this SECTION 4.2 or SECTION 4.4. The Trustee shall return
all Certificates canceled by it to the Grantor.
(d) Each Certificate delivered to a Holder pursuant to SECTION 4.1
and each Certificate delivered pursuant to SECTION 4.2 shall be issued
without registration of such Certificate under the Securities Act of
1933, as amended, or under any state securities or "blue sky" law, and
without qualification of this Trust Agreement under the Trust Indenture
Act of 1939, as amended. All Certificates issued hereunder shall bear a
legend that shall read substantially as follows:
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THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES OR "BLUE SKY" LAW, AND MAY NOT BE
TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF
SUCH ACT OR LAWS.
Promptly after registration of transfer of any Certificate pursuant to
SECTION 4.2, the Trustee will give notice thereof to the Lessee and
Sublessee specifying the name and address for notices of the transferee
or transferees.
(e) If the Trustee in its individual capacity shall acquire any of
the Certificates, such acquisition shall not operate as a redemption of,
or the satisfaction of the indebtedness represented by, such Certificates
unless and until the same shall be delivered to the Trustee for
cancellation pursuant to this Trust Agreement.
(f) Notwithstanding anything herein contained to the contrary, no
transfer, assignment, pledge or sale, including any of participating
interest therein, of any Certificate shall be effective unless in
conformity with SECTION 6.2 or 6.3 (as applicable) of the Participation
Agreement.
Section 4.3 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee and any agent of the
Trustee may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
ARTICLE V and for all other purposes whatsoever, and neither the Trustee nor any
agent of the Trustee shall be affected by any notice to the contrary; PROVIDED,
HOWEVER, that in determining whether the Holders evidencing the requisite
investment amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Certificates owned by the Lessee, the
Sublessee or any Affiliate thereof shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Certificates which a Responsible Officer in the
Corporate Trust Department of the Trustee knows to be so owned shall be so
disregarded.
Section 4.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
any Certificate shall become mutilated, destroyed, lost or stolen, then upon
the written request of the Holder thereof, the Grantor shall execute and
deliver to the Trustee and the Trustee shall authenticate and deliver to such
Holder (at the expense of such Holder), a new Certificate. Such new
Certificate shall be: (i) registered in the name in which such mutilated,
destroyed, lost or stolen Certificate was registered; (ii) in the same
original investment amount as such mutilated, destroyed, lost or stolen
Certificate; and (iii) dated the date of such mutilated, destroyed, lost or
stolen Certificate. If the Certificate being replaced has become mutilated,
it shall be surrendered to the Trustee. If the Certificate being replaced
has been destroyed, lost or stolen, the Holder thereof shall furnish to the
Grantor and the Trustee such security or indemnity as
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reasonably may be required by Trustee to save the Trustee harmless from any
loss, however remote (including claims for investment of and Yield on, such
destroyed, lost or stolen Certificate), and evidence satisfactory to the
Grantor and the Trustee of the destruction, loss or theft of such Certificate
and the ownership thereof. Each Certificate issued pursuant to this SECTION
4.4 shall bear a notation by the Trustee of: (i) the aggregate amounts of
investment of such mutilated, destroyed, lost or stolen Certificate that was
paid to any holder thereof at any time prior to the delivery of such new
Certificate; and (ii) the date to which yield on such mutilated, destroyed,
lost or stolen Certificate had been paid to any holder thereof at the time of
such delivery.
Section 4.5 TERMS OF CERTIFICATES.
(a) The amount of the Certificate Advances outstanding from time to
time shall accrue Yield at the Applicable Yield Rate, and the investment
of and Yield on each Certificate shall be due and payable at the times,
provided in SECTION 2.3 of the Participation Agreement. If all or any
portion of the Certificate Advances, any Yield payable thereon or any
other amount payable under the Participation Agreement shall not be paid
when due (whether at stated maturity, acceleration thereof or otherwise),
such overdue amount shall bear interest per annum which is equal to the
Default Rate.
(b) No Certificate is subject to purchase or prepayment, in whole
or in part, except as provided in SECTION 4.6. Any prepayment of a
Certificate shall be accompanied by accrued and unpaid Yield on the
unpaid investment amount of such Certificate to the date of such purchase
or prepayment.
Section 4.6 PREPAYMENT OF CERTIFICATES.
(a) If a Casualty has occurred with respect to all or substantially
all of the Equipment, and Lessee has purchased the Equipment from the
Trustee pursuant to SECTION 9.1 of the Lease, then the Trustee shall
prepay, and there shall become due all Certificates at 100% of the unpaid
investment amount thereof, together with all accrued but unpaid Yield
thereon.
(b) If a termination of the Lease pursuant to SECTION 5.1(a) or 5.4
thereof shall occur, then the Trust shall prepay, and there shall become
due, on the Lease Termination Date all Certificates at 100% of the unpaid
investment amount thereof, together with all accrued but unpaid Yield
thereon to the Lease Termination Date, plus the premium, if any, with
respect to SECTION 5.4.
(c) The Trustee shall give notice of any prepayment of the
Certificates pursuant to this SECTION 4.6 to all Holders promptly after
the Trustee shall have received notice that such prepayment is to occur.
Such notice from the Trustee shall specify the investment amount of the
Certificates held by such Holders so to be prepaid and the date on which
such prepayment is to occur, but failure to give
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such notice to any Holder shall not affect the validity of the
proceedings for such prepayment.
Section 4.7 PAYMENTS FROM TRUST ESTATE. All payments of investment and
Yield to be made by the Trustee under this Trust Agreement shall be made only
from the income and the proceeds from the Trust Estate and only to the extent
that the Trustee shall have sufficient income or proceeds from the Trust Estate
to make such payments. Each Holder, by its acceptance of its Certificates,
agrees: (i) that it will look solely to the income and proceeds from the Trust
Estate to the extent available for distribution to such Holder as herein
provided; and (ii) that in any action or proceeding brought on such
Certificates, on the indebtedness evidenced thereby, on this Trust Agreement or
on any other Operative Document, except as expressly provided with respect to
the Trustee herein or in any other Operative Document, no deficiency or other
monetary judgment shall be sought or obtained against the Trustee for the
indebtedness evidenced by such Certificates, except as is necessary to enforce
the rights and remedies of such Holder under this Trust Agreement and the other
Operative Documents (including, but not by way of limitation, the foreclosure of
the Lien on the Equipment), in which event any such judgment shall be
enforceable against the Trustee only to the extent of the interest of the
Trustee in the Trust Estate and any such judgment shall not be enforceable by
execution or be a Lien on any of the assets of the Trustee other than the
interest of the Trustee in the Trust Estate.
Section 4.8 METHOD OF PAYMENT.
(a) The investment of, and Yield on, each Certificate shall be
payable at the Corporate Trust Department and, subject to the provisions
of SECTION 4.7, shall be paid by the Trustee by transferring by wire
transfer the amount of such payments in immediately available federal
funds to the account or accounts specified for such Holder in SCHEDULE II
to the Participation Agreement until such Holder shall have specified
otherwise by written notice to the Trustee.
(b) The Trustee shall keep a record of each payment made by the
Trustee on account of any amounts due under any of the Certificates and,
upon written request therefor from the Grantor to the Trustee, the
Trustee shall give notice to the Grantor of each such payment.
Section 4.9 APPLICATION OF PAYMENTS TO INVESTMENT OR YIELD. In the case
of each Certificate, each payment of investment thereof, and Yield thereon,
shall be applied, FIRST, to the payment of accrued but unpaid Yield on such
Certificate (including any interest on overdue investment and (to the extent
permitted by applicable law) Yield) to the date of such payment, and SECOND, the
balance, if any, remaining thereafter, to the payment of the unpaid investment
amount of such Certificate, PROVIDED that such Certificate shall not be subject
to prepayment except as provided in SECTION 4.6 or as a result of the
acceleration of the maturity thereof pursuant to SECTION 6.1 hereof.
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Section 4.10 TERMINATION OF INTEREST IN TRUST ESTATE. A Holder shall
have no further interest in, or other right with respect to, the Trust Estate
when and if: (i) the entire investment amount of, and all accrued Yield on, all
Certificates held by such Holder; (ii) all other sums payable to such Holder
pursuant to such Certificates or pursuant to any other Operative Document; and
(iii) all other obligations then due, each shall have been discharged and paid
in full in cash.
ARTICLE V.
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST ESTATE
Section 5.1 RENT AND OTHER LEASE PAYMENTS. Except as otherwise provided
in SECTION 5.2, each installment or other payment of (i) Periodic Rent pursuant
to SECTION 3.1 of the Lease; (ii) Lease Balance, Yield, and other amounts
required to be paid in the event of an early termination pursuant to ARTICLE V
of the Lease or a Casualty to all or substantially all of the Equipment pursuant
to Article IX of the Lease; (iii) Purchase Option Exercise Amount; (iv) any
overdue installment of Rent or other payment due under the Lease (and, to the
extent permitted by applicable law, interest thereon); and (v) Proceeds and Sale
Recourse Amount in the event the Lessee elects the Sale Option pursuant to
SECTION 5.1(b) of the Lease received by the Trustee shall be distributed by the
Trustee on the date such installment or payment is due from the Lessee (or as
soon thereafter as such installment or payment shall be received by the Trustee)
in an amount as shall be required to pay in full the aggregate amount of the
payment or payments of investment, and Yield (including any interest on overdue
investment and, to the extent permitted by applicable law, Yield) then due
(including by reason of notice of prepayment pursuant to SECTION 4.6 hereof),
and in case the amount so to be distributed shall be insufficient to pay the
Holders such Unpaid Investment, and Yield in full, then ratably, without
priority of one over the other, in the proportion that the aggregate amount of
such payments then due under such Certificates held by each such Holder bears to
the aggregate amount of such payments then due under all such Certificates held
by all such Holders.
Section 5.2 PAYMENTS AFTER EVENT OF DEFAULT. All payments received and
amounts held or realized by the Trustee as part of the Trust Estate at any time
when an Event of Default shall have occurred and be continuing and after the
maturity of the Certificates shall have been accelerated pursuant to SECTION 6.1
hereof; as well as all payments or amounts then held or thereafter received by
the Trustee as part of the Trust Estate, shall be distributed forthwith upon
receipt by the Trustee in the following order of priority:
FIRST: (i) so much of such payments or amounts as shall be required
to reimburse first the Trustee and then any Holder for any tax (other
than any income tax payable on Yield or paid pursuant to a Certificate
and on fees and other compensation of the Trustee), expense or other
amount owed to the Trustee or any Holder in
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connection with the collection or distribution of such payments or
amounts to the extent not previously reimbursed by the Grantor
(including, without limitation, the expenses of any sale, taking or
other proceeding, expenses in connection with realizing on any of
the Equipment in the Trust Estate, reasonable attorneys' fees and
expenses, court costs and any other reasonable expenditures
incurred or reasonable expenditures or advances made by the Trustee
or any Holder in the protection, exercise or enforcement of any
right, power or remedy upon such Event of Default whether pursuant
to SECTION 6.2 or otherwise) shall be so applied by the Trustee as
between itself and such Holders; and (ii) so much of such payments
or amounts as shall be required to pay the reasonable fees and
compensation of the Trustee in connection with acting as Trustee
not previously paid by the Grantor, shall be distributed to the
Trustee;
SECOND: (i) so much of such payments or amounts remaining as shall
be required to reimburse the then existing or prior Holders for payments
or deposits pursuant to SECTION 7.3 (to the extent not previously
reimbursed and to the extent not constituting an indemnity paid or
payable for an act constituting gross negligence or wilful misconduct)
shall be distributed to the then existing or prior Holders, ratably,
without priority of one over the other, in accordance with the amount of
the payments or deposits made by each such then existing or prior Holder
pursuant to such SECTION 7.3; and (ii) so much of such payments or
amounts remaining as shall be required to pay the then existing or prior
Holders the amounts payable to them pursuant to the provisions of SECTION
7.1, Article VIII, and SECTION 9.6 of the Participation Agreement and the
amounts of all other unpaid Obligations then due and payable to them
(other than Obligations covered by CLAUSE THIRD of this SECTION 5.2)
shall be distributed to each Holder entitled (including its predecessor
holders thereof) thereto; and in case the aggregate amount so to be paid
in accordance with CLAUSES (i) and (ii) above shall be insufficient to
pay all such amounts as aforesaid, then, ratably, without priority of one
such Person over the other, in the proportion that the amount which would
have been distributed to each such Person pursuant to this CLAUSE SECOND
but for such insufficiency bears to the aggregate amount which would have
been distributed to all such Persons pursuant to this CLAUSE SECOND but
for such insufficiency; and
THIRD, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid investment amount of, if
any, due and payable on, and all accrued but unpaid Yield (including, to
the extent permitted by applicable law, interest on Yield) on, all of the
Certificates shall be distributed to the Holders, and in case the
aggregate amount so to be distributed shall be insufficient to pay such
unpaid investment, and Yield in full as aforesaid, then, ratably, without
priority of one over the other, in the proportions that the aggregate
unpaid investment amount of, if any, due and payable on, and all accrued
but unpaid Yield to the date of distribution on, all Certificates held by
each such Holder bears
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to the aggregate unpaid investment amount of, and all accrued but
unpaid yield to the date of distribution on, all Certificates held
by all such Holders.
Section 5.3 PAYMENTS FOR OTHER SPECIFIC PURPOSES. Any payments
constituting a part of the Trust Estate received by the Trustee for which no
provision as to the application thereof is made elsewhere in this ARTICLE V and
for which provision as to the application thereof is made in the Participation
Agreement, the Lease or any other Operative Document, shall be applied to
payment to the Person who is entitled thereto in accordance with the purpose for
which such payment was made under the Participation Agreement, the Lease or such
other Operative Documents, as the case may be.
Section 5.4 OTHER PAYMENTS. Except as otherwise provided in SECTIONS
5.2 and 5.3:
(a) Any payments received by the Trustee constituting a part of the
Trust Estate for which no provision as to the application thereof is made
in the Participation Agreement, the Lease or any other Operative
Document, or elsewhere in this ARTICLE V, and
(b) All payments received and amounts realized by the Trustee under
the Lease or otherwise with respect to the Equipment, to the extent
received or realized at any time, as well as any other amounts remaining
as part of the Trust Estate, after payment in full of all unpaid
principal of, if any, due and payable on, and all accrued but unpaid
Yield on, all Certificates,
shall be promptly distributed by the Trustee in the following order of priority:
First, in the manner provided in CLAUSE FIRST of SECTION 5.2; second, in the
manner provided in CLAUSE SECOND of SECTION 5.2; and third, to the Grantor.
Section 5.5 DEPOSIT ACCOUNT. All payments or amounts received by the
Trustee pursuant to SECTION 9.1 of the Lease by reason of a Casualty shall be
held by the Trustee as part of the Trust Estate and, if the Lien on the
applicable Equipment is discharged pursuant to SECTION 11.1 hereof prior to the
time such payments or amounts are disbursed pursuant to the terms of the Lease
or distributed pursuant to SECTION 5.2 hereof shall be distributed to the
Grantor.
Section 5.6 INVESTMENT OF AMOUNTS HELD BY THE TRUSTEE. In the event
that any amounts held by the Trustee are not distributable pursuant to this
ARTICLE V promptly following receipt, such amounts shall be invested by the
Trustee from time to time as the Requisite Holders shall direct, but only in the
following securities: (i) obligations of, or guaranteed as to payment of yield
and investment by, the United States of America that mature not more than 90
days after such investment; (ii) open market commercial paper of any corporation
incorporated under the laws of the United States of America or of any State
thereof that is not an Affiliate of the Grantor, the Sublessee, or the Trustee
and that is rated "prime-1"
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or its equivalent by Moody's Investors Service, Inc. or "A-1" or its
equivalent by Standard & Poor's Corporation; or (iii) certificates of deposit
maturing within 90 days after such investment issued by commercial banks
organized under the laws of the United States of America or of any political
subdivision thereof having a combined capital and surplus in excess of
$1,000,000,000 and rated "B" or better by Thompson Bank Watch, Inc. Any
income or gain realized as a result of any such investment of such amounts
shall be applied to make up any losses resulting from any such investment and
any other income or gain so realized shall be promptly distributed to the
Grantor so long as no Event of Default shall have occurred and be continuing.
Upon incurring any losses from any such investment of such amounts, which
losses are not made up from income or gain as aforesaid, the Trustee shall
promptly notify the Holders and the Grantor thereof. The Trustee shall have
no liability for any loss resulting from any investment of such amounts
pursuant to this SECTION 5.6 other than by reason of the wilful misconduct or
gross negligence of the Trustee. Any investment of such amounts pursuant to
this SECTION 5.6 may be sold (without regard to maturity date) by the Trustee
whenever the Trustee reasonably believes such sale is necessary to make any
distribution required by this ARTICLE V and the Trust Estate has insufficient
funds therefor.
ARTICLE VI.
DEFAULT
Section 6.1 ACTION UPON EVENT OF DEFAULT. If a Lease Event of Default
shall have occurred, upon written instructions from the Requisite Holders, the
Trustee shall terminate the Lease and the Sublease and shall exercise the
remedies set forth in SECTION 10.2 of the Lease and SECTION 10.2 of the Sublease
or take such other actions as may be desired by the Requisite Holders.
Section 6.2 WAIVER OF DEFAULTS. Upon written instructions from the
Requisite Holders or all of the Holders, as applicable, the Trustee shall waive
any Event of Default and its consequences, PROVIDED that in the absence of
written instructions from all Holders, the Trustee shall not waive any Lease
Event of Default.
Section 6.3 PROCEEDINGS BY HOLDERS. No Holder shall have any right to
institute any action or proceeding at law or in equity, or in bankruptcy or
otherwise, upon or under or with respect to this Trust Agreement, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder previously shall have given to the Trustee written notice of a
Lease Event of Default and of the continuation thereof; (b) the Requisite
Holders or all of the Holders, as applicable, shall have made written request to
the Trustee to institute such action or proceeding as Trustee hereunder and
shall have offered to the Trustee such reasonable indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby; and (c) the Trustee for 30 days after its receipt of such
notice, request and offer of indemnity shall
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have failed to institute any such action or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee;
it being understood and intended, and being expressly covenanted by each
Holder with each other Holder and the Trustee, that no Holder shall have any
right in any manner whatever to affect, disturb or prejudice the rights of
any other Holder or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Trust Agreement,
except in the manner herein provided and for the ratable benefit of all
Holders.
ARTICLE VII.
DUTIES OF TRUSTEE
Section 7.1 ACTION UPON LEASE EVENT OF DEFAULT.
(a) NOTICES. In the event the Trustee shall have actual knowledge
of a Lease Event of Default or an event which with the giving of notice
and/or lapse of time could become a Lease Event of Default, including a
failure to pay Rent on the date it becomes due, and if no other notice is
required to be given with respect thereto by the Trustee hereunder, the
Trustee shall give prompt facsimile or telephonic notice (but in no event
later than the Business Day next succeeding the date on which the Trustee
has actual knowledge of such Lease Event of Default or event) thereof to
the Grantor, the Sublessee and each Holder (confirmed by written notice
sent in the manner provided in SECTION 12.3 hereof). Such notice shall
set forth in reasonable detail the circumstances of such Lease Event of
Default or event if known to the Trustee. If any event which with the
giving of notice and/or lapse of time and with respect to which the
Trustee has given notice as described above matures into a Lease Event of
Default then the Trustee shall again provide notice of such Lease Event
of Default as described above.
(b) CONDITIONS FOR ACTION. Trustee shall take such action, or
refrain from taking such action, with respect to any Lease Event of
Default as the Trustee shall be instructed in writing by the Requisite
Holders or such other percentage of the unpaid investment amount of
outstanding Certificates as may be specified herein or in the
Participation Agreement with respect to any particular action.
(c) ACTUAL KNOWLEDGE OF TRUSTEE. For all purposes of this Trust
Agreement, in the absence of actual knowledge on the part of a
Responsible Officer of the Trustee, the Trustee shall not be deemed to
have knowledge of a Lease Event of Default or an event which with the
giving of notice and/or passage of time could become a Lease Event of
Default (except in the case of the failure of the Lessee to pay any
installment of Rent after the same shall become due and except in the
case of the failure of the Lessee to maintain insurance as required under
SECTION 9.3 of the Lease if the Trustee shall have received notice of
termination or nonrenewal from an insurer or
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broker) unless notified in writing of such Lease Event of Default
or event by a Holder, the Grantor, or the Sublessee.
Section 7.2 ACTION UPON INSTRUCTIONS GENERALLY.
(a) GENERAL ACTION. Upon the written instructions at any time and
from time to time of the Requisite Holders, the Trustee shall: (i) give
such notice or direction or exercise such right, remedy or power or take
such action under the Lease or other Operative Documents as shall be
specified in such instructions; and (ii) approve as satisfactory to it
all matters required by the terms of the Participation Agreement, the
Lease or any other Operative Document to be satisfactory to the Trustee
or the Holders (unless such matter expressly requires the satisfaction of
all Holders), it being understood that without such written instructions
the Trustee shall not approve any such matter as satisfactory to it.
(b) EQUIPMENT AND TRUST ESTATE. Upon the written instructions at
any time and from time to time of the Requisite Holders, the Trustee
shall exercise such right, remedy or power or take such action hereunder
to preserve or protect the Equipment and the Trust Estate (including the
discharge of Liens) as shall be specified in such instructions.
(c) FINANCING STATEMENTS AND ASSIGNED CONTRACTS. Upon the written
instructions at any time and from time to time of any Holder, the Trustee
shall execute any financing statement (and any continuation statement
with respect to any such financing statement) or any other similar
document relating to the security interests and assignments contemplated
by the Participation Agreement, as may be specified in such instructions
(which instructions shall be accompanied by an execution form of such
financing statement or such continuation statement, as the case may be).
Section 7.3 INDEMNIFICATION, ETC. Anything in this Trust Agreement to
the contrary notwithstanding, the Trustee shall not be required to take any
action or refrain from taking any action that shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability unless
it shall have been indemnified in a manner satisfactory to it or unless, in the
reasonable judgment of the Trustee, the indemnities made by the Grantor shall be
adequate for such purpose. The Trustee shall not be required to take any
action, nor shall any other provision of this Trust Agreement be deemed to
impose a duty on the Trustee to take any action, if it shall have been advised
by counsel (which counsel may be an employee of the Trustee) that such action is
contrary to the terms hereof or of any other Operative Document or is otherwise
contrary to law.
Section 7.4 DUTIES TO REMOVE LIENS AND PROVIDE REPORTS, ETC. The
Trustee shall, in its individual capacity and at its own cost and expense,
promptly take such action as may be necessary duly to discharge all Liens on any
part of the Trust Estate that result from any act of or claim against the
Trustee in its individual capacity arising out of any event or
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condition not related to the administration of the Trust Estate. The Trustee
will furnish to each Holder with reasonable promptness after receipt thereof,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and other instruments furnished to the
Trustee hereunder or under the Lease or the Participation Agreement or any
other Operative Document, unless, in each case, the Trustee shall reasonably
believe that such Holder shall theretofore have received copies thereof.
Section 7.5 NO ACTION EXCEPT UNDER TRUST AGREEMENT OR INSTRUCTIONS. The
Trustee shall not, and shall not be required to, manage, control, use, sell,
dispose of or otherwise deal with the Equipment except: (a) In accordance with
the powers granted to, or the authority conferred upon, the Trustee pursuant to
this Trust Agreement; or (b) In accordance with the express terms hereof or with
written instructions from Holders with such percentage of the unpaid investment
amount of outstanding Certificates as may be authorized by this Trust Agreement
to deliver such instructions to the Trustee.
ARTICLE VIII.
THE TRUSTEE
Section 8.1 ACCEPTANCE OF TRUSTS AND DUTIES. The Trustee accepts the
trusts hereby created and applicable to it and agrees to perform the same but
only upon the terms of this Trust Agreement, and agrees to receive and disburse
all monies constituting part of the Trust Estate in accordance with the
provisions hereof. The Trustee shall not be answerable or accountable under any
circumstances, except: (a) for its own willful misconduct or gross negligence;
or (b) in the case of the inaccuracy of any representation or warranty expressly
made by the Trustee in its individual capacity; or (c) for the performance of
its obligations under the first sentence of SECTION 7.4 hereof or SECTION 6.1 of
the Participation Agreement.
Section 8.2 ABSENCE OF DUTIES EXCEPT AS SPECIFIED. The Trustee shall
have no duty or obligation to manage, control, use, sell, dispose of or
otherwise deal with the Equipment or any other part of the Trust Estate, or
otherwise to take or refrain from taking any action under, or in connection
with, this Trust Agreement, the Lease, the Sublease, or the Sublease Assignment,
except as expressly provided by the terms of this Trust Agreement, or as
expressly provided in written instructions from the Holders of such percentage
of the unpaid investment amount of outstanding Certificates as may be authorized
by this Trust Agreement to deliver such instructions, in each case given in
accordance with the terms hereof, and no implied duties or obligations shall be
read into this Trust Agreement against the Trustee. Except in accordance with
written instructions or requests furnished pursuant to ARTICLE VII or as
expressly provided in ARTICLE VII and SECTION 6.2 hereof, the Trustee shall have
no duty: (a) to see to any filing of any financing or continuation statements
in respect of any such filing; (b) to see to any insurance on the Equipment or
to effect
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or maintain any such insurance, whether or not the Lessee shall be in default
with respect thereto; (c) to see to the payment or discharge of any tax,
assessment or other governmental charge or any Lien of any kind owing with
respect to, or assessed or levied against, any part of the Trust Estate
(other than Liens arising by, through or under the Trustee in its individual
capacity and not related to the Operative Documents or the transactions
contemplated thereby); (d) to confirm or verify or to inquire into the
failure to receive any financial statements of the Grantor; or (e) to inspect
the Equipment at any time or ascertain or inquire as to the performance or
observance of the Lessee's covenants under the Lease.
Section 8.3 NO REPRESENTATIONS OR WARRANTIES. THE TRUSTEE MAKES:
(a) NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY
PARTICULAR PURPOSE OF THE EQUIPMENT, OR ANY OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT WHATSOEVER (except as to
absence of Lessor Liens attributable to Trustee); and (b) no representation or
warranty as to the validity or enforceability of this Trust Agreement, the
Participation Agreement, or any other Operative Document or as to the
correctness of any statement contained in any thereof, except to the extent that
any such statement is expressly made therein by the Trustee. The Trustee makes
no representation as to the value or condition of the Trust Estate or any part
thereof, as to the title of the Trustee thereto or as to the security afforded
hereby.
Section 8.4 NO SEGREGATION OF MONIES; NO INTEREST. All monies
received by the Trustee shall, until used or applied as herein provided, be held
in trust for the purpose for which they were received. Except as otherwise
provided herein, any monies received by the Trustee hereunder need not be
segregated in any manner except to the extent required by law, and such monies
may be deposited under such general conditions as may be prescribed by law in
the general banking department of the Trustee, and the Trustee shall not be
liable for any interest thereon.
Section 8.5 RELIANCE; AGENTS; ADVICE OF COUNSEL.
(a) Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, endorsement on any
Certificate, request, consent, order, certificate, report, opinion, bond
or other document or paper believed by it to be genuine and believed by
it to be signed by the proper Person or Persons. The Trustee may accept
in good faith a copy of a resolution of the Board of Directors of the
Lessee or Sublessee, certified by a Responsible Officer thereof as duly
adopted and in full force and effect, as conclusive evidence that such
resolution has been duly adopted by such Board and that the same is in
full force and effect. As to the amount of any payment to which any
Person is entitled pursuant to CLAUSES FIRST and SECOND of SECTION 5.2
hereof, the Trustee may for all purposes hereof rely on a certificate of
such Person. As to any fact or matter the manner of ascertainment of
which is not specifically described herein, or as to which the Trustee
shall deem it desirable to ascertain prior to taking, suffering or
omitting any
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action hereunder, the Trustee may for all purposes hereof rely on a
certificate of a Responsible Officer of the Lessee, Sublessee or
other appropriate Person as to such fact or matter, and such
certificate shall constitute full protection to the Trustee for any
action taken or omitted to be taken by it in good faith in reliance
thereon.
(b) In the administration of the trusts hereunder, the Trustee may
execute any of the trusts or powers hereof and perform its powers and
duties hereunder directly or through agents or attorneys and may, at the
expense of the Trust Estate (but subject to the priorities of payment set
forth in ARTICLE V), consult with counsel, accountants and (with the
prior approval of the Requisite Holders) other skilled Persons to be
selected and retained by it (other than Persons regularly in its employ),
and the Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of
any such counsel, accountants or other skilled Persons who are not
officers or employees of the Trustee or any Affiliate thereof, so long as
the Trustee shall have exercised due care in the good faith selection of
such counsel, accountant or other skilled Person and such advice or
opinion is within the scope of such Person's or Persons' particular area
of professional competence, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by the Trustee hereunder.
Section 8.6 NO COMPENSATION FROM HOLDERS. The Trustee agrees that it
shall have no right against the Holders for any fee as compensation for its
services hereunder except as expressly provided in SECTION 5.2 hereof.
Section 8.7 NOT ACTING IN INDIVIDUAL CAPACITY. In performing the trusts
hereby created, the Trustee acts solely as Trustee as herein provided and not in
its individual capacity, except as otherwise expressly provided herein.
Section 8.8 TRUSTEE MAY OWN CERTIFICATES, ETC. The Trustee, in its
individual capacity, may buy, sell, own and hold any of the Certificates and may
join in any action which any Holder may be entitled to take with like effect as
if the Trustee were not a party to this Trust Agreement. The Trustee, in its
individual capacity, may also engage in or be interested in any financial or
other transaction with the Grantor, the Sublessee, or any other party to an
Operative Document; PROVIDED that if the Trustee determines that any such
relation is in conflict with its duties under this Trust Agreement, it shall
eliminate the conflict or resign as Trustee. It also is agreed that if a Lease
Event of Default has occurred and is continuing, and if the Trustee, in its
individual capacity, is a creditor of the Grantor or the Sublessee, other than
as a Holder, then the Trustee shall terminate such credit relationship or resign
as Trustee.
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ARTICLE IX.
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
Section 9.1 RESIGNATION OR REMOVAL OF TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) The Trustee or any successor thereto may resign at any time
without cause by giving at least 30 days' prior written notice to the
Grantor, Sublessee and Holders, such resignation to be effective on the
acceptance of appointment by the successor Trustee pursuant to the
provisions of SECTION 9.1(b) hereof. In addition, the Requisite Holders
(excluding, for the purposes of the calculation of the Requisite Holders,
any Certificates held by the Trustee) may at any time remove the Trustee
without cause by an instrument in writing delivered to the Trustee,
Lessee, and Sublessee, and the Trustee shall give prompt written
notification thereof to each Holder. Such removal will be effective on
the acceptance of appointment by the successor Trustee pursuant to the
provisions of SECTION 9.1(b). In the case of the resignation or removal
of the Trustee or in case the Trustee shall become incapable of acting,
the Requisite Holders may appoint a successor Trustee by an instrument
signed by such holders. If a successor Trustee shall not have been
appointed within 30 days after such resignation or removal, the Trustee
or any Holder may apply to any court of competent jurisdiction to appoint
a successor Trustee to act until such time, if any, as a successor shall
have been appointed by the Requisite Holders as above provided. The
successor Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Trustee appointed by
the Requisite Holders as above provided.
(b) Any successor Trustee, whether appointed by a court or by the
Requisite Holders, shall execute and deliver to the Lessee, Sublessee,
each Holder and the predecessor Trustee an instrument accepting such
appointment, and thereupon such successor Trustee, without further act,
shall become vested with all the estates, properties, rights, powers and
duties of the predecessor Trustee hereunder in the trusts hereunder
applicable to it with like effect as if originally named the Trustee
herein; but nevertheless upon the written request of such successor
Trustee or the Requisite Holders, such predecessor Trustee shall execute
and deliver an instrument transferring to such successor Trustee, upon
the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Trustee, and such
predecessor Trustee shall duly assign, transfer, deliver and pay over to
such successor Trustee all monies or other property then held by such
predecessor Trustee hereunder.
(c) Any successor Trustee, however appointed, shall be a bank or
trust company organized under the laws of the United States of America or
any State thereof having a combined capital and surplus of
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at least $250,000,000, if there be such an institution willing,
able and legally qualified to perform the duties of the Trustee
hereunder upon reasonable or customary terms. Additionally, if
there be such an institution willing, able and legally qualified to
perform the duties of the Trustee hereunder upon reasonable or
customary terms, such institution shall have a Corporate Trust
Department in the State of California or Nevada.
(d) Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Trustee may be transferred, shall be
the Trustee under this Trust Agreement without further act.
Section 9.2 APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever: (i) the Trustee shall deem it necessary or prudent
to conform to any law of any jurisdiction in which any part of the Trust
Estate shall be situated or to make any claim or bring any suit with
respect to or in connection with this Trust Agreement, any other
Operative Document or any of the Equipment; or (ii) the Trustee shall be
advised by counsel satisfactory to it, that it is so necessary or prudent
in the interest of the Holders; or (iii) the Trustee shall have been
requested to do so by the Requisite Holders, then in any such case, the
Trustee shall execute and deliver a Supplemental Trust Agreement hereto
and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more Persons approved
by the Trustee, either to act as additional trustee or trustees of all or
any part of the Trust Estate, jointly with the Trustee, or to act as
separate trustee or trustees of all or any part of the Trust Estate, in
any such case with such powers consistent with this Trust Agreement as
may be provided in such Supplemental Trust Agreement hereto, and to vest
in such bank, trust company or Person as such additional trustee or
separate trustee, as the case may be, any property, title, right or power
of the Trustee consistent with this Trust Agreement deemed necessary or
advisable by the Trustee, subject to the remaining provisions of this
SECTION 9.2. The Trustee may execute, deliver and perform any such
conveyance, assignment or other instrument in writing as may be required
by any additional trustee or separate trustee for more fully and
certainly vesting in and confirming to such Person any property, title,
right or power consistent with this Trust Agreement which by the terms of
such Supplemental Trust Agreement are expressly to be conveyed or
conferred to or upon such additional trustee or separate trustee.
(b) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act, and the Trustee
shall act, subject to the following provisions and conditions:
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(i) all powers, duties, obligations and rights conferred upon
the Trustee in respect of the receipt, custody, payment of monies or the
investment of monies, shall be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such additional trustee or trustees and separate
trustee or trustees jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the Trustee
shall be incompetent, unqualified or unable to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Estate in any such jurisdiction) shall be exercised and
performed by such additional trustee or trustees or separate trustee or
trustees;
(iii) no power hereby given to, or exercisable as provided
herein by, any such additional trustee or separate trustee shall be exercised
hereunder by such additional trustee or separate trustee except, to the maximum
extent permitted by applicable law, jointly with, or with the consent of, the
Trustee; and
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, except that the Trustee
shall be liable for the consequences of its lack of reasonable care in selecting
any additional or separate trustee hereunder.
If at any time the Trustee shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be
advised by such counsel that it is no longer so necessary or prudent in
the interest of the Holders, or in the event that the Trustee shall have
been requested to do so in writing by the Requisite Holders, the Trustee
shall execute and deliver a Supplemental Trust Agreement hereto and all
other instruments and agreements necessary or proper to remove any
additional trustee or separate trustee.
(c) Any additional trustee or separate trustee may at any time by
an instrument in writing constitute the Trustee its agent or attorney-in-
fact, with full power and authority, to the extent that may be authorized
by law, to do all acts and things and exercise all discretion that it is
authorized or permitted to do or exercise, for and in its behalf and in
its name. In case any such additional trustee or separate trustee shall
die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such
additional trustee or separate trustee, as the case may be, so far as
permitted by law, shall vest in and be exercised by the Trustee, without
the appointment of a new
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successor to such additional trustee or separate trustee, unless
and until a successor is appointed in the manner hereinbefore
provided.
(d) Any request, approval or consent in writing by the Trustee to
any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take
such action as may be so requested, approved or consented to.
(e) Each additional trustee and separate trustee appointed pursuant
to this SECTION 9.2 shall be subject to, and shall have the benefit of,
this Trust Agreement as it applies to the Trustee. Notwithstanding any
other provision of this SECTION 9.2, the rights, powers, duties and
obligations of any additional trustee or separate trustee appointed
pursuant to this SECTION 9.2 shall not in any case exceed those intended
to be conferred on the Trustee hereunder.
ARTICLE X.
SUPPLEMENTAL TRUST AGREEMENT AND
AMENDMENTS TO OPERATIVE DOCUMENTS
Section 110.1 SUPPLEMENTAL TRUST AGREEMENT AND AMENDMENTS TO OPERATIVE
DOCUMENTS WITH CONSENT OF HOLDERS. At any time and from time to time, and
subject to the terms and conditions of SECTION 9.15 of the Participation
Agreement: (a) the Grantor and the Trustee shall execute a Supplemental Trust
Agreement for the purpose of adding provisions to, or changing or eliminating
provisions of, this Trust Agreement as specified in such consent; (b) the
Trustee shall (x) enter into such written amendment of or supplement to the
Lease, the Sublease or any other Operative Document to which it is party as the
Lessee or the Sublessee may agree to and as may be specified in such consent, or
(y) execute and deliver such written waiver or modification of the terms of the
Lease, the Sublease or any other Operative Document to which it is a party or
that is assigned to the Trustee hereunder as may be specified in such consent;
and (c) the Trustee shall enter into such amendment of or supplement to the
Participation Agreement as may be specified in such consent.
Section 110.2 SUPPLEMENTAL TRUST AGREEMENTS WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holder but subject to the provisions of
SECTION 10.3, at the request of the Trustee, the Grantor shall join with it
in entering into any Supplemental Trust Agreements: (i) to evidence the
succession of a new entity as the Trustee hereunder, the removal of the
Trustee, or the appointment of any co-trustee or co-trustees or any separate
or additional trustee or trustees, in each case in accordance with the terms
of ARTICLE IX; or (ii) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee, or to make any other provisions with respect
to matters arising under this Trust Agreement that shall not be inconsistent
with the provisions of this Trust Agreement, PROVIDED that
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such action shall not adversely affect the interests of the present or any
past Holder or the Trustee, and each such Holder, the Trustee, and the
Grantor shall have received an opinion of independent counsel, satisfactory
to each such party, to such effect.
Section 110.3 TRUSTEE PROTECTED. If in the opinion of the Trustee any
document required to be executed pursuant to the terms of SECTIONS 10.1 or 10.2
adversely affects any right or duty of or affects any immunity or indemnity in
favor of the Trustee under this Trust Agreement, the Participation Agreement or
any other Operative Document, the Trustee may in its discretion decline to
execute such document. With every such document required to be executed by the
Trustee pursuant to the terms of SECTIONS 10.1 or 10.2, the Trustee shall be
furnished by counsel satisfactory to the Requisite Holders with an opinion
satisfactory in form and substance to the Trustee that such document complies
with the provisions of this Trust Agreement, and that all consents required by
the terms of SECTION 10.1 in connection with the execution of such document have
been obtained. Such counsel may reasonably rely on certificates of appropriate
Persons with respect to factual matters relevant to any such opinion. The
Trustee shall be fully protected in relying on such opinion.
Section 110.4 FORM OF REQUEST. It shall not be necessary for any
written request of the Holders furnished pursuant to SECTION 10.1 to specify the
particular form of the proposed documents to be executed pursuant thereto, but
it shall be sufficient if such request shall indicate the substance thereof.
Section 110.5 DOCUMENTS MAILED TO HOLDERS. Promptly after the execution
by the Trustee of any document entered into pursuant to SECTIONS 10.1 or 10.2,
the Trustee shall mail, by first class mail, postage prepaid, a conformed copy
thereof to each Holder at its address currently shown in the Certificate
Register, but any failure to mail such conformed copies shall not impair or
affect the validity of such document.
Section 110.6 THIS ARTICLE EXCLUSIVE.
(a) This Trust Agreement may not be amended, and no term hereof may
be waived, except by a Supplemental Trust Agreement entered into in
accordance with SECTIONS 10.1 or 10.2 hereof.
(b) No term or provision of this Trust Agreement or any Certificate
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Person against whom enforcement of
the change, waiver, discharge or termination is sought; and any waiver of
the terms hereof or of any Certificate shall be effective only in the
specific instance and for the specific purpose given.
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ARTICLE XI.
TERMINATION
Section 111.1 TERMINATION UPON PERFORMANCE. This Trust Agreement and
the trusts created hereby shall terminate and this Trust Agreement shall cease
and be of no further force or effect and all of the property, rights and
interests included in the Trust Estate shall revert to and revest in the Grantor
without any other act or formality whatsoever, and the Trustee shall, upon the
written request and at the expense of the Grantor, execute and deliver to, or as
directed in writing by, the Grantor appropriate termination statements, releases
and other instruments (in due form for recording) requisite to evidence the
satisfaction and discharge of the Lease and this Trust Agreement and the
security interest created thereby with respect thereto, to release or reconvey
to the Grantor as directed by the Grantor all of the Trust Estate, freed and
discharged from the provisions contained herein and in the Lease and free of any
interest of any Holder with respect thereto and to release the Grantor from its
covenants herein contained upon the earlier of:
(a) payment in full in cash of all investment of, and all accrued
Yield on, all Certificates and all other Obligations then due to the
Trustee and any Holder (directly or through any predecessor Holders); or
(b) the sale or other final disposition of all Equipment and the
final distribution by the Trustee of all monies or other property or
proceeds constituting part of the Trust Estate in accordance with the
terms of ARTICLE V;
PROVIDED, however, that if at the time referred to in CLAUSE (b) above the
Lessee or the Sublessee shall not have fully complied with all of the terms of
each Operative Document to which such Person is a party, this Trust Agreement
and the trusts created hereby shall continue in full force and effect in
accordance with the terms thereof until such time as each of the Lessee, or the
Sublessee, has fully complied with such terms. Upon any such payment in full of
all amounts referred to in CLAUSE (a) above in accordance with this Trust
Agreement, the Trustee shall pay all remaining monies or other properties or
proceeds held by it under this Trust Agreement to the Grantor and shall give
notice to the Sublessee of such payment, execute and deliver to, or as directed
in writing by, the Grantor all appropriate instruments (in due form for
recording and filing) reasonably requested by the Grantor releasing the
Equipment, the Lease, the Sublease, the Purchase Agreements the trusts created
hereby shall terminate and shall be of no further force or effect.
Section 111.2 TERMINATION GENERALLY.
(a) In the event the Trust created hereby has not previously
terminated pursuant to the terms of SECTION 11.1, it shall terminate upon
the earliest to occur of: (i) the twentieth anniversary of the Closing
Date, unless the Requisite Holders elect to continue the
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Trust created hereby; and (ii) twenty-one years less one day after
the death of the last to survive of all descendants of John D.
Rockefeller, Jr. (except Michael Rockefeller, the son of Nelson
Rockefeller, and his descendants), who are living on the date
hereof, but, without limiting the generality of the foregoing, if
legislation shall become effective providing for the validity or
permitting the holding of assets in a trust for a period in gross
exceeding the period hereinabove stated, then this Trust Agreement
nad the trust created hereby shall not terminate as aforesaid but
shall extend to and continue in effect, but only if such
non-termination and extension shall then be valid under applicable
law, until such time as the same shall, under applicable law, cease
to be valid.
(b) Upon any termination of the Trust pursuant to the provisions of
this SECTION 11.2, the Trustee shall transfer undivided interests in the
Trust Estate to the Holders ratably based on the outstanding investment
amount of the Certificates held by such Holders without recourse or
warranty of any kind (but free of any Lessor Liens resulting from any act
of or claim against the Trustee), and, upon making such transfer and
accounting for all funds that have come into its hands, the Trustee shall
be discharged and free of any further liability hereunder with respect to
the Trust, except such liability, not payable out of the assets of the
Trust Estate, as may be shown by such accounting then to exist in
accordance with the other provisions of this Trust Agreement. No later
than the date of the termination of the Trust, the Trustee shall execute
and deliver to such Holders, or to any Person designated in writing by
such Holders a bill of sale and such other written instruments as such
Holders shall reasonably request, all in form and content reasonably
satisfactory to such Holders evidencing the transfer of title to the
Trust Estate, without recourse or warranty of any kind, but free of
Lessor Liens resulting from any act of or claim against the Trustee, to
such Holders or their designees. Any amounts received by the transferees
of the Trust Estate shall continue to be applied in the manner set forth
in ARTICLE V, hereof.
ARTICLE XII.
MISCELLANEOUS
Section 112.1 SALE OF EQUIPMENT BINDING. Any sale or other conveyance
of the Equipment by the Trustee made pursuant to the terms of this Trust
Agreement or of the Lease shall bind the Holders and shall be effective to
transfer or convey all right, title and interest of the Trustee and the Holders
in and to the Equipment. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Trustee.
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Section 112.2 TRUST AGREEMENT FOR BENEFIT OF HOLDERS ONLY. Nothing in
this Trust Agreement, whether express or implied, shall be construed to give to
any Person other than the Holders any legal or equitable right, remedy or claim
under or in respect of this Trust Agreement or any Certificate; but this Trust
Agreement shall be held for the sole and exclusive benefit of the parties hereto
and the Holders from time to time.
Section 112.3 NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices and communications provided for
herein shall be in writing and shall be duly given in accordance with, and
addressed to the address specified for such Person pursuant to, the
Participation Agreement or, in the case of a Holder, then recorded for such
Person in the Certificate Register.
Section 112.4 SEVERABILITY. Whenever possible, each provision of this
Trust Agreement shall be interpreted in such manner as to be effective and valid
under applicable law; but if any provision of this Trust 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
Trust Agreement.
Section 112.5 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and without limiting SECTION 12.2, inure
to the benefit of, the parties hereto and their respective permitted successors
and assigns and each Holder. Any request, notice, direction, consent, waiver or
other instrument or action by Holder shall bind the successors and assigns of
such holder.
Section 112.6 APPLICABLE LAW. THIS TRUST AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEVADA WITHOUT REGARD TO THE CHOICE
OF LAWS PROVISIONS THEREOF.
Section 112.7 COUNTERPARTS. This Trust Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each executed counterpart constituting an original but all
together one agreement.
Section 112.8 CAPTIONS AND TABLE OF CONTENTS. Section and caption
headings used in this Trust Agreement (including the table of contents, Exhibits
and Schedules thereto) are for convenience of reference only and shall not
affect the construction of this Trust Agreement.
Section 112.9 FURTHER ASSURANCES. The Grantor and the Trustee will
each, at the Grantor's expense, do, execute, acknowledge and deliver all and
every such further acts, deeds, agreements, instruments, conveyances, transfers
and assurances as may be necessary or appropriate in order to protect the right,
title and interest of the Trustee to the Trust Estate and the Holders in the
Trust Estate.
Section 112.10 SURVIVAL OF COVENANTS. All claims pertaining to
representations, warranties, covenants or indemnities of Grantor shall
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survive the termination of the Trust created hereby to the extent such claims
arose out of events or conditions existing prior to such termination.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be executed and delivered as of the date first above written.
Grantor:
STATION CASINOS, INC.
By: /s/ Glenn C. Christenson
-------------------------------
Glenn C. Christenson
Executive Vice President
Chief Financial Officer
and Treasurer
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Trustee:
FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity, but
solely as Trustee under the Trust
By: /s/ Nancy M. Dahl
------------------------------------
Nancy M. Dahl
Trust Officer
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STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND CONTRACTOR
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with a Guaranteed Maximum Price
-------------------------------------------------------------------
AGREEMENT
Made as of the 1st day of November, in the year of Nineteen Hundred and ninety-
five
BETWEEN the Owner: SUNSET STATION, INC.
1301 WEST SUNSET ROAD
HENDERSON, NEVADA 89014
and the Contractor: J. A. TIBERTI CONSTRUCTION COMPANY, INC.
1806 INDUSTRIAL ROAD
LAS VEGAS, NEVADA 89102
the Project is: SUNSET STATION HOTEL AND CASINO
1301 West Sunset Road
Henderson, Nevada 89014
the Architect is: Morris & Brown Architects
105 E. Reno, Suite 1
Las Vegas, NV 89119
The Owner and the Contractor agree as set forth below.
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ARTICLE 1
1.1 The Contract documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other conditions), Drawings,
Specifications, addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and modifications issued after execution of
this Agreement; these form the Contract, and are as fully a part of the contract
as if attached to this Agreement or repeated herein. The contract represents
the entire and integrated agreement between the parties hereto and supersedes
prior negotiations, representations or agreements, either written or oral. An
enumeration of the contract documents, other than Modifications, appears in
Article 16. If anything in the other Contract documents is inconsistent with
this Agreement, this Agreement shall govern.
ARTICLE 2
WORK OR THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
documents and 2.2 below, except to the extent specifically indicated in the
Contract Documents to be the responsibility of others or as follows:
SEE EXHIBIT "A" - Exclusions from the Work.
2.2 The Work shall consist of Sunset Station Hotel and Casino, which will
include a main facility area with a footprint of 360,000 square feet, plus a
twenty story, 467 room hotel tower and 80,000 square foot casino, with Keno
lounge, poker parlor and sports book areas, five full-service restaurants and
thirteen screen movie theater. The Work shall be constructed in a manner
equivalent to the manner in which other comparable hotels and casinos in Las
Vegas, Nevada have been constructed.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with all members of
the Design Team and utilize the Contractor's best skill, efforts and judgement
in furthering the interests of the Owner; to furnish efficient business
administration and supervision; to make best efforts to furnish at all times an
adequate supply of workers and materials; and to perform the Work in the best
way and most expeditious and economical manner consistent with the interests of
the Owner. The Owner agrees to exercise best efforts to enable the Contractor
to perform the Work in the best way and most expeditious manner by furnishing
and approving in a timely way, information required by the Owner and making
payments to the Contractor in accordance with requirements of the Contract
Documents.
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ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement shall be the date of this Agreement, as first
written above.
4.2 The Contractor shall achieve Substantial Completion of the entire work not
later than June 1, 1997. The Contractor's obligation to achieve Substantial
Completion by that date is conditioned and contingent upon timely receipt of all
Drawings and Specifications necessary to proceed with the orderly course of
construction. The date that Contractor is to achieve Substantial Completion is
also subject to delay by reason of changes in Drawings and Specifications
(including, but not limited to, any modifications required by Contractor
pursuant to Paragraph 14.3) and any Changes in the Work.
ARTICLE 5
CONTRACT TIME
5.1 The Owner shall pay the Contractor in current funds for the Owner's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
Designer's FF&E pursuant to Designer's Plans and Specifications -- 3%
Other Cost of Work, up to $100,000,000 -- 7%
Remaining Cost of Work -- 5%
Changes in the Work shall be subject to the above fees.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed
by the Contractor not to exceed One Hundred Twenty-One Million Dollars
($121,000,000)* subject to additions and deductions by Change Order as provided
in the Contract Documents. Such maximum sum is referred to in the Contract
Documents as the Guaranteed Maximum Price. Costs which would cause the
Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without
reimbursement by the Owner.
* (includes a $5,000,000 contingency reserve)
5.2.2 The Guaranteed Maximum Price is based upon the following alternates,
if any, which are described in the Contract Documents and are hereby accepted by
the Owners; TBD
5.2.3 The amounts agreed to for unit prices, if any, are as follows: TBD
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ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in
the Work may be determined by any of the methods listed in Subparagraph 7.3.3 of
the General Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with
the Owner's prior consent on the basis of cost plus a fee), their terms "cost"
and "fee" as used in Clause 7.3.3.3 of the General Conditions and the terms
"costs" and "a reasonable allowance for overhead and profit" as used in
subparagraph 7.3.6 of the General Conditions shall have the meanings assigned to
them in the General Conditions and shall not be modified by Articles 5, 7 and 8
of this Agreement. Adjustments to subcontracts awarded with the Owner's prior
consent on the basis of cost plus a fee shall be calculated in accordance with
the terms of those subcontracts.
6.1.3 In calculating adjustments to this Contract, the terms "cost and
"costs" as used in the above-referenced provisions of the General Conditions
shall mean the cost of the Work as defined in Article 7 of the Agreement and the
terms "fee" and "a reasonable allowance for overhead and profit" shall man the
Owner's Fee as defined in Paragraph 5.1 of this Agreement.
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE (INTENTIONALLY OMITTED)
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment of
the Contractor's Fee in the case of changes in the Work, or if the extent of
such changes is such, in the aggregate, that application of the adjustment
provisions of Paragraph 5.1 will cause substantial inequity to the Owner or
Contractor, the Contractor's Fee shall be equitably adjusted on the basis of the
Fee established for the original Work.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's agreement,
at off-site workshops.
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7.1.1.2 Wages or salaries of the Contractor's supervisory, administrative and
accounting personnel when stationed at the site with the Owner's agreement.
7.1.1.3 Wages and salaries of the Contractor's supervisory and administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production of transport of materials or equipment required for the work, but
only for that portion of their time required for the Work, with the Owner's
agreement.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the Subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over
to the Owner at the completion of the Work or, at the Owner's option, shall be
sold by the Contractor or the Owner; amounts realized, if any, from such sales
shall be credited to the Owner as a deduction from the Cost of the Work.
Equipment, materials, supplies, etc. purchased and charged to the Cost of the
Work and not consumed, will become the property of the Owner upon completion of
the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance,
dismantling and removal of materials, supplies, temporary facilities, machinery,
equipment, and hand tools not customarily owned by the construction workers,
which are provided by the Contractor at the site and fully consumed in the
performance of the Work; and cost less salvage value on such items if not fully
consumed, whether sold to others or retained by the Contractor. Cost for items
previously used by the Contractor shall mean fair market value.
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7.1.4.2 Rental charges for temporary facilities (including the trailers and
contents supplied by Contractor for the use of the Owner) machinery, equipment,
and any tools not customarily owned by the construction workers, which are
provided by the Contractor at the site, whether rented from the Contractor or
others, and costs of transportation, installation, minor repairs and
replacements, dismantling and removal thereof. Rates and quantities of
equipment rented after execution of this Agreement shall be subject to the
Owner's written approval. Rental charges for Contractor's own equipment shall
be provided to Owner for approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and
parcel delivery charges, telephone service at the site and reasonable petty cash
expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories or tests required by the Contract
Documents will not be the responsibility of the Contractor, except those related
to defective or nonconforming Work for which reimbursement is excluded by
Subparagraph 13.5.3 of the General conditions or other provisions of the
Contract Documents and which do not fall within the scope of Subparagraphs 7.2.2
through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suites or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent' provided, however, that such costs of
legal defenses, judgment and settlement shall not be included in the calculation
of the Contractor's Fee or of a Guaranteed Maximum Price, if any, and provided
that such royalties, fees and costs are not excluded by the last sentence of
Subparagraph 3.17.1 of the General Conditions or other provisions of the
Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
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7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the
extent approved in advance in writing by the Owner.
7.1.6.2 Costs incurred for on-site security personnel and equipment.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR
NONCONFORMING WORK
The cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case
of an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the
Contractor or the Contractor's foremen, engineers or superintendents, or other
supervisory, administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph
7.2.2, provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not recoverable by the Contractor from others and the
Contractor is not compensated therefore by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or supplied by
a Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier or others.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel
stationed at the Contractor's principal office or offices other than the site
office, except as specifically provided in clauses 7.1.1.2 and 7.1.1.3 or as may
be provided in Article 14.
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8.1.2 Expenses of the Contractor's principal office and offices other than
the site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the
Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically
provided in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph
13.5 of this Agreement, costs due to the fault or negligence of the Contractor,
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
8.1.9 Bonuses paid to Contractor's or Subcontractors' employees.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall
accrue to the Owner. Trade discounts, rebates, refunds and amounts received
from sales of surplus materials and equipment shall accrue to the Owner, and the
Contractor shall make provisions so that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1. shall be credited to the Owner as a deduction from the Cost of
the Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the contractor does not customarily
perform with the Contractor's own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The
Contractor shall obtain bids from Subcontractors and from suppliers of materials
or equipment fabricated especially for the Work and shall deliver such bids to
the Owner. The Owner will then determine, with the advice of the Contractor
which bids will be accepted. The Owner may designate specific persons or
entities from whom the Contractor shall obtain bids; however, if a Guaranteed
Maximum price has been established, the Owner may
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not prohibit the Contractor from obtaining bids from others. The Contractor
shall not be required to contract with anyone to whom the Contractor has
reasonable objection.
10.2. If a Guaranteed Maximum Price has been established and a specific
bidder among those whose bids are delivered by the Contractor to the Owner (1)
is recommended to the owner by the Contractor; (2) is qualified to perform that
portion of the work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity recommended to the Owner by the Contractor and
the amount of the subcontract or other agreement actually signed with the person
or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment
provisions of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of
cost plus a fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
the Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Owner by the
Contractor, the Owner shall make progress payments on account of the Contract
Sum to the Contractor as provide below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one
calendar month ending on the last day of the month.
12.3 Provided an Application for Payment is received by the Owner no later
than the 1st day of the month, the Owner shall make payment to the Contractor
not later than the 25th day of that same month. If an Application for Payment is
received by the Owner after the application date fixed above, payment shall be
made by the Owner not later than 25 calendar days after the Owner receives the
Application for Payment.
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12.4 With each Application for Payment the Contractor shall submit
payrolls, petty cash accounts, receipted invoices of invoices with check
vouchers attached, and any other evidence required by the Owner to demonstrate
that cash disbursements already made by the Contractor on account of the Cost of
the Work equal or exceed (1) progress payments already received by the
Contractor; less (2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the present
Application for Payment, plus (4) retainage provided in Subparagraph 12.5.4, if
any, applicable to prior progress payments. The Contractor shall include with
the Application for Payment an appropriate conditional lien release covering the
Work and materials that are the subject of the payment request.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent
schedule of values submitted by the Contractor in accordance with the Contract
Documents. The schedule of values shall allocate the entire Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as
the Owner may require. This schedule, unless objected to by the Owner, shall be
used as a basis for reviewing the Contractor's Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Guaranteed Maximum price allocated to that portion of
the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum price properly allocable
to completed Work as determined by multiplying to percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work described in Section 6.1.1, amounts
not in dispute may be included as provided in Subparagraph 7.3.7 of the General
Conditions, even though the Guaranteed Maximum price has not yet been adjusted
by Change Order.
12.5.3.2 Add that portion of the Guaranteed Maximum price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work, or, if approved in advance by the Owner, suitably
stored off-site at a location agreed upon in writing.
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12.5.3.3 Add the Contractor's Fee, less retainage if any, as per the schedule
included under Article 12.5.4. Contractor's Fee shall be computed upon the Cost
of the Work described in the two preceding Clauses at the rate stated in
Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in that
Paragraph shall be an amount which bears the same ratio to that fixed-sum Fee as
the Cost of the Work in the two preceding Clauses bears to a reasonable estimate
of the probably Cost of the Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Owner has withheld or
nullified an Application for Payment as provided in Paragraph 9.5 of the General
Conditions.
12.5.4 Until the Work is 50% complete, retainage shall be 10%. Thereafter,
retainage shall be withheld only for Subcontractor Work as provided in 12.7.
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
(INTENTIONALLY OMITTED)
12.7 Except with the Owner's prior approval, payments to Subcontractors
included in the Contractor's Applications for Payment shall not exceed an amount
for each Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to
completed work as determined by multiplying the percentage completion of each
portion of the Subcontractor's Work by the share of the total Subcontract Sum
allocated to that portion in the Subcontractor's schedule of values, less
retainage of ten percent (10%). Pending final determination of amounts to be
paid to the Subcontractor for changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions even though
the Subcontract Sum has not yet been adjusted by Change Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing, less retainage of ten
percent (10%).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to
the Contractor.
12.7.4 Subtract amounts, if any, for which the Owner has withheld or
nullified an Application for Payment to the Contractor for reasons which are the
fault of the Subcontractor.
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12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor,
a sum sufficient to increase the total payments to the Subcontractor to one
hundred percent (100%) of the Subcontract Sum, less amounts, if any, for
incomplete Work and unsettled claims; and, if final completion of the entire
work is thereafter materially delayed through no fault of the Subcontractor, add
any additional amounts payable on account of Work of the Subcontractor in
accordance with Subparagraph 9.10.3. of the General Conditions.
12.7.6 Notwithstanding the foregoing provisions of Paragraph 12.7, with
respect to certain Subcontractors approved by Owner, 10% retainage shall be
withheld until the Subcontractor Work is 50% complete, with no retainage
withheld thereafter.
The Subcontract Sum is the total amount stipulated in the subcontract to be paid
by the Contractor to the Subcontractor for the subcontractor's performance of
the Subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site, except for those suppliers of FF&E goods which
require a down payment, or except for proforma payment, prior to shipment of the
goods.
12.9 In taking action on the Contractor's Application for Payment, the
Owner shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be deemed to represent
that the Owner has made a detailed examination, audit or arithmetic verification
of the documentation submitted in accordance with Paragraph 12.4 or other
supporting data; that the Owner has made exhaustive or continuous on-site
inspections or that the Owner has made examinations to ascertain how or for what
purposes the Contractor has used amounts previously paid on account of the
Contract. Such examinations, audits and verifications, if required by the
Owner, will be performed by the Owner's accountants acting in the sole interest
of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1)
the Contract has been fully performed by the Contractor except for the
Contractor's responsibility to correct defective or nonconforming Work, as
provided in Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; (2) a final
Application for Payment and a final accounting of the Cost of the Work have been
submitted by the Contractor and reviewed by the Owner's accountants and other
agents; and such final payment shall be made by the Owner not more than 30 days
after the approval of the Application for Payment.
13.2 The amount of the final payment shall be calculated as follows:
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13.2.1 Take the sum of the cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price.
13.2.2 Subtract amounts, if any, for which the Owner withholds, in whole or
in part, as provided in Subparagraph 9.5.1 of the General Conditions or other
provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants or other agents will review and report in
writing on the Contractor's final accounting within 30 calendar days after
delivery of the final accounting to the Owner by the Contractor. Based upon
such Cost of Work as the Owner's accountants report to be substantiated by the
Contractor's final accounting, and provided the other conditions of Paragraph
13.1 have been met, the Owner will, within five calendar days after receipt of
the written report of the Owner's accountants, either approve a final
Application for Payment with a copy to the Contractor, or notify the Contractor
in writing of the reasons for withholding a payment as provided in subparagraph
9.5.1 of the General Conditions. The time periods stated in this Paragraph 13.3
supersede those stated in Subparagraph 9.4.1 of the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as
substantiated by the Contractor's final accounting to be less than claimed by
the Contractor, the Contractor shall be entitled to demand arbitration of the
disputed amount. Such demand for arbitration shall be made by the Contractor
within 30 days after the Contractor's receipt of Owner's decision on the final
Application for Payment; failure to demand arbitration within this 30-day period
shall result in the substantiated amount reported by the Owner's accountants
becoming binding on the Contractor. Pending a final resolution by arbitration,
the Owner shall pay the Contractor the amount not in dispute.
13.5 If, subsequent to final payment and at the Owner's request, the
Contractor incurs costs described in Article 7 and not excluded by Article 8 to
correct defective or nonconforming Work, the Owner shall reimburse the
Contractor such costs and the Contractor's Fee applicable thereto on the same
basis as if such costs had been incurred prior to final payment, but not in
excess of the Guaranteed Maximum Price, if any. If the Contractor has
participated in savings as provided in Paragraph 5.2, the amount of such savings
shall be recalculated and appropriate credit given to the Owner in determining
the net amount to be paid by the Owner to the Contractor.
13.6 The final Application for Payment shall be received by the Owner no
later than 120 days from the date of final completion. All amounts due and
owing must be submitted within this 120 day period. Requests for payments
received more than 120 days after final completion shall not be paid and shall
be the sole responsibility of the Contractor.
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ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the
General Conditions or another Contract Document, the reference refers to that
provision as amended or supplemented by other provisions of the Contract
Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from
the date payment is due at the rate of (2) points above Prime.
14.3 If the Cost of the Work attributable to a portion of the Work depicted
or described in any Drawing or Specifications would, in Contractor's reasonably
exercised judgement, cause the total Cost of the Work and Contractor's fee to
exceed $116,000,000, as that amount may be supplemented, from time to time, by
contingency reserve allocation made by contractor after first consulting with
Owner, then Contractor shall have the right to require modification of those
Drawings or Specifications without cost to Contractor to have that portion of
the Cost of the Work appropriately reduced. Owner shall have the right to have
those modifications to Drawings or Specifications made in a manner satisfactory
to Owner so long as the required cost reductions are obtained. Contractor, and
only Contractor, shall have the right to allocate contingency reserve, but shall
do so only after having first consulted with Owner.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in
Article 14 of the General Conditions; however, the amount to be paid to the
Contractor under Subparagraph 14.1.2 of the General Conditions shall not exceed
the amount the Contractor would be entitled to receive under Paragraph 15.3
below and in no event will payments to the Contractor exceed the Guaranteed
Maximum Price.
15.2 The Contract may be terminated by the Owner for cause as provided in
Article 14 of the General Conditions or for the Owner's Convenience; however,
the amount, if any, to be paid to the Contractor under Subparagraph 14.2.4 of
the General Conditions shall not cause the Guaranteed Maximum Price to be
exceeded, nor shall it exceed the amount the Contractor would be entitled to
receive under Paragraph 15.3 below.
15.3 If the Contract is terminated by the Owner then, subject to Paragraph
15.2, the Owner shall then pay the Contractor an amount calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the
date of termination at the rate stated in Paragraph 5.1.
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15.3.3 Subtract the aggregate of previous payments made by the Owner.
15.3.3 The Owner shall also pay the Contractor fair compensation, either by
purchase or rental at the election of the Owner, for any equipment owned by the
Contractor which the Owner elects to retain and which is not otherwise included
in the Cost of the Work under Subparagraph 15.3.1. To the extent that the Owner
elects to take legal assignment of subcontracts and purchase orders (including
rental agreements), the Contractor shall, as a condition of receiving the
payments referred to in this Article 15, execute and deliver all such papers and
take all such steps, including the legal assignment of such subcontracts and
other contractual rights of the Contractor, as the Owner may require for the
purpose of fully vesting in the Owner the rights and benefits of the Contractor
under such subcontracts or purchase orders.
15.4 The Work may be suspended by the owner as provided in Article 14 of
the General Conditions; in such case, the Guaranteed Maximum price, if any,
shall be increased as provided in Subparagraph 14.3.2 of the General Conditions
except that the term "cost of performance of the Contract" in that Subparagraph
shall be understood to mean the cost of the work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after
execution of this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Form of Agreement Between Owner and
Contractor.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, 1987 edition, AIA Document A201 except in such cases as, and then
only to the extent that, those conditions are inconsistent with this Contract.
The parties agree to endeavor in good faith to agree upon and prepare a revised
set of General Conditions more consistent with this Contract.
16.1.3 The supplementary and other Conditions of the Contract are those
contained in the Project Specifications, as of 8/12/96, for Divisions 1 through
16, as enumerated in Exhibit C.
16.1.4 The specifications are those contained in the Project Manual dated as
in Paragraph 16.1.3, for Divisions 1 through 16 as enumerated on Exhibit C.
16.1.5 The Project Drawings as enumerated on Exhibit B.
This agreement is entered into as of the day and year first written and is
executed in at least two original copies of which one is to be delivered to the
Contractor, and the other to the Owner.
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OWNER CONTRACTOR
/s/ Blake L. Sartini /s/ J. Tito Tiberti
- ------------------------- --------------------------
(Signature) (Signature)
Blake L. Sartini J. Tito Tiberti
- ------------------------- --------------------------
(Print Name) (Print Name)
/s/ Thomas I Moore
- -------------------------
(Signature)
Thomas I Moore
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(Print Name)
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