AGREEMENT
REGARDING PRE-NEGOTIATED
RESTRUCTURING
FITZGERALDS GAMING CORPORATION
FITZGERALDS BLACK HAWK, INC.
FITZGERALDS BLACK HAWK II, INC.
FITZGERALDS LAS VEGAS, INC.
FITZGERALDS MISSISSIPPI, INC.
FITZGERALDS RENO, INC.
FITZGERALDS SOUTH, INC.
101 MAIN STREET, Limited Liability Company
FITZGERALDS INCORPORATED
FITZGERALDS FREMONT EXPERIENCE CORPORATION
and
Philip D. Griffith
Michael E. McPherson
Max L. Page
Paul H. Manske
and
MEMBERS OF INFORMAL COMMITTEE OF HOLDERS OF
12.25% SENIOR SECURED NOTES DUE 2004
December 1, 2000
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TABLE OF CONTENTS
PAGE
RECITALS ..............................................................1
AGREEMENT ..............................................................2
Article I Definitions...................................................2
Article II General Terms of Restructuring...............................10
Section 2.1 General Purpose of Agreement...........................10
Section 2.2 Acknowledgment of Obligations..........................11
Section 2.3 Acknowledgment of Security Interests...................11
Section 2.4 Acknowledgement of Binding Effect of
Documents..............................................11
Section 2.5 No Other Waivers; Reservations of Rights...............11
Article III Liquidation of Operating Companies and the Chapter
11 Cases.....................................................12
Section 3.1 Sales of Operating Companies and
Commencement of Chapter 11 Cases.......................12
Section 3.2 Sale Negotiations......................................13
Section 3.3 Certain Agreements to Cooperate and Other
Rights Respecting Claims Purportedly Owned
by Fitzgeralds Sugar Creek, Inc........................14
Section 3.4 Forbearance by Consenting Noteholders and
the Indenture Trustee..................................14
Section 3.5 Consenting Noteholder Representation...................14
Section 3.6 Treatment of FGC Equity Interests......................14
Section 3.7 Treatment of Subsidiary Equity Interests...............14
Section 3.8 Pre-Petition Cash Distribution to Certain
Unsecured Creditors....................................15
Section 3.9 Treatment of the Foothill Claim........................16
Section 3.10 Certain Obligations in respect of Official
Noteholder Committee...................................16
Article IV Treatment of Noteholder Claims...............................16
Section 4.1 Pre-Petition Cash Distribution.........................16
Section 4.2 Additional Excess Cash Distributions...................16
Section 4.3 Distribution of Sale Proceeds..........................17
Article V Senior Management Incentive Program..........................17
Section 5.1 Senior Management Role.................................17
Section 5.2 Cash Distribution Incentive............................18
Section 5.3 Senior Management's Ownership of Nevada
Purchase Notes.........................................20
Section 5.4 Retention and Severance................................20
Section 5.5 Certain Agreements with Senior Management
Regarding Compensation Clawback and
Non-Compete Agreements.................................21
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Section 5.6 Senior Management Employment Agreements and
Compensation...........................................22
Section 5.7 Bankruptcy Court Approval..............................23
Section 5.8 Agreement to Waive Claims by Senior
Management.............................................23
Section 5.9 Replacement of Executives..............................24
Section 5.10 Waiver of all FSI Warrants.............................24
Article VI Liquidating Trust............................................24
Article VII Lockup and Conditions on Transfer of Notes...................25
Section 7.1 Reserved...............................................25
Section 7.2 Restrictions On Transfer of Notes, Claims
and Interests..........................................25
Section 7.3 Material Reliance......................................26
Section 7.4 Remedies...............................................26
Article VIII Representations and Warranties...............................27
Section 8.1 Senior Management......................................27
Section 8.2 Debtors and Senior Management..........................27
Section 8.3 Consenting Noteholders.................................29
Article IX Bankruptcy Process...........................................30
Section 9.1 Bankruptcy Filing......................................30
Section 9.2 Support of Agreement and Restructuring.................30
Section 9.3 No Improper Solicitation...............................32
Section 9.4 Official Noteholder Committee..........................32
Section 9.5 Debtors' Professionals.................................32
Section 9.6 Rights of Parties in the Event the Indenture
Trustee Acts in a Manner inconsistent with
this Agreement.........................................33
Article X Conduct of Business..........................................33
Section 10.1 Conduct of Business....................................33
Section 10.2 Capital Expenditures...................................35
Article XI Conditions Subsequent, Defaults and Remedies.................35
Section 11.1 Debtors' Right to Terminate Agreement Upon
Condition Subsequent...................................35
Section 11.2 Consenting Noteholders Right to Terminate
Agreement Upon Condition Subsequent....................36
Section 11.3 Senior Management's Right to Terminate
Agreement Upon Condition Subsequent....................36
Section 11.4 Consenting Noteholder Default..........................37
Section 11.5 Remedies in the Event of a Consenting
Noteholder Default.....................................38
Section 11.6 Debtors' Default.......................................38
Section 11.7 Remedies in the Event of a Debtors' Default............39
Section 11.8 Senior Management Default..............................39
Section 11.9 Remedies in the Event of a Senior Management
Default................................................40
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Section 11.10 Limited Right To Terminate Agreement By
Consenting Noteholders.................................40
Section 11.11 Limitation on Right To Terminate Agreement
By the Debtors' or Senior Managements'
Default................................................42
Section 11.12 Termination Due to Failure to Settle Papers
and Orders.............................................42
Article XII Miscellaneous................................................42
Section 12.1 Successors and Assigns.................................42
Section 12.2 Successors and Assigns.................................42
Section 12.3 Notices................................................43
Section 12.4 Amendments.............................................45
Section 12.5 Enforcement............................................45
Section 12.6 Headings...............................................45
Section 12.7 Counterparts...........................................45
Section 12.8 Entire Agreement.......................................45
Section 12.9 Time Is of the Essence.................................45
Section 12.10 Extension of Senior Management's Employment............45
Section 12.11 Effect of Termination of This Agreement................45
Section 12.12 Jurisdiction; Waiver of Jury Trial.....................45
<PAGE>
EXHIBIT LIST
EXHIBITS TO
AGREEMENT REGARDING PRE-NEGOTIATED RESTRUCTURING
Exhibit "1" Protocol Motion
Exhibit "2" Form of Escrow Agreement for the Retention and Severance Payment
(See Section 7.2(b))
Exhibit "3" Compensation Motion
Exhibit "4" Form of Liquidating Trust Agreement
Exhibit "5" Form of Transferee Agreement
Exhibit "6" Form of Legal Opinion
Exhibit "7" List of Subsidiaries
Exhibit "8" Agreement Regarding Use of Cash Collateral
Exhibit "9" Interim Fee Procedures Motion and Order
Schedule 2.3 Liens
Schedule 8.1 Claims/Interests
<PAGE>
This RESTRUCTURING AGREEMENT dated as of December 1, 2000 (this
"Agreement") is entered into by and among Fitzgeralds Gaming Corporation, a
Nevada corporation ("FGC") and the following Subsidiaries; Fitzgeralds
Mississippi, Inc. a Mississippi corporation, ("FMI"), 101 Main Street, Limited
Liability Company, a Colorado limited-liability company ("101 Main"),
Fitzgeralds Reno, Inc., a Nevada corporation ("FRI") and Fitzgeralds Las Vegas,
Inc., a Nevada corporation ("FLVI" collectively with FMI, 101 Main and FRI, the
"Operating Companies"), Fitzgeralds Black Hawk, Inc. ("FBHI") a Nevada
corporation, Fitzgeralds Black Hawk II, Inc. ("FBHII"), a Colorado corporation,
Fitzgeralds Fremont Experience Corporation, a Nevada corporation ("FFEC"),
Fitzgeralds South, Inc. ("FSI"), a Nevada corporation, Fitzgeralds Incorporated,
a Nevada corporation ("FI" and collectively with FGC, FBHI, FBHII, FFEC and FSI
and the Operating Companies, the "Debtors") and Philip D. Griffith, Michael E.
McPherson, Paul H. Manske and Max L. Page (each an "Executive" and collectively,
"Senior Management"), and with various funds and accounts advised by affiliates
of Putnam Investment Management, Inc., The Putnam Advisory Company and Putnam
Fiduciary Trust Company identified specifically on the signature pages hereto
(collectively, "Putnam"), Morgan Stanley Dean Witter High Yield Securities,
Inc., Morgan Stanley Dean Witter High Income Advantage Trust, and Morgan Stanley
Dean Witter High Income Advantage Trust II, Morgan Stanley Dean Witter High
Income Advantage III, Morgan Stanley Dean Witter Variable Investment Series High
Yield Portfolio, Morgan Stanley Dean Witter Diversified Income Trust, and Morgan
Stanley Dean Witter Select Dimensions Investment Series--The Diversified Income
Portfolio (collectively, "MSDW"), various affiliates of Contrarian Capital
Management, L.L.C. and Contrarian Capital Advisors, L.L.C. (collectively,
"Contrarian"), Prudential High Yield Fund Inc. and The Prudential Series Fund
Inc., High Yield Bond Portfolio (collectively, "Prudential").
RECITALS
WHEREAS, pursuant to that certain Indenture dated as of December 31, 1997,
(the "Indenture") by and among FGC as obligor; the Operating Companies, FSI, FI,
FBHI, FFEC and FBHII as guarantors (the "Guarantors"); and The Bank of New York,
a New York banking corporation, and any successor in interest (the "Indenture
Trustee"), as trustee thereunder, FGC has issued $205,000,000 principal amount
of its 12.25% Senior Secured Notes due 2004 (the "Notes"); and
WHEREAS, FGC is currently in default of certain of its obligations with
respect to the Notes including, among other things, its failure to make interest
payments due thereunder on June 15, 1999, December 15, 1999 and June 15, 2000,
which failures constitute "Events of Default" under the Indenture; and
WHEREAS, the Debtors, Senior Management and the Consenting Noteholders
believe that the fair market value of the real and personal property securing
the Notes is less than the total outstanding principal and interest due under
the Notes, and that the fair market value of Debtors' real and personal property
not securing the Notes is less than the amount of the unsecured deficiency claim
of the Noteholders; and
WHEREAS, the parties' primary objective in this restructuring is to
maximize the value of the Noteholders' recoveries in as much as the obligations
<PAGE>
owed by the Debtors to the Noteholders constitute in excess of 90% of the
Debtors' liabilities, and the parties' desire to obtain this objective through
an expeditious and orderly sale of the Operating Companies as going concerns by
asset and/or stock sales and the distribution of the net proceeds therefrom; and
WHEREAS, the Consenting Noteholders and the Debtors are desirous of
maintaining the stability of operations and gaming licensing during the sale of
the stock and/or assets of the Operating Companies, and have determined that it
is important to retain Senior Management; each Executive has advised the
Consenting Noteholders and the Debtors that, subject to the conditions set forth
in this Agreement, each Executive is prepared to remain in such employ and
forego alternative employment opportunities in favor of remaining with the
Debtors through the Liquidation Date and the Cash Distribution Incentive and
Retention Payment have been developed and negotiated (and as incorporated in the
Chapter 11 Senior Management Retention and Severance Program entered into by
Debtors and Senior Management) to provide an incentive for Senior Management to
remain with the Debtors, thereby enhancing the probability that maximum sale
proceeds will be realized from the sale of the assets (or the stock) of the
Operating Companies and the sale of the remaining assets of FGC in an
expeditious manner.
WHEREAS, certain of the Executives are licensed under gaming laws and
regulations applicable to the Debtors and own a substantial portion of Existing
Common Stock.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtors, Senior Management and where applicable, each of the
Executives and the Consenting Noteholders (severally and neither jointly nor
jointly and severally) hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following capitalized terms shall have
the following meanings:
"101 Main" has the same meaning as set forth in the Preamble to this
Agreement, and is a wholly owned subsidiary of FBHII.
"363 Motion" means each motion(s) filed by one or more of the Debtors
seeking an order authorizing the sale of the assets of one or more Operating
Companies, or the stock of such companies, free and clear of Liens pursuant to
Section 363 of the Bankruptcy Code and the assignment (and in some cases the
assumption) of certain assumed executory contracts and unexpired leases pursuant
to Section 365 of the Bankruptcy Code, as set forth in the Protocol Motion.
"Affiliate" has the same meaning as the term "affiliate" in the Indenture.
"Agreement" means this Restructuring Agreement.
"Article" means an Article of this Agreement, unless the context otherwise
indicates.
<PAGE>
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, Title 11,
United States Code, as now in effect or hereafter amended, 11 U.S.C. ss.ss. 101
ET SEQ.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Nevada, Northern Division.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure,
promulgated pursuant to 28 U.S.C. ss. 2075 and the Local Rules of Practice of
the United States Bankruptcy Court, District of Nevada as applicable from time
to time during the Chapter 11 Cases.
"Beneficial Owner" has the meaning set forth in Section 7.2.
"Best Rejected Offer" means with respect to the assets (or the stock) of
each Operating Company, the Rejected Offer with the highest proposed purchase
price.
"Bonus Formula" has the meaning set forth in Section 5.6.
"Business Day" means any day except Saturday, Sunday, or a day in which
commercial banks in the state of Nevada or state of New York are authorized or
required by law to close.
"Cash Collateral Stipulation" has the meaning set forth in Section 9.1.
"Cash Distribution Incentive" has the meaning set forth in Section 5.2.
"Chapter 11 Cases" has the meaning set forth in Article II.
"Compensation Motion" has the meaning set forth in Section 5.7.
"Confirmation Date" means the date upon which the Bankruptcy Court enters
its order confirming the Plan for FGC.
"Consenting Noteholders" means, collectively, (i) Putnam, MSDW, Contrarian
and Prudential, (ii) any Transferees to whom a transfer of any Notes has been
effected by any Consenting Noteholder after the date hereof and (iii) any
Noteholders that are Affiliates of any Transferees.
"Contrarian" has the meaning set forth in the Preamble to this Agreement.
"Court Approval Date" has the meaning set forth in Section 5.2.
"Debtors" has the meaning set forth in the Preamble to this Agreement.
"Debtors' Professionals" means Gordon & Silver, Ltd., KPMG, LLP, Arthur
Andersen, LLP, Hughes, Hubbard and Reed, Deloitte & Touche LLP and such other
professionals retained by the Debtors to advise and represent them in the
Restructuring and in the Chapter 11 Cases.
"Deemed Sales Prices" means the sales price at which the assets (or stock)
of each Operating Company are ultimately sold, including a credit bid by the
Indenture Trustee; provided, however, that if a bid for the assets or stock of
any Operating Company made at any auction is not accepted by the Indenture
<PAGE>
Trustee and the auction is terminated, the last bid before such auction was
terminated shall be the Deemed Sales Price of such Operating Company.
"Default Date" has the meaning set forth in Section 5.2.
"Default Extension Period" with respect to each Operating Company shall be
a period of three months plus the time to obtain Bankruptcy Court and gaming
regulatory approvals of a new sale transaction.
"Delay Extension Period" has the meaning set forth in Section 5.2.
"Discount Rate" has the meaning set forth in Section 5.2.
"Distributable Cash" means the sum of: (a) all Excess Cash Distributions
paid to the Indenture Trustee; (b) net cash and non-cash consideration received
by the Indenture Trustee or the beneficiaries of the Liquidating Trust from the
sales of assets (or stock) of Operating Companies and the Deemed Sales Price
(without duplication); (c) all Purchase Notes received by the Debtors; (d) the
Nevada Purchase Notes received by the Debtors; (e) the proceeds of the Net
Residual Assets; (f) the amount of the Retention Payment; (g) the amount paid to
Houlihan Lokey by FGC and/or the other Debtors in excess of $600,000.00; (h) the
sum of each Higher Offer Amount; and (i) the Deemed Sales Price to the extent
not included in subpart (b) of this paragraph. No component of Distributable
Cash shall be reduced by the Cash Distribution Incentive payment(s) when
determining Distributable Cash.
"Distribution Date" has the meaning set forth in Section 5.2.
"Effective Date" means the later of the first Business Day following the
closing date of the sale of the last of the assets (or stock) of the Operating
Companies or the first Business Day that is at least eleven calendar days after
the Confirmation Date of the FGC Plan.
"Events of Default" as used in the Recitals and Article II of this
Agreement shall have the meaning provided in the Indenture.
"Excess Cash" means $13,000,000 distributed pursuant to Section 4.1 of
this Agreement and, with respect to any applicable period after the Petition
Date, all cash and all cash equivalents held by the Debtors (excluding
Restricted Cash and the Retention Payment to the extent not included in the
definition of Restricted Cash) in Excess of $15,000,000.00 PLUS the applicable
Purchase Agreement Cash Reserve PLUS the amount of any bid protection (i.e.
Breakup fee) or expense reimbursement then pending in an application or stated
in an order therefore .
"Excess Cash Distributions" has the meaning set forth in Section 4.2.
"Executive" has the meaning set forth in the Preamble to this Agreement.
"Executive Claims/Interests" has the meaning set forth in Section 7.2.
"Executive Payment" has the meaning set forth in Section 5.5.
<PAGE>
"Existing Common Stock" means all the outstanding and existing common
stock and related options and warrants (if any) of FGC.
"Existing Preferred Stock" means all of the outstanding and existing
preferred stock of FGC and related options and warrants, including the
cumulative redeemable preferred stock of FGC issued pursuant to a Certificate of
Designation of Preferences and Rights dated the 8th day of December 1995.
"Extended Transactions" has the meaning set forth in Section 5.2.
"FBHI" has the same meaning set forth in the Preamble to this Agreement,
and is a wholly owned subsidiary of FI.
"FBHII" has the same meaning set forth in the Preamble to this Agreement,
and is a wholly owned subsidiary of FBHI.
"FFEC" has the meaning set forth in the Preamble of this Agreement, and is
a wholly owned subsidiary of FLVI.
"FI" has the same meaning set forth in the Preamble to this Agreement, and
is a wholly owned subsidiary of FGC.
"FLVI" has the same meaning set forth in the Preamble to this Agreement,
and is a wholly owned subsidiary of FSI.
"FAMI" has the same meaning set forth in Section 5.8 and is a Non-Debtor
Affiliate.
"Final Order" means an order, judgment or other decree of the Bankruptcy
Court which has not been appealed, vacated, reversed, modified or amended or
stayed, and for which the time to appeal or seek review or rehearing has
expired.
"FM" has the same meaning set forth in Section 5.8 and is a non-Debtor
Affiliate.
"FMI" has the same meaning set forth in the Preamble to this Agreement,
and is a wholly owned subsidiary of FSI.
"FRI" has the same meaning set forth in the Preamble to this Agreement,
and is a wholly owned subsidiary of FGC.
"FSI" has the meaning set forth in the Preamble to this Agreement, and is
a wholly owned subsidiary of FGC.
"Fitzgeralds Black Hawk" means the assets comprising the Fitzgeralds Black
Hawk Casino owned and operated by 101 Main.
"Fitzgeralds Las Vegas" means the assets comprising the Fitzgeralds Las
Vegas Hotel and Casino owned and operated by FLVI.
<PAGE>
"Fitzgeralds Reno" means the assets comprising the Fitzgeralds Reno Hotel
and Casino owned and operated by FRI.
"Fitzgeralds Tunica" means the assets comprising the Fitzgeralds Tunica
Hotel and Casino owned and operated by FMI.
"Foothill" means Foothill Capital Corporation, a California corporation.
"FSI Warrants" means any warrants to purchase shares of common stock of
FSI, formally known as Fitzgeralds Gaming Corporation, issued in connection with
the issuance of $36,000,000 in aggregate amount of Senior Secured Notes in
February 1994.
"Guarantors" has the meaning set forth in the Recitals to this Agreement.
"Higher Offer Amount" means with respect to the assets or stock of each
Operating Company, the difference between: (a) the Best Rejected Offer; and (b)
the Deemed Sales Price; PROVIDED, HOWEVER, if (a) is less than (b), the Higher
Offer Amount shall be deemed to equal zero. For purposes of calculating the
Higher Offer Amount, the assets (or stock) of any Operating Company, which
remain unsold as of the Liquidation Date, shall have a Deemed Sales Price of
zero only if there was no bid at the auction other than the credit bid of the
Indenture Trustee.
"Houlihan Lokey" means Houlihan Lokey Howard Zukin Capital.
"Indenture" has the meaning set forth in the Recitals to this Agreement.
"Indenture Trustee" has the meaning set forth in the Recitals to this
Agreement.
"Informal Committee" means the informal committee of Noteholders comprised
of Consenting Noteholders signatory hereto.
"Informal Committee Professionals" means Ropes & Gray and Houlihan Lokey
and such other professionals retained by the Informal Committee from time to
time.
"Interim Fee Procedures Motion and Order" has the meaning set forth in
Sections 9.4 and 9.5.
"Legal Opinion" has the meaning set forth in Section 7.2.
"Leveraged Offer(s)" means any offer to acquire one or both of the Nevada
Properties, which among other things, is conditioned upon the applicable selling
Debtor accepting a Nevada Purchase Note(s) as consideration.
"Lien" has the meaning set forth in Section 101(37) of the Bankruptcy
Code.
"Liquidation Date" means the date which is the later of: (a) December 31,
2001; (b) the termination of the last Delay Extension Period; and (c) the
termination of the last Default Extension Period.
<PAGE>
"Minimum Spread" means an amount equal to 500 basis points plus the
product of 20 basis points times the difference between 25% and the percentage
of shareholders' equity as a portion of total financing debt and equity
capitalization of the Buyer on the closing date of the sale.
"Motions" means individually and collectively the Protocol Motion,
Compensation Motion, 363 Motion, Motion to Approve the Cash Collateral
Stipulation and the Interim Fee Procedures Motion.
"MSDW" has the meaning set forth in the Preamble to this Agreement.
"Net Distributable Cash" means cash and non-cash consideration available
for distribution to the Indenture Trustee (and the Noteholders) and shall equal
the Distributable Cash less the sum of: (a) the Cash Distribution Incentive
payments; (b) the Retention Payment; (c) the amount paid to Houlihan Lokey by
FGC and/or the other Debtors in excess of $600,000.00; and (d) to the extent any
Higher Offer Amounts greater than zero are included in Distributable Cash, the
sum of each such Higher Offer Amount and the portion of value ultimately
realized from the sale of the assets (or stock) of each individual unsold
Operating Company to which each such individual Higher Offer Amount relates.
"Net Residual Assets" means an amount equal to the difference between: (a)
the Residual Assets, minus (b) the Tail Liability.
"Nevada Club, Inc." has the meaning set forth in Section 5.8 and is a
wholly owned subsidiary of FGC and a Non-Debtor Affiliate.
"Nevada Properties" means Fitzgeralds Las Vegas and Fitzgeralds Reno and
"Nevada Property" means either of the Nevada Properties.
"Nevada Purchase Note(s)" means a note issued (or to be issued) by a
purchaser in connection with the acquisition of one or both of the Nevada
Properties. Each Nevada Purchase Note shall have terms, which are no less
favorable to the Debtors than the Nevada Purchase Note Terms.
"Nevada Purchase Note Terms" means in respect of a Nevada Purchase Note:
(a) securing the obligations under such Nevada Purchase Note with a first
priority lien, mortgage and security interest on all assets of the Operating
Company having been sold in respect of that Nevada Purchase Note; (b) a maturity
date (without acceleration) of the principal of all interest on such Nevada
Purchase Note not later than the sixth anniversary of its making; (c)
representations, warranties, defaults and restrictive covenants on operation and
financing activities of the maker that are customary for senior secured
indebtedness in the gaming industry; (d) a principal amount that does not exceed
85% of the purchase price for such Operating Company; (e) interest payable in
cash not less than semi-annually; and (f) an interest rate not less than the sum
of the Minimum Spread plus the interest rate on U.S. Treasury Notes as of the
date of the closing with the same maturity date as such Nevada Purchase Note.
"Non-Debtor Affiliates" has the meaning set forth in Section 5.8.
<PAGE>
"Noteholders" means any beneficial holder of Notes.
"Notes" has the meaning set forth in the Recitals to this Agreement.
"Official Noteholder Committee" means an official committee as provided
for by Section 1102(a)(1) of the Bankruptcy Code, the majority of members of
which are Consenting Noteholders.
"Operating Cash" shall mean, with respect to the Operating Companies as a
group, cash and cash equivalents (exclusive of Restricted Cash) in the total
amount of $13 million. With respect to each individual Operating Company,
Operating Cash shall mean cash and cash equivalents (exclusive of Restricted
Cash) in the following amounts: FRI - $3 million; 101 Main - $2.5 million; FLVI
- $3.5 million; and FMI $4 million.
"Operating Companies" has the meaning set forth in the Preamble to this
Agreement and "Operating Company" means any of the Operating Companies.
"Operating Pleadings" has the same meaning set forth in Section 9.1.
"Petition Date" means the date that the Debtors file their petitions under
Chapter 11 with the Bankruptcy Court.
"Petition Pleadings" has the meaning set forth in Section 9.1.
"Pre-Petition Cash Distribution" has the meaning set forth in Section 4.1.
"Pre-Petition Unsecured Payment" has the meaning set forth in Section 3.8.
"Properties" means, collectively, Fitzgeralds Black Hawk, Fitzgeralds Las
Vegas, Fitzgeralds Reno and Fitzgeralds Tunica. "Property" means any of the
Properties.
"Plan" means plan(s) of reorganization to be proposed by the Debtors on
terms consistent and in accordance with this Agreement, which plan(s) are in
form and substance reasonably acceptable to the Consenting Noteholders.
"Protocol Motion" means the Motion for Order Approving Procedures for Sale
of Assets Free and Clear of Liens, Claims and Interest and Assumption and
Assignment of Certain Executory Contracts and Unexpired Leases, in substantially
the form attached hereto as Exhibit "1," to be filed on the Petition Date for
the purposes of establishing the procedures by which sales of Operating
Companies shall be documented, advertised and brought before the Bankruptcy
Court for approval.
"Prudential" has the meaning set forth in the Preamble to this Agreement.
"Purchase Agreement Cash Reserve" means, at all times when the Debtors are
party to definitive purchase agreements for a number of Operating Companies
listed below, the amount in the following chart:
<PAGE>
<TABLE>
<CAPTION>
# OF OPERATING COMPANIES AMOUNT
UNDER P & S CONTRACTS
<S> <C>
0 $0
1 $3,000,000
2 $4,000,000
3 $5,000,000
4 $7,500,000
</TABLE>
"Purchase Note(s)" means a note issued (or to be issued) by a purchaser in
favor of FMI or 101 Main (or both as the case may be) in connection with the
acquisition of Fitzgeralds Black Hawk and/or Fitzgeralds Tunica.
"Putnam" has the meaning set forth in the Preamble to this Agreement.
"Qualified Offer" means a cash offer with respect to Fitzgeralds Black
Hawk and Fitzgeralds Tunica, and means either a cash offer or a Leveraged Offer
with respect to either Fitzgeralds Las Vegas or Fitzgeralds Reno. Such offer(s)
shall be from a party that more likely than not can close the proposed
transaction, including obtaining any necessary financing (excluding any
financing which consists of a Nevada Purchase Note) and required licensing
approvals, and shall contain substantially all of the non-financial material
terms and conditions contained in the Purchase and Sale Agreement attached as
Exhibit "2" to the Protocol Motion.
"Rejected Offer" means any Qualified Offer (excluding any Leveraged Offer
made by any Executive or his Affiliates) received for the assets (or the stock)
of any of the Operating Companies of which FGC recommends the acceptance, but
which the Informal Committee (or the Official Noteholder Committee, as the case
may be) or Indenture Trustee elects to reject.
"Residual Assets" means, without duplication of any other component of
Distributable Cash, all tangible and intangible assets belonging to the Debtors
and to the Liquidating Trust which, as of the Liquidation Date, are not a
Purchase Note(s), Nevada Purchase Note(s) or operating assets (or stock) of any
Operating Company that has not been sold.
"Restricted Cash" means cash which, in accordance with generally accepted
accounting principles ("GAAP") consistently applied, is properly classified on
the balance sheet of FGC and/or any of its subsidiaries as "restricted." The
$2,400,000.00 placed in escrow for the Retention Payment and/or any unfunded
portion thereof shall automatically be considered Restricted Cash
notwithstanding requirements pursuant to GAAP to classify such amounts
otherwise.
"Restructuring" has the meaning set forth in Article II.
"Retention Payment" has the meaning set forth in Section 5.4.
"Section" means a Section of this Agreement unless the context otherwise
indicates.
"Security Documents" as used in Article II of this Agreement shall have
the meaning provided in the Indenture.
<PAGE>
"Senior Management" has the meaning set forth in the Preamble to this
Agreement.
"Senior Management Affiliate" has the meaning set forth in Section 10.1.
"Senior Management Incentive Program" means the Cash Distribution
Incentive and Retention Payment payable to Senior Management as set forth in
Article V and the Executive Payment.
"Subject Parties" has the meaning set forth in Section 7.2.
"Successors" has the meaning set forth in Section 7.2.
"Subsidiaries" means FRI, 101 Main, FMI, FI, FSI, FBHI, FBHII, FFEC and
FLVI.
"Tail Liability" is any liability (excluding the Notes) of any of the
Debtors not assumed in connection with a purchase of the assets or the stock of
the Operating Companies.
"Transfer" has the meaning set forth in Section 7.2.
"Transferee" has the meaning set forth in Section 7.2 of this Agreement.
"Transferee Agreement" has the meaning set forth in Section 7.2.
"Transferor" has the meaning set forth in Section 7.2.
"Unsecured Debt Cap" has the meaning set forth in Section 3.8.
"UST" means the Office of the United States Trustee.
ARTICLE II
GENERAL TERMS OF RESTRUCTURING
SECTION 2.1 GENERAL PURPOSE OF AGREEMENT. The parties to this Agreement
have agreed to a restructuring of the Debtors which shall be implemented by the
Debtors commencing cases under Chapter 11 of the Bankruptcy Code (the "Chapter
11 Cases") in Bankruptcy Court (the "Restructuring"). The Debtors, Senior
Management and the Consenting Noteholders have concluded that the enterprise
value of the Debtors (including separate sales of the Operating Companies'
assets or stock) is not sufficient to pay all claims in respect of the Notes in
full, and therefore no distribution will be made to holders of Existing Common
Stock, Existing Preferred Stock and the FSI Warrants. The Debtors in
coordination and cooperation with the Informal Committee will seek purchasers
for the assets (or the stock) of the Operating Companies during the period prior
to the filing of the Chapter 11 Cases. In order to accomplish this orderly
liquidation, the Debtors shall file petitions for relief under Chapter 11 of the
Bankruptcy Code and proceed by way of 363 Motions(s) and/or Plan(s) to obtain
approval of sales agreements with such purchasers in accordance with the
Protocol Motion, and in the event sales agreements are not entered into for the
sale of the assets (or the stock) of all of the Operating Companies, to sell the
assets (or the stock) of any remaining Operating Companies through an auction
process before the Bankruptcy Court. The Restructuring will provide for the
<PAGE>
Indenture Trustee (and thereby, the Noteholders) to receive the Net
Distributable Cash. Additionally, given the regulatory approvals needed to
accomplish the Restructuring, and in recognition of the need to retain Senior
Management in order to insure continuity and compliance with all gaming
regulations and licensing requirements in the Debtors' operations during the
Restructuring, the Senior Management Incentive Program will be adopted by the
Debtors as a preventative measure in order to retain key executives and
adequately compensate them for their continued employment with the Debtors
during the Restructuring and to incentivise Senior Management to obtain the
highest return for the Noteholders. The summary of the Restructuring set forth
in this Section 2.1 is qualified in its entirety by the other provisions of this
Agreement, which provide a more detailed description of the terms and conditions
of the Restructuring.
SECTION 2.2 ACKNOWLEDGMENT OF OBLIGATIONS. FGC and the Guarantors
acknowledge, confirm and agree that as of the date hereof, FGC and the
Guarantors are indebted to the Indenture Trustee in the principal amount of
$205,000,000 with respect to the Notes, together with accrued interest of
approximately $56,800,000, plus certain charges and expenses of the Indenture
Trustee. Such amounts, and fees, costs, expenses and other charges now or
hereafter payable under the Indenture and the Security Documents are
unconditionally owing by FGC and the Guarantors without offset, defense or
counterclaim by the Debtors of any kind, nature or description whatsoever,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
SECTION 2.3 ACKNOWLEDGMENT OF SECURITY INTERESTS. FGC and the Guarantors
hereby acknowledge, confirm and agree that as of the date hereof, the Indenture
Trustee (for the benefit of the Noteholders) has and shall continue to have
valid, enforceable and perfected liens upon and security interest in the
collateral heretofore granted to the Indenture Trustee pursuant to the Security
Documents (except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting creditors' rights
generally with respect to enforceability or by equitable principles relating to
enforceability), subject only to the liens described on Schedule 2.3 not
exceeding the amount listed thereon.
SECTION 2.4 ACKNOWLEDGEMENT OF BINDING EFFECT OF DOCUMENTS. FGC and the
Guarantors hereby acknowledge, confirm and agree that as of the date hereof: (a)
each of the Security Documents to which FGC or any Guarantor is a party has been
duly executed and delivered by FGC or such Guarantors and each is in full force
and effect, (b) the agreements and obligations of FGC and the Guarantors
contained in the Security Documents constitute legal, valid and binding
obligations of FGC and the Guarantors, as the case may be, enforceable against
FGC and the Guarantors in accordance with their respective terms, and neither
FGC nor any Guarantor has any valid defense to the enforcement of such
obligations, except as legality, validity and enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability, (c) the agreements and obligations of FGC and the
Guarantors contained in this Agreement constitute legal, valid and binding
obligations of FGC and the Guarantors in accordance with their terms, subject to
entry of any Bankruptcy Court orders necessary to carry out the transactions
provided for in this Agreement.
<PAGE>
SECTION 2.5 NO OTHER WAIVERS; RESERVATIONS OF RIGHTS.
(A) The Consenting Noteholders have not waived, and are not by this
Agreement waiving, any Events of Default which may be continuing on the
date hereof or any Events of Default which may occur after the date hereof
(whether the same or similar to the Existing Default or otherwise), and
the Consenting Noteholders have not agreed to forbear with respect to any
of its rights or remedies concerning any Events of Default except as
provided herein.
(B) Subject to this Agreement, the Consenting Noteholders reserve
the right, in their discretion, to exercise any or all of their rights and
remedies (and to direct the Indenture Trustee with respect to its rights
and remedies) under the Indenture and the other Security Documents as a
result of any Events of Default which may be continuing on the date hereof
or any Event of Default which may occur after the date hereof, and the
Consenting Noteholders and the Indenture Trustee have not waived any of
such rights or remedies, and nothing in this Agreement, and no delay on
its part in exercising any such rights or remedies, should be construed as
a waiver of any such rights or remedies.
(C) Except as expressly agreed herein, no Debtor or Executive or any
combination thereof has waived, and by the execution of this Agreement
shall not be deemed to waive any right or remedy, whether at law, in
equity, or under any agreement, regardless of form, in respect to any
person, including the Noteholders, Consenting Noteholders the Informal
Committee (or the Official Noteholders Committee as the case may be) or
the Indenture Trustee, or any document or agreement, including the Notes,
the Indenture or any guarantee.
ARTICLE III
LIQUIDATION OF OPERATING COMPANIES AND THE CHAPTER 11 CASES
SECTION 3.1 SALES OF OPERATING COMPANIES AND COMMENCEMENT OF CHAPTER 11
CASES
(A) MARKETING AND SALE OF OPERATING COMPANIES. (i) The Debtors shall
prepare marketing materials not later than January 2, 2001 and, subject to
any "no shop" agreement entered into by any of the Debtors, as permitted
by Section 3.1(b) of this Agreement, shall market the Operating Companies
on the terms and conditions substantially as set forth in the Protocol
Motion. (ii) If a Definitive Purchase and Sale Agreement (here and
hereinafter in this Agreement, as defined in the Protocol Motion) is
agreed to for the sale of two or more of the Operating Companies' assets,
and the purchaser under such agreement has waived all due diligence
contingencies under such agreement on or before December 4, 2000, then the
Debtors shall commence the Chapter 11 Cases by December 5, 2000, and
within ten (10) Business Days thereafter shall file a 363 Motion to
approve the sale subject of such agreement, free and clear of Liens
subject to the terms and conditions of such agreement and this Agreement.
In any other event, the Debtors shall file the Chapter 11 Cases no later
than January 19, 2001 to effectuate the orderly liquidation of the
Operating Companies. Thereafter, in accordance with the Protocol Motion,
the Debtors shall file the appropriate 363 Motion or Plans, as the case
may be, to sell the assets (or the stock) of the Operating Companies.
Although it is contemplated that the sales will be of the assets of the
<PAGE>
Operating Companies, nothing herein shall preclude the sale of the stock
of an Operating Company by the Debtors. Subject to Section 10.1(d) and
(e), during the term of this Agreement, the Debtors will not enter into an
agreement to sell any of the assets (or stock) of the Operating Companies
without the consent of the Consenting Noteholders who are at the time
beneficial owners (or record owners) of a majority of the principal amount
of Notes.
(B) AGREEMENT WITH PURCHASER. Debtors with the approval of the
Consenting Noteholders may enter into "no shop" agreements with
prospective purchasers, whereby the Debtors may agree not to, directly or
indirectly, solicit or encourage, initiate or enter into discussions or
transactions, or provide information regarding any applicable Operating
Company to any person concerning the acquisition of such Operating Company
for periods of time prior to and/or subsequent to the Petition Date. If as
a result of such an agreement, any order, motion, plan or proceeding to
approve a Definitive Purchase and Sale Agreement with such purchaser is
delayed or postponed by the Bankruptcy Court as a result of the "No Shop"
agreement, then the Distribution Date and the date of December 31, 2001 as
set forth in the Liquidation Date definition and Sections 5.2, 5.4 and
12.10 of this Agreement shall be extended for a period of time equal to
the duration of the postponement or delay ordered by the Bankruptcy Court
due to such "no shop" provision.
(C) AUCTION OF ASSETS OF REMAINING OPERATING COMPANIES. In the event
a Definitive Purchase and Sale Agreement has not been reached regarding a
sale with respect to one or more of the Operating Companies' assets (or
stock) by the Petition Date, the Debtors shall continue to market and
shall cause any unsold Operating Companies' assets (or stock) to be sold
by auction conducted by the Bankruptcy Court on or about June 15, 2001,
pursuant to the procedures set forth in the Protocol Motion.
Any term in this Section 3.1 to the contrary notwithstanding, the provisions of
Section 3.1 are subject to Sections 5.1 and 5.2 of this Agreement.
SECTION 3.2 SALE NEGOTIATIONS. The Informal Committee shall have the right
to participate with the Debtors in negotiations with potential purchasers of the
assets and/or stock of the Operating Companies. The Debtors shall keep the
Informal Committee, through the Informal Committee Professionals, informed as to
the status of the solicitation of purchasers and all negotiations. The Informal
Committee may designate two of its members along with the Informal Committee
Professionals to participate with the Debtors in such negotiations; PROVIDED,
HOWEVER, that upon Debtors' request, only one such member, together with the
Informal Committee Professionals, shall participate in any particular meeting
with potential purchasers. All sales and solicitation materials are subject to
review by the Informal Committee's financial advisors prior to dissemination to
potential purchasers. The Informal Committee's financial advisor shall be
informed of all written and oral communications with potential purchasers. All
draft purchase and sale documentation shall be provided to the Informal
Committee Professionals upon receipt by the Debtors and/or Senior Management,
and to the extent prepared by the Debtors, the Debtors' Professionals or Senior
Management, prior to dissemination to potential purchasers. Upon the
commencement of the Chapter 11 Cases, if the U.S. Trustee appoints an Official
Noteholder Committee, then the Official Noteholder Committee shall participate
in the negotiations with potential purchasers in lieu of the Informal Committee.
<PAGE>
SECTION 3.3 CERTAIN AGREEMENTS TO COOPERATE AND OTHER RIGHTS RESPECTING
CLAIMS PURPORTEDLY OWNED BY FITZGERALDS SUGAR CREEK, INC. The Debtors, the
Consenting Noteholders and Senior Management shall attempt to resolve on or
before December 8, 2000 the dispute which has arisen concerning the ownership
and prosecution of an action in respect of gaming licensing and gaming operation
in Missouri, which involved Fitzgeralds Sugar Creek, Inc., a revoked Missouri
corporation. Any resolution shall be subject to Bankruptcy Court approval. If
the Debtors, the Consenting Noteholders and Senior Management cannot resolve
this dispute by the December 8, 2000 deadline, it is agreed that Philip D.
Griffith shall have the right to seek Bankruptcy Court adjudication of the
rights to ownership of the prosecution of any actions regarding such Missouri
gaming licensing and gaming operation by motion notwithstanding Bankruptcy Rule
7001. The motion may be heard on an order shortening time on notice of the
Informal Committee (or the Official Noteholder Committee, as the case may be)
and the other Executives. The actions by Philip D. Griffith to pursue such a
motion would, notwithstanding any other term in this Agreement, not constitute a
violation of this Agreement.
SECTION 3.4 FORBEARANCE BY CONSENTING NOTEHOLDERS AND THE INDENTURE
TRUSTEE. Upon execution hereof, each Consenting Noteholder shall, until the
Liquidation Date (i) refrain from filing, recording or serving (or causing to be
filed, recorded or served) any notice of foreclosure or default, and shall not
take, or instruct the Indenture Trustee, Informal Committee (or the Official
Noteholder Committee, as the case may be) or any of their professionals to take,
any other action to foreclose upon any of the collateral securing the Notes or
the obligations of FGC under the Indenture (including Sections 6.2 and 6.5
thereof) or any guarantee relating thereto, and (ii) take such actions on a
timely basis as provided for in Sections 6.4 and 6.5 of the Indenture to
instruct and direct the Indenture Trustee to refrain from filing any such notice
or taking any other action to pursue any remedy or enforce an "Event of Default"
under the Indenture; PROVIDED, however, that the Consenting Noteholders shall
not be required to indemnify the Indenture Trustee.
SECTION 3.5 CONSENTING NOTEHOLDER REPRESENTATION. Both prior to and after
the Petition Date, the Debtors Professionals and the Informal Committee
Professionals shall continue to cooperate with one another, and the Debtors
shall pay such Informal Committee Professionals in accordance with existing
procedures and compensation agreements. Subsequent to the Petition Date, the
Debtors shall pay the Informal Committee's Professionals or, alternatively, in
the event an Official Noteholder Committee is appointed, the Official Noteholder
Committee's Professionals, only pursuant to the Cash Collateral Stipulation or
Bankruptcy Court order.
SECTION 3.6 TREATMENT OF FGC EQUITY INTERESTS. On the Effective Date of
the Plan for FGC, the Existing Common Stock, Existing Preferred Stock and the
FSI Warrants shall be cancelled and extinguished. Such holders shall receive
nothing under the Plan and shall not receive any equity or other interest in any
of the Debtors (as reorganized) or any other consideration in exchange for the
cancellation of the Existing Common Stock, Existing Preferred Stock and the FSI
Warrants.
SECTION 3.7 TREATMENT OF SUBSIDIARY EQUITY INTERESTS. No later than the
Effective Date of the Plan for FGC, all Existing Common Stock of the
Subsidiaries shall have been sold or extinguished and all remaining assets of
the Subsidiaries liquidated and transferred to FGC. The FFEC Common Stock may be
<PAGE>
conveyed as part of the purchase of Fitzgeralds Las Vegas and all obligations of
FFEC assumed by the purchaser of Fitzgeralds Las Vegas.
SECTION 3.8 PRE-PETITION CASH DISTRIBUTION TO CERTAIN UNSECURED
CREDITORS.
(A) Until the Petition Date, the Debtors will continue to pay their
outstanding undisputed, non-contingent and ordinary course unsecured debts
in the ordinary course of business and remain current with all such
creditors. It is the parties' intention to eliminate the potential for
pre-petition outstanding undisputed, non-contingent, ordinary course, and
unsubordinated, unsecured debts/claims and otherwise avoid any delay or
disruption of vendor services to the Operating Companies; the Debtors
intend to pay, shortly before the Petition Date, all outstanding
undisputed, non-contingent, ordinary course, unsubordinated, unsecured
claims (the "Pre-Petition Unsecured Payment"). To the extent that any
unsecured creditors' claims of the Debtors (exclusive of the deficiency
claim of the Noteholders and any claims subordinated thereto and payroll
and payroll- related claims) exist as of the Petition Date, the Plan shall
provide that on the Effective Date, those general unsecured claims which
are not paid in full pursuant to the Operating Pleadings, and which are
not subordinated to any deficiency claim of the Indenture Trustee, shall
be paid in full, provided such claims, including anticipated rejection
claims arising under Section 365 of the Bankruptcy Code, do not exceed
$4,000,000 in the aggregate, excluding payroll and payroll-related
expenses (the "Unsecured Debt Cap").
(B) In the event unsecured creditors' claims of the Debtors
(exclusive of the deficiency claim of the Noteholders, any claims
subordinated thereto and payroll and payroll-related claims), as of any
applicable claims bar date, (and any anticipated rejection claims arising
under Section 365 of the Bankruptcy Code) exceed the Unsecured Debt Cap,
at the election of Consenting Noteholders who are at the time beneficial
owners (or record holders) of a majority of the principal amount of the
Notes, the Debtors shall propose and support a Plan that classifies and
treats those general unsecured claims, including rejection claims, similar
to the deficiency claim of the Indenture Trustee, and the Consenting
Noteholders shall direct the Indenture Trustee, the Informal Committee (or
the Official Noteholders Committee, as the case may be) and their
professionals to support such a Plan before the Bankruptcy Court. The
Consenting Noteholders agree to vote all of their claims against and
interest in the Debtors for such a Plan, except to the extent such claims
or interests are deemed by operation of the Bankruptcy Code to have
accepted or rejected the Plan. If the Debtors fail to propose and support
such a Plan at the request of Consenting Noteholders, who are beneficial
owners (or record owners) of a majority of a principal amount of Notes,
the Debtors agree to the termination of any remaining portion of the
exclusivity period solely in favor of the Consenting Noteholders. Each
Executive shall also vote all of the claims against and interests in the
Debtors that he owns, or of which he has the power to control the vote in
favor of such a Plan, except to the extent such claims or interests are
deemed by operation of the Bankruptcy Code to have accepted or rejected
the Plan. In this regard, the Debtors agree to provide the Consenting
Noteholders who at the time are the beneficial or record owners of a
majority of the principal amount of the Notes and proposing such a Plan
with information necessary to prepare a disclosure statement.
<PAGE>
SECTION 3.9 TREATMENT OF THE FOOTHILL CLAIM. Debtors shall use their best
efforts to obtain a reconveyance of the Foothill Liens prior to the Petition
Dates and in this regard to pay all contractual sums due Foothill. In the event
that the Foothill Liens are not released prior to the Petition Date, Debtors
shall continue their efforts to obtain voluntary reconveyances of the Foothill
Liens, but if unsuccessful, Foothill shall be treated as unimpaired under the
Plan(s) of the Debtors and shall be paid the amount of its allowed claim no
later than with the closing of the first purchase of an Operating Company.
SECTION 3.10 CERTAIN OBLIGATIONS IN RESPECT OF OFFICIAL NOTEHOLDER
COMMITTEE. Nothing in this Agreement shall deemed to require a Consenting
Noteholder to serve on an Official Committee of Noteholders; PROVIDED, however,
any Consenting Noteholder who becomes a member of an Official Noteholders
Committee shall not remain on that committee if such member is required by this
Agreement to take any action which would violate its duties as a committee
member. Debtors agree to support a motion by the Official Noteholders Committee
to permit trading by such members subject to appropriate Chinese Wall
restrictions.
ARTICLE IV
TREATMENT OF NOTEHOLDER CLAIMS
SECTION 4.1 PRE-PETITION EXCESS CASH DISTRIBUTION. Subject to the
condition precedent that this Agreement has been duly executed by all parties
hereto, within three (3) Business Days after the execution of this Agreement but
not later than one (1) Business Day before the Petition Date, FGC shall
distribute by wire transfer to the Indenture Trustee for the benefit of the
Noteholders Excess Cash in the amount of $13,000,000, to be applied to unpaid
and accrued Indenture Trustee's fees and expenses incurred to date and as
partial payment of accrued and unpaid interest and principal as provided in the
Indenture (the "Pre-Petition Cash Distribution"). All distributions of Excess
Cash pursuant to this Section and Section 4.2, to the extent not recovered as a
pre-Petition Date preferential transfer or a recoverable post-Petition Date
transfer shall be distributable cash for purposes of calculating the Cash
Distribution Incentive payment set forth in Article V. All wire transfers made
to the Indenture Trustee under this Agreement shall be directed as follows:
BK OF NYC - ABA NO. 021000018
BBK-ATTN: CORPORATE TRUST AGENCY/GLA 111-565
REF: A/C 117813
RE: FITZGERALDS GAMING
SECTION 4.2 ADDITIONAL EXCESS CASH DISTRIBUTIONS. Subject to the
Bankruptcy Court's approval of that portion of the Cash Collateral Stipulation
providing for post-petition payments to the Indenture Trustee to reduce the
obligations described in Section 2.2 of this Agreement and on the terms
contained in this Section 4.2, the Debtors shall distribute to the Indenture
Trustee, for the benefit of Noteholders, all Excess Cash as of the end of each
respective first, second or third financial reporting quarter beginning April 1,
2001, within 45 days of the end of such quarter (such distributions, together
with the Pre-Petition Cash Distribution, the "Excess Cash Distributions"). With
respect to the fourth financial reporting quarter of each year beginning with
the financial reporting quarter ending December 31, 2000, Excess Cash will be
distributed within 90 days of the end of the fiscal year and such payments shall
<PAGE>
be applied to unpaid and accrued Indenture Trustee's fees and expenses incurred
to date and as partial payment of accrued and unpaid interest and principal as
provided in the Indenture. The provisions of this Section 4.2 are qualified in
their entirety by the terms of the Cash Collateral Stipulation and the Interim
Order and the Final Order.
SECTION 4.3 DISTRIBUTION OF SALE PROCEEDS. The Restructuring shall be
accomplished by the orderly sale of the assets (or the stock) of the Operating
Companies and the Residual Assets whether by 363 Motion or a Plan. The
Consenting Noteholders hereby agree to the sale or auction of the assets (or the
stock) of the Operating Companies free and clear of Liens, with the Liens
attaching to the proceeds from such sales, and agree to instruct both the
Informal Committee (or the Official Noteholders Committee, as the case may be)
and the Indenture Trustee and their professionals to consent to and support
approval of such sales before the Bankruptcy Court (but not including the
providing of any indemnity to the Indenture Trustee). Upon the closing of any
sale of the assets (or the stock) of an Operating Company, the net proceeds,
less a reserve for amounts due in connection with the Senior Management
Incentive Program and the reserve as reasonably determined by the Debtors and
the Informal Committee (or the Official Noteholder Committee, as the case may
be) and approved by the Bankruptcy Court for Tail Liabilities, shall be
distributed to the Indenture Trustee for the benefit of and distribution to the
Noteholders in accordance with the Indenture. The Debtors and the Executives
agree to support a plan that provides that the claims of the
Noteholders/Indenture Trustee under the Indenture are an undersecured claim(s)
and shall be treated through the cash and non-cash distributions contemplated
hereby and issuance to the Noteholders of the beneficial interests in the
Liquidating Trust. The Consenting Noteholders agree to direct and instruct the
Informal Committee (or the Official Noteholders Committee, as the case may be)
and the Indenture Trustee and their professionals to support such a plan before
the Bankruptcy Court.
ARTICLE V
SENIOR MANAGEMENT INCENTIVE PROGRAM
SECTION 5.1 SENIOR MANAGEMENT ROLE. In order to maintain the stability of
the operations and gaming licensing during the process of selling the Operating
Companies, the Debtors, Senior Management and the Consenting Noteholders have
agreed that each of the Executives are to remain with FGC through the
Liquidation Date to maximize the value of the Noteholders' recoveries. The
parties understand and acknowledge that the end result of the Restructuring is
the sale of the Operating Companies and the cessation of all gaming operations
by FGC. In conjunction therewith, and although existing employment agreements
with each of the Executives will not be assumed by FGC pursuant to Section 365
of the Bankruptcy Code (as set forth in Section 5.6), each of the Executives
shall continue to perform their duties and carry out their responsibilities as
more particularly described in their existing employment agreements and shall be
compensated thereunder. Each Executive shall continue to serve in his present
role as an officer and/or director of the Debtors for so long as he continues to
be employed by the Debtors, provided such service does not violate applicable
law. In addition, each of the Executives will support the sales process. As
additional consideration therefor, the Senior Management Incentive Program shall
be adopted by the Debtors as described herein, and shall be supported by the
Consenting Noteholders as it is part of the Restructuring.
<PAGE>
SECTION 5.2 CASH DISTRIBUTION INCENTIVE.
(A) Subject to Bankruptcy Court approval to be obtained before
twenty-seven (27) days after commencement by the Debtors of their Chapter
11 Cases, Senior Management shall receive from the Debtors or the trustee
of the Liquidating Trust, as applicable, simultaneously with the
distribution of the Net Distributable Cash (or any portion thereof), to
the Indenture Trustee or to the beneficiaries of the Liquidating Trust, a
percentage of the Distributable Cash ("Cash Distribution Incentive"),
pursuant to the following schedule:
<TABLE>
<CAPTION>
DISTRIBUTABLE CASH PERCENT TO SENIOR MANAGEMENT
<S> <C>
$115,000,000 or less 0%
$115,000,001 to $164,000,000 7.0%
$164,000,001 and above 8.5%
</TABLE>
In respect of the Cash Distribution Incentive earned, Senior Management
shall receive payments which will consist of cash, and if applicable, an
interest in the Nevada Purchase Note(s). The amount of the Cash Distribution
Incentive payment to be paid in a form other than cash (i.e. Nevada Purchase
Note(s)), if any, will be determined at the Liquidation Date and shall equal the
product of: (i) the Cash Distribution Incentive earned as of the Liquidation
Date; and (ii) the ratio of (a) the estimated fair market value of the Nevada
Purchase Note(s) and (b) the Distributable Cash. There will be no Cash
Distribution Incentive payment until the Distributable Cash exceeds
$115,000,000.00. Percentages apply only to the incremental Distributable Cash
above each break point as referenced above and not to the cumulative balance of
Distributable Cash. To the extent there is disagreement between Senior
Management, the Debtors and the Informal Committee (or the Official Noteholder
Committee, as the case may be) with respect to the value of any component of
Distributable Cash, the amount of Distributable Cash shall be determined by the
Bankruptcy Court.
(B) For purposes of calculating the Cash Distribution Incentive
payment and subject to the exceptions and formulations referenced below,
Distributable Cash available for distribution subsequent to June 30, 2001
(the "Distribution Date") shall be present valued to the Distribution Date
using an annualized discount rate of 12.25% (the "Discount Rate"). With
respect to any portion of Distributable Cash which represents cash or
non-cash consideration from the sale of any assets (or stock) of the
Operating Companies, such sale proceeds shall be subject to one of the
following formulations (for purposes of calculating the Cash Distribution
Incentive Payment):
1. If Bankruptcy Court approval to sell assets (or stock) of
any Operating Company occurs on or before the Distribution Date, then that
portion of Distributable Cash which represents cash and/or non-cash
proceeds from the sale of assets (or stock) of any such Operating Company
pursuant to such Bankruptcy Court order shall not be subject to a present
value calculation for any time period (including the time period during
which the regulatory approval process(es) is occurring.
<PAGE>
2. If Bankruptcy Court approval to sell assets (or stock) of
any Operating Company occurs after the Distribution Date but before
September 30, 2001, then that portion of Distributable Cash which
represents cash and/or non-cash consideration from the sale of assets (or
stock) of any such Operating Company pursuant to such Bankruptcy Court
order shall be subject to a present value calculation (utilizing the
Discount Rate) for the period from the Distribution Date to the date on
which the Bankruptcy Court issues an oral order approving such sale ( the
"Court Approval Date"). Such sale proceeds shall not be subject to a
present value calculation with respect to the period from the Court
Approval Date through the date upon which any such sale closes and the
applicable portion of the sales proceeds therefrom are distributed to the
Indenture Trustee or to the beneficiaries of the Liquidating Trust.
3. If the Court Approval Date occurs subsequent to September
30, 2001 with respect to the sale of assets (or stock) of any Operating
Company, then that portion of Distributable Cash which represents cash
and/or non-cash consideration from the sale of assets (or stock) of any
such Operating Company pursuant to such Bankruptcy Court order shall be
subject to a present value calculation (utilizing the Discount Rate) for
the period from the Distribution Date through the date on which any such
sale closes and the applicable portion of the sales proceeds therefrom are
distributed to the Indenture Trustee or to the beneficiaries of the
Liquidating Trust.
PROVIDED, HOWEVER, with respect to the three (3) formulations set forth above,
assets of any Operating Company shall include any such Operating Company's
(ies') Operating Cash and shall not include any other cash or cash equivalents.
For purposes of calculating the Cash Distribution Incentive payment, the
following components of Distributable Cash shall automatically be deemed to have
been distributed on or before the Distribution Date: (i) Excess Cash
Distributions paid on or before August 15, 2001; and (ii) items (f), (g) and (h)
contained in the definition of Distributable Cash.
(C) If a sale of the assets (or stock) of an Operating Company,
either by sales contract or auction (in either event, the terms and
conditions of which are agreed to and documented on or before the
Distribution Date), is unable to be closed by December 31, 2001, due to
delays related to the purchaser's(s') efforts to obtain the necessary
regulatory approval(s) and/or financing other than as the result of a
default by the Debtors under a Definitive Purchase and Sale Agreement
(hereinafter, an "Extended Transaction"), then notwithstanding Section
5.1, 5.6 and 12.10, the Executives, the Debtors and the Consenting
Noteholders agree that the Executives will continue to be employed,
continue to be compensated as provided for in their respective employment
agreements and continue to be entitled to earn the Cash Distribution
Incentive in respect of the Operating Companies to which such transaction
relates for an additional period of time beyond December 31, 2001 (the
"Delay Extension Period"). The Delay Extension Period shall be with
respect to each Operating Company the period beginning December 31, 2001
and ending on the date on which the relevant Extended Transaction has
closed. Anything in this paragraph to the contrary notwithstanding, if an
Extended Transaction is terminated for any reason other than a default by
Debtors, it shall be treated under the next succeeding paragraph.
<PAGE>
(D) If a sale of the assets (or stock) of an Operating Company,
either by sales contract or auction, that is not an Extended Transaction
does not timely close because of a purchaser's breach other than as result
of a default by the Debtors, then notwithstanding Sections 5.1, 5.6 and
12.10, the Executives shall continue to be employed, shall continue to be
compensated as provided for in their respective employment agreements and
shall continue to be entitled to earn the Cash Distribution Incentive in
respect of the Operating Company to which such transaction relates beyond
December 31, 2001 for the Default Extension Period. The Default Extension
Period with respect to each Operating Company shall begin on the earlier
of the first Business Day after Debtors are notified in writing by the
purchaser that the sale will not close, the Debtors notify the purchaser
of the purchaser's default under the purchase agreement or of the Debtors'
intention not to go forward with such sale under such purchase agreement,
or the last day set by the Bankruptcy Court order approving a sale, as may
be amended from time to time, to close. In such an event, that portion of
the Distributable Cash representing the proceeds from the sale of any
assets (or stock) of any such Operating Company (including its Operating
Cash but not including any other cash or cash equivalents) shall not be
present valued to the Distribution Date nor to any other date.
(E) In the event a sale of the assets (or stock) of an Operating
Company does not close by December 31, 2001, (as extended by any Delay
Extension Period or Default Extension Period applicable to such Operating
Company) any sales proceeds with respect to such Operating Company shall
not be Distributable Cash.
SECTION 5.3 SENIOR MANAGEMENT'S OWNERSHIP OF NEVADA PURCHASE NOTES. In the
event the Nevada Properties are sold pursuant to a Leveraged Offer(s), then
Senior Management shall own and receive payments under any Nevada Purchase
Note(s) in proportion to any Cash Distribution Incentive payment arising from
the sale underlying such Nevada Purchase Note(s) in whole or in part, including
its portion of the interest accruals thereunder. In connection with the Plan(s),
the Debtors and the Consenting Noteholders agree that the Nevada Purchase Notes
may be delivered to an agent for the Consenting Noteholders or directly to the
Consenting Noteholders.
SECTION 5.4 RETENTION AND SEVERANCE. Subject to Bankruptcy Court approval
by final order to be obtained before twenty-seven (27) days after commencement
by the Debtors of their Chapter 11 Cases, Senior Management will be entitled to
receive from an escrow that has been established retention and severance
payments from the Debtors in the aggregate amount of $2,400,000.00 ("Retention
Payment") and shall not be entitled to any severance under their employment
agreements. The Retention Payment will be apportioned as follows: Philip D.
Griffith, $1,200,000.00, Michael E. McPherson, $400,000.00, Max L. Page,
$400,000.00, and Paul H. Manske, $400,000.00. The Retention Payment shall be
held in escrow, funded simultaneously with the payment of $13,000,000.00 as
provided in Section 14.1 of this Agreement, pursuant to the escrow agreement
attached hereto as Exhibit "2". The Retention Payment shall be paid to an
Executive on the earlier of (i) the effective date of a Plan that effectuates a
sale of the assets (or stock) of the last Operating Company (to the extent not
previously disposed of pursuant to Bankruptcy Code Section 363) and transfers
all Residual Assets and Tail Liabilities to a Liquidating Trust or (ii) the
Liquidation Date, or (iii) the date on which such Executive is terminated
without cause by the Debtors (with the consent of the Informal Committee (or the
<PAGE>
Official Noteholder Committee, as the case may be)); PROVIDED, HOWEVER, that an
Executive shall not be entitled to his applicable portion of the Retention
Payment if such Executive is not, or has not been continuously since the date of
the Restructuring Agreement, employed by the Debtors. To the extent Debtors
determine in their reasonable judgment to adopt, after July 1, 2000, a retention
and severance program for employees who are not Senior Management, proceeds
distributed to Debtors' employees pursuant to such retention plan (if any) will
be netted against the Retention Payment and prorated on a dollar for dollar
basis with respect to the share of the Retention Payment to be received by each
member of Senior Management.
SECTION 5.5 CERTAIN AGREEMENTS WITH SENIOR MANAGEMENT REGARDING
COMPENSATION CLAWBACK AND NON-COMPETE AGREEMENTS. Each of the Debtors, the
Executives and the Consenting Noteholders have agreed to certain other terms and
conditions respecting clawbacks of compensation and non-compete agreements that
are set forth in this Section 5.5.
(A) CLAWBACK. The portion of the Retention Payment payable to an
Executive and the Cash Distribution Incentive Payment payable to Senior
Management under Section 5.4 of this Agreement shall be reduced by the
lesser of (i) any amount paid or payable to that Executive without the
Informal Committee's consent (or the consent of the Official Noteholder
Committee, as the case may be) by a purchaser or its affiliates of the
assets (or stock) of an Operating Company and agreed to within one year
after the closing or (ii) the percentage of the Retention Payment
apportioned to that Executive under Section 5.4 of this Agreement and a
portion of the Cash Distribution Incentive Payment equal to the percentage
of the Retention Payment apportioned to that Executive under Section 5.4
of this Agreement.
(B) AGREEMENT TO ENTER INTO NON-COMPETE AGREEMENTS. Each Executive
on behalf of himself agrees to execute any number of agreements
("non-compete agreements") restricting his commercial activities in the
gaming industry ("competitive activities") required by any buyer of the
assets (or stock) of an Operating Company, whether pursuant to a sale at
auction conducted in accordance with the Protocol Motion or otherwise,
subject to the following restrictions:
1. GENERAL TERMS. Any non-compete agreement required to be
executed pursuant to this Agreement shall contain customary terms
and conditions and may include customary non-solicitation and
non-hire provisions, provided they are consistent with this
Agreement.
2. GEOGRAPHIC LIMITATIONS. Any non-compete agreement required
to be executed pursuant to this Section 5.5(b)(2) shall limit each
Executive's competitive activities only in the following geographic
areas:
(A) Downtown Las Vegas, which means the area
commonly known as Downtown Las Vegas, which consists of the area of
the City of Las Vegas, Nevada bounded by Stewart Avenue on the
north, Bridger Avenue on the south, Sixth Street on the east and
Main Street on the west;
<PAGE>
(B) A 75 mile radius of the hotel-casino in Reno,
Nevada, owned by FRI, excluding the geographic area within one-half
mile of the shoreline of Lake Tahoe;
(C) A 75 mile radius of the casino in Black Hawk,
Colorado owned by 101 Main; and
(D) A 75 mile radius of the hotel-casino in
Tunica, Mississippi owned by FMI;
3. DURATION OF AGREEMENT. Any non-compete agreement that an
Executive is required to execute pursuant to this Agreement shall
limit an Executive's competitive activities for a period of time not
to exceed eighteen (18) months in each geographic area described in
Section 2.2 of this Agreement; PROVIDED, HOWEVER, such eighteen (18)
month term shall commence in each such geographic area upon the
earlier to occur of (i) a sale of the assets or stock of each
Operating Company in that geographic area, respectively or (ii) the
Liquidation Date and in any event on the condition that the
Executive Payment is timely made. Each Executive agrees that the
provisions set forth in Section 4.08 of the Majestic Star Purchase
Agreement dated November 22, 2000 are consistent with this Section
5.5.
4. NON-SOLICITATION AND NON-HIRE. Any non-solicitation and
non-hire provisions included in a non-compete agreement may have any
geographic scope but shall be limited to twelve (12) months in
duration from the commencement of the applicable non-compete
agreement.
5. CONSIDERATION FOR AGREEMENT. The Executives shall be paid
by the Debtors the aggregate sum of $2,000,000 (the "Executive
Payment") for the non-compete agreement(s) payable as follows:
$500,000.00 upon the closing of the sale of the assets (or stock) of
Fitzgeralds Reno with the balance of $1,500,000.00 or the entire
$2,000,000.00 (in the event that a sale of Fitzgeralds Reno had not
yet concluded and the $500,000.00 paid) payable on the earlier of
(i) the date that the Indenture Trustee receives Distributable Cash
in excess of $115,000,000.00 or (ii) the Liquidation Date. The
Executive Payment shall be apportioned as determined between the
Executives as they deem appropriate in their sole and absolute
discretion. The Executives represent and warrant that they have
agreed amongst themselves upon an allocation of the Executive
Payment.
SECTION 5.6 SENIOR MANAGEMENT EMPLOYMENT AGREEMENTS AND
COMPENSATION. The Debtors will not assume the existing employment agreements
with Senior Management pursuant to Section 365 of the Bankruptcy Code.
However, upon commencement of the Chapter 11 Cases and continuing thereafter,
Senior Management will continue to receive all compensation and benefits at
the levels and under the terms provided in their respective employment
agreements through the Liquidation Date. Senior Management bonuses for the
calendar operating years 2000, 2001 and any applicable portion of 2002 shall
be determined using the existing formula used by the FGC compensation
<PAGE>
committee ("Bonus Formula"). The Bonus Formula, in both amount of bonus and
EBITDA targets, will be annualized and adjusted pro ratably to reflect sales
of assets (or stock) of Operating Companies at the date they close escrow.
SECTION 5.7 BANKRUPTCY COURT APPROVAL. The Consenting Noteholders shall
direct the Informal Committee (or the Official Noteholder Committee, if
applicable) and the Indenture Trustee to instruct their professionals to voice
support before the Bankruptcy Court of a motion filed by the Debtors with the
Bankruptcy Court to approve the Senior Management Incentive Program and the
compensation and benefits provided in Section 5.6 ("Compensation Motion"),
substantially in the form attached hereto as Exhibit "3," which Compensation
Motion will be filed on the Petition Date and will come on for hearing upon such
limited notice and shortened time as the Bankruptcy Court may allow. The
Consenting Noteholders acknowledge and understand that the approval of the
Compensation Motion in its entirety within 28 days of the Petition Date is a
condition to the continued participation of Senior Management in the Chapter 11
Cases and employment with the Debtors and is a Condition Subsequent to this
Agreement.
SECTION 5.8 AGREEMENT TO WAIVE CLAIMS BY SENIOR MANAGEMENT.
(A) In partial consideration of the availability of the Retention
Payment benefit, the receipt of post-petition compensation during the
Executives respective employment (as provided for in this Agreement and by
Bankruptcy Court order) and the right to earn the timely payment of the
Cash Distribution Incentive (as provided for in this Agreement and by
Bankruptcy Court Order), each Executive agrees to waive all claims (not
arising under or contemplated by this Agreement) in the Chapter 11 Cases
against the Debtors, as well as Fitzgeralds Management Corporation.
("FM"), Fitzgeralds Arizona Management, Inc. ("FAMI") and Nevada Club,
Inc. (and together with FM and FAMI, the "Non-Debtor Affiliates") upon
entry of a Confirmation Order for the Plan of FGC, except in respect to
any capital stock interests.
(B) Upon execution hereof each Executive shall, until the
Liquidation Date with respect to an Operating Company, refrain from (i)
taking any action to enforce, reduce to judgment or collect on, any claim
that they have against the Debtors or their Non-Debtor Affiliates not
arising under or contemplated by this Agreement and (ii) filing, in their
capacities as creditors, claimants or the counterparty to any executory
contract (other than this Agreement and any other agreements contemplated
by this Agreement), any motion in the Chapter 11 Cases; PROVIDED, HOWEVER,
that (i) the Executives shall be permitted (i) to file proofs of claim in
the Chapter 11 Cases in order to preserve their rights; (ii) to defend
their claims against any objections filed; and (iii) take any other
actions the Executives deem necessary or appropriate to preserve their
rights.
(C) Upon execution hereof each Executive shall, until the
Liquidation Date with respect to an Operating Company, take all
commercially reasonable efforts to cause his Affiliates (excluding the
Debtors and their Non-Debtor Affiliates) to refrain from (i) taking any
action to enforce, reduce to judgment or collect on, any claim that such
an Affiliate has against the Debtors or their Non-Debtor Affiliates not
arising under or contemplated by this Agreement; and (ii) filing, in such
<PAGE>
Affiliate's capacities as a creditor, claimants or the counterparty to any
executory contract (other than this Agreement and any other agreements
contemplated by this Agreement), any motion in the Chapter 11 Cases;
PROVIDED, HOWEVER, that such Affiliates shall be permitted (i) to file
proofs of claim in the Chapter 11 Cases in order to preserve their rights;
(ii) to defend their claims against any objections filed; and (iii) take
any other actions such Affiliate deems necessary or appropriate to
preserve their rights.
SECTION 5.9 REPLACEMENT OF EXECUTIVES. In the event that one or more of
the Executives leaves the employ of the Debtors prior to the Liquidation Date,
then the Debtors shall hire a replacement, reasonably qualified to perform the
responsibilities of such position, to fill the position held by the departing
Executive unless the Consenting Noteholders who are beneficial owners (or record
owners) of a majority of principal amount of the Notes agree otherwise. The
ordinary course compensation for such replacement Executive shall not exceed the
compensation of the departing Executive provided pursuant to Section 5.6 of this
Agreement unless the Consenting Noteholders who are beneficial owners (or record
owners) of a majority of principal amount of the Notes agree otherwise. The
Debtors may use the portion of the Retention Payment forfeited by a departing
Executive as a hiring incentive for a replacement Executive to be paid on the
same terms as would have been paid to the departing Executive. Any departing
Executive shall be entitled to retain his allocable portion of (i) the Cash
Distribution Incentive earned through the date of his termination by all of the
Debtors, calculated as though no termination of such departing Executive
occurred and (ii) the Executive Payment.
SECTION 5.10 WAIVER OF ALL FSI WARRANTS. In partial consideration of the
Pre-Petition Excess Cash Payment and other consideration, the sufficiency of
which is acknowledged, any Consenting Noteholder that directly or indirectly
holds or controls any FSI Warrants agrees to waive all claims (not arising under
or contemplated by this Agreement) in the Chapter 11 Cases upon entry of a
Confirmation Order for the Plan of FGC.
ARTICLE VI
LIQUIDATING TRUST
On the Effective Date of the Plan for FGC, all Residual Assets of the
Debtors will be transferred to a liquidating trust created pursuant to the Plan
for the Debtors ("Liquidating Trust"). The beneficiaries of the Liquidating
Trust shall be the Noteholders, if the Plan so provides, creditors of the
Debtors, and, with respect to Net Residual Assets, also Senior Management. The
purpose of the Liquidating Trust shall be to serve as a vehicle for the
liquidating Residual Assets, Tail Liabilities and making periodic distributions
amongst the beneficiaries. The name of the Liquidating Trust shall be the
"Fitzgeralds Gaming Corporation Liquidating Trust," and shall be administered
and managed by an administrator with oversight by a board of managers. The board
of managers shall consist of one or more individuals, unless otherwise agreed by
the parties, designated by the Informal Committee (or the Official Noteholder
Committee, as the case may be) at the confirmation hearing of the Plan. The form
of the Liquidating Trust Agreement shall be substantially in the form attached
hereto as Exhibit "4." The administrator of the Liquidating Trust shall issue
periodic financial reports. Each Executive shall have the right to review, at
his own cost and expense, the financial reports prepared by the administrator
for the beneficiaries of the Trust and to inspect, at his own cost and expense,
<PAGE>
the books and records of the administrator and the board of managers in respect
of the Liquidating Trust, its assets, liabilities and activities.
ARTICLE VII
LOCKUP AND CONDITIONS ON TRANSFER OF NOTES
SECTION 7.1 RESERVED.
SECTION 7.2 RESTRICTIONS ON TRANSFER OF NOTES, CLAIMS AND INTERESTS.
(A) (i) The Consenting Noteholders irrevocably and unconditionally
agree, on behalf of themselves and their respective agents, successors,
and permitted assigns and transferees (if any) (collectively, the
"Successors"), (x) that neither the Notes nor any beneficial interest in
or rights under the Notes shall, directly or indirectly, be transferred,
sold, assigned, encumbered, disposed of, or otherwise alienated in any
manner (each, a "Transfer") except as expressly authorized under this
Section; (y) not to contest or challenge, or encourage or help any other
person or entity to contest or challenge, directly or indirectly, any
provisions of this Agreement; and (z) not to enter into any commitments or
otherwise obligate themselves to take any actions prohibited by the
preceding clauses (x) or (y);
(ii) The Executives irrevocably and unconditionally agree, on
behalf of themselves and their respective agents, successors, and
permitted assigns and transferees (if any), (x) that neither any interest
in or claim against any of the Debtors or the Non-Debtor Affiliates
("Executive Claims/Interests"), nor any beneficial interest in or rights
under such interest or claims, shall be transferred except as expressly
authorized under this Section; (y) not to contest or challenge, or
encourage or help any other person or entity to contest or challenge,
directly or indirectly, any provisions of this Agreement; and (z) not to
enter into any commitments or otherwise obligate themselves to take any
actions prohibited by the preceding clauses (x) and (y).
(B) No Transfer of any Notes or any Executive Claim/Interest may be
effected unless the party or parties to whom the Transfer is to be made
and the party or parties who would thereby become the beneficial owner of
the Notes or any Executive Claim/Interest (collectively, the "Transferee")
execute and deliver to the person or persons (including the Consenting
Noteholders) from whom the Transfer is the be made ("Transferor") and the
Debtors the acknowledgment and agreement set forth in Exhibit "5" hereto
(the "Transferee Agreement") and deliver to the Debtors and Transferor a
written opinion ("Legal Opinion") of the Transferee's counsel,
substantially in the form annexed hereto as Exhibit "6". The Transferee
Agreement and the Legal Opinion described in the preceding sentence must
be received by the Debtors and Transferor at least three (3) Business Days
prior to the Transfer in order for the Transfer to be effective.
(C) Any Transfer or purported Transfer which is not effected in full
compliance with this Section shall (i) be void; (ii) not transfer to or
vest in the Transferee any ownership interest in, or rights with respect
<PAGE>
to, the Notes or any Executive Claim/Interest in question; and (iii)
constitute a material breach of this Agreement by Transferor and subject
Transferor to liability pursuant to Section 7.4 below in the event of a
breach by Transferor or the provisions of this Agreement, and specifically
this Article VII.
(D) Each Consenting Noteholder and Executive, on behalf of itself
and its Successors, waives any and all rights to be a direct or indirect
beneficiary of an indemnity or "hold harmless" agreement from Transferee
or any other person or entity for liability for the transfer to such
Transferee constituting a violation of this Section 7.2.
(E) Any Transferor that holds Notes or any Executive Claim/Interest
as nominee for, or in any manner on behalf of, a beneficial owner or
participant (such Noteholder or Executive is referred to herein as a
"Beneficial Owner") shall immediately notify such Beneficial Owner of the
contents of this Agreement. Such Transferor shall remain subject to
liability pursuant to Section 7.4 and such Beneficial Owner shall not
recognize, record or effect any change in the beneficial ownership or
identity of the participant unless the Beneficial Owner has delivered or
caused to be delivered to the Debtors, not less than three (3) Business
Days prior to the proposed change, the Transferee Agreement executed by
the proposed new Beneficial Owner or participant and a Legal Opinion as
described in paragraph (b) of this Section.
(F) Each Transferor consents, on behalf of itself and its
Successors, to service of process by first class mail in any action
brought by the Debtors to enforce any provision of this Agreement.
SECTION 7.3 MATERIAL RELIANCE. Each Consenting Noteholder and Executive
acknowledges that the Debtors, Senior Management and the other Consenting
Noteholders (i) have materially relied on the terms of this Agreement and the
Consenting Noteholders' covenants and other obligations hereunder, (ii) have
foregone other strategic reorganization opportunities and expended substantial
sums of money on professional fees and costs in reliance on this Article VII and
the terms of this Agreement, (iii) would not have entered into this Agreement if
this Section were not binding and enforceable against the Consenting
Noteholders, Executives and their Successors, and (iv) would suffer irreparable
injury if any provisions of this Agreement were not complied with by any
Consenting Noteholders, Executives or their Successors.
SECTION 7.4 REMEDIES. In the event of any Transfer or purported Transfer
in violation of Section 7.2, the subject Transferor and Transferee
(collectively, the "Subject Parties"), on behalf of themselves and their
respective Successors, consent to the immediate issuance of a temporary
restraining order and a temporary or permanent injunction (or both) prohibiting
or invalidating such violative conduct or Transfer. The Subject Parties further
agree, on behalf of themselves and their respective Successors, that the
prevailing party in any action brought as a result of a violation of Section 7.2
or to contest the validity of a Transfer subject to Section 7.2 shall be awarded
attorneys' fees, costs and such other damages as may be permitted by law by the
Bankruptcy Court.
<PAGE>
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 SENIOR MANAGEMENT. Each of the Executives represents and
warrants, to the Consenting Noteholders, that
(A) that this Agreement is the legal, valid and binding obligation
of such Executive, enforceable in accordance with its terms (as limited by
bankruptcy, insolvency, reorganization, moratorium and other similar law
relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability), both in his individual capacity
and in any capacity as trustee or agent with power to vote or control such
claims, interests and contracts;
(B) such Executive is the record or beneficial owner, or controls
with the power to vote, the shares of Existing Common Stock and Existing
Preferred Stock listed with his signature hereto;
(C) as of the date of this Agreement, the only claims against,
interests in, and contracts with the Debtors that he has, or that other
entities have for which the Executive has the power to control the vote of
or actions with respect to, are listed on Schedule 8.1 attached hereto;
and
(D) the Executive listed with respect to each claim, interest or
contract is either the owner of such claim, interest or contract, or
controls with the power to vote and to direct all other actions with
respect to, such claim, interest or contract.
SECTION 8.2 DEBTORS AND SENIOR MANAGEMENT. Each of the Debtors and each
Executive (where applicable), hereby represents and warrants to the Consenting
Noteholders that the following statements are true, correct and complete as of
the date hereof:
(A) CORPORATE POWER AND AUTHORITY. Each Debtor has all requisite
corporate power and authority to enter into this Agreement and, subject to
such Bankruptcy Court approval as may be required except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability, to carry out the transactions
provided herein, and to perform its respective obligations under this
Agreement;
(B) AUTHORIZATION. The execution and delivery of this Agreement and,
subject to such Bankruptcy Court approval as may be required, the
performance of its obligations hereunder, have been duly authorized by all
necessary corporate action for each Debtor;
(C) NO CONFLICTS. The execution, delivery and performance of this
Agreement is not, and shall not, be subject to receipt of required
government approvals, consents and authorizations, (excluding any such
approvals, consents or authorizations as may be required by gaming
authorities or under gaming laws) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate
of incorporation or bylaws;
<PAGE>
(D) BINDING OBLIGATION. This Agreement has been duly executed and
delivered and is the legal, valid and binding obligation of each Debtor
enforceable against each in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability and
subject to such Bankruptcy Court approval as may be required;
(E) NO LITIGATION. There is no pending or threatened action, suit,
or proceeding known to the Debtors before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction that is reasonably likely to result in an unfavorable
injunction, judgment, order, decree, ruling, or charge that would (A)
prevent Restructuring or (B) permit any or all of the cash payments made
to the Indenture Trustee (and then to the Noteholders) pursuant to the
Restructuring to be rescinded;
(F) DISCLOSURE. The representations and warranties made by the
Debtors or the Executives (where applicable) contained in this Agreement
by or with respect to it do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained herein not misleading;
(G) FINANCIAL STATEMENTS. (A) The audited balance sheets and
statements of operations, changes in stockholders' equity, and cash flow
(collectively, the "Financial Statements") as of and for the fiscal years
ended December 31, 1999 and December 31, 1998 contained in Forms 10-K
filed by FGC with the Securities and Exchange Commission (the "SEC
Reports") have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as noted
therein), are correct and complete in all material respects and present
fairly the consolidated financial conditions of the Debtors as of such
dates and the consolidated results of operations of FGC for such periods
and are consistent in all material respects with the books and records of
the Debtors, and (B) the unaudited balance sheets, statements of
operations and cash flow as of and for the fiscal quarters ended April 2,
2000, July 2, 2000 and October 1, 2000 for FGC on a consolidated basis, as
filed with the SEC have been prepared in accordance with GAAP applied on a
consistent basis throughout the period covered thereby (except as noted
therein), are correct and complete in all material respects and present
fairly the consolidated financial condition of FGC for such period, and
are consistent in all material respects with the books and records of the
Debtors; and
(H) SUBSIDIARIES. The subsidiaries of the Debtors (including all
entities in which any of the Debtors has a controlling interest) are
listed on Exhibit "7", and no subsidiary of the Debtors that is not party
to this Agreement has any assets or liabilities except as listed on such
Exhibit.
<PAGE>
SECTION 8.3 CONSENTING NOTEHOLDERS. Each of the Consenting Noteholders
hereby represents and warrants to the Debtors and each of the Executive that the
following statements are true, correct and complete as of the date hereof:
(A) CORPORATE POWER AND AUTHORITY. Each Consenting Noteholder has
all requisite corporate power and authority to enter into this Agreement
and, subject to such Bankruptcy Court approval as may be required, to
carry out the transactions provided herein, and to perform its respective
obligations under this Agreement;
(B) AUTHORIZATION. The execution and delivery of this Agreement and,
subject to such Bankruptcy Court approval as may be required, the
performance of its obligations hereunder, have been duly authorized by all
necessary corporate action for each Consenting Noteholder;
(C) NO CONFLICTS. The execution, delivery and performance of this
Agreement does not, and shall not, be subject to receipt of required
government approvals, consents and authorizations, (excluding any such
approvals, consents or authorizations as may be required by gaming
authorities or under gaming laws) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate
of incorporation or bylaws;
(D) BINDING OBLIGATION. This Agreement has been duly executed and
delivered and is the legal, valid and binding obligation of each
Consenting Noteholder enforceable against each in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability and subject to such Bankruptcy Court approval as may be
required;
(E) DISCLOSURE. The representations and warranties made by the
Consenting Noteholders contained in this Agreement by or with respect to
it do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and
information contained herein not misleading; and
(F) CONSULTATION WITH INDENTURE TRUSTEE. The Consenting Noteholders
have caused the Informal Committee to inform the Indenture Trustee
respecting the terms and conditions of this Agreement, and to the best of
each Consenting Noteholder's knowledge and belief, it believes, based on
conversations between counsel to the Indenture Trustee and counsel to the
Informal Committee, that the Indenture Trustee will follow the Consenting
Noteholder's instructions to the Indenture Trustee (without requiring any
indemnity) made pursuant to this Agreement.
(G) OWNERSHIP OF NOTES. The Consenting Noteholders own the face
amount of Notes stated next to their respective names on the signature
pages to this Agreement.
<PAGE>
ARTICLE IX
BANKRUPTCY PROCESS
SECTION 9.1 BANKRUPTCY FILING. Upon execution of this Agreement, the
Debtors shall promptly conclude preparation of Chapter 11 petitions, statements
of financial affairs, schedules of assets and liabilities, and any and all other
documents necessary to commence the Chapter 11 Cases (collectively, the
"Petition Pleadings") no later than January 19, 2001. In addition, upon
execution of this Agreement, the Debtors shall promptly commence preparation of
all required operating documents and first day motions to continue normal
business operations during the Chapter 11 Cases which shall be filed as of the
commencement of the Chapter 11 Cases ("the Operating Pleadings"). No later than
five (5) Business Days prior to the Petition Date, FGC shall provide to the
Informal Committee copies of the Operating Pleadings for the Informal
Committee's review and comments, and the Informal Committee shall provide its
comments to FGC no sooner than two (2) Business Days before the proposed
Petition Date; PROVIDED, HOWEVER, not later than five (5) Business Days prior to
the Petition Date, the Debtors' Professionals and the Informal Committee's
Professionals shall agree upon the form of (i) the Protocol Motion, (ii) the
motion for order approving the proposed payment of a break-up fee and expense
reimbursement to Majestic Investor, LLC, prospective purchaser of Fitzgeralds
Las Vegas, Fitzgeralds Tunica, Fitzgeralds Black Hawk and Fitzgeralds Fremont
Experience Corporation, (iii) sale order sought by the 363 Motion to be filed in
connection with the purchase agreement executed (or to be executed) by Majestic
Investor, LLC, and (iv) the Interim Order and the Final Order (each as defined
in the Cash Collateral Stipulation). In addition, attached hereto as Exhibit "8"
is the Agreement Regarding Use of Cash Collateral (the "Cash Collateral
Stipulation"). On the Petition Date, the Debtors shall file a motion for entry
of an Interim and Final Order approving the Cash Collateral Stipulation. The
Consenting Noteholders and pursuant to their direction, the Informal Committee
and the Indenture Trustee and each of their professionals and the Debtors and
the Debtors' Professionals shall make commercially reasonable efforts to support
the approval of the Cash Collateral Stipulation and the Operating Pleadings by
the Bankruptcy Court and the Consenting Noteholders shall direct the Indenture
Trustee to support and execute the Cash Collateral Stipulation which shall not
require providing an indemnity.
SECTION 9.2 SUPPORT OF AGREEMENT AND RESTRUCTURING.
(A) In addition to the express covenants in this Agreement, each of
the Debtors shall (i) make all commercially reasonable efforts in to
effectuate the Restructuring, achieve the sale of assets (or stock) of the
Operating Companies as provided in this Agreement and to obtain
confirmation of the Plan as provided in this Agreement and (ii) refrain
from opposing, or proposing, soliciting, supporting or encouraging any
person to take any action to impede, hinder or delay, the Restructuring,
the sale of assets (or stock) of the Operating Companies as provided by
this Agreement and confirmation of the Plan contemplated hereby.
(B) In addition to the express covenants in this Agreement, each of
the Executives in their capacities as officers, directors, shareholders,
employee and creditors shall (i) make all commercially reasonable efforts
in good faith to effectuate the Restructuring, achieve the sale of assets
(or stock) of the Operating Companies as provided in this Agreement and to
<PAGE>
obtain confirmation of the Plan as provided in this Agreement and (ii)
refrain from opposing, or proposing soliciting, supporting or encouraging
any person to take any action to oppose, impede, hinder or delay, the
Restructuring, the sale of assets (or stock) of the Operating Companies as
provided by this Agreement and confirmation of the Plan contemplated
hereby. Each Executive shall also vote all of the claims against and
interests in the Debtors that he owns, or of which he has the power to
control the vote in favor of the Plan contemplated hereby, except to the
extent such claims or interests are deemed by operation of the Bankruptcy
Code to have accepted or rejected the Plan.
(C) In addition to the express covenants in this Agreement, each
Consenting Noteholder shall refrain from opposing, or proposing,
soliciting, supporting or encouraging any person to take any action
inconsistent with this Agreement or to oppose, impede, hinder or delay,
the Restructuring, the sale of assets (or stock) of the Operating
Companies as provided by this Agreement and confirmation of the Plan
contemplated hereby. Each of the Consenting Noteholders shall make all
commercially reasonable efforts in good faith to:
(1) vote all of its claims against and interests in the
Debtors in favor of the Plan contemplated hereby, except to the extent
such claims or interests are deemed by operation of the Bankruptcy Code to
have accepted or rejected the Plan;
(2) if requested by Debtors, direct the Indenture Trustee (but
shall not be required to indemnify the Indenture Trustee), to support the
Restructuring, all motions and applications made by the Debtors and Senior
Management not inconsistent with this Agreement, the sales contemplated
hereby and the Plan, and to consent to the sale of the assets contemplated
hereby;
(3) direct (i) counsel to the Informal Committee (or Official
Noteholder Committee, as the case may be) to appear in the Bankruptcy
Court and, to the extent requested by the Debtors, relevant gaming
regulatory proceedings and to support entry of the orders contemplated
hereby, confirmation of the Plan and the granting of any gaming approvals
necessary to consummate the transactions contemplated by this Agreement;
(4) direct the Informal Committee to recommend that other
Noteholders accept the Plan contemplated hereby; and
(5) not propose, vote for, consent to or support or
participate, directly or indirectly, in the formulation of any
application, motion or plan of reorganization or liquidation (proposed or
filed or to be proposed or filed) in any bankruptcy proceeding commenced
with respect to the Debtors that provides for the treatment of Senior
Management or the Consenting Noteholders on any other terms that are
materially inconsistent with this Agreement, other than a plan agreed to
by the Consenting Noteholders and the Debtors;
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PROVIDED, HOWEVER, that no Consenting Noteholder shall be barred from objecting
to compliance with Section 1126 of the Bankruptcy Code if a disclosure statement
proposed by the Debtors or received by such Consenting Noteholder contains a
material misstatement or omission or taking any action with respect to any
matter inconsistent with the terms of this Agreement, or assisting the Informal
Committee (or Official Noteholder Committee) in making such objections and
taking such actions;
(D) If an involuntary case under Chapter 7 or Chapter 11 of the
Bankruptcy Code is commenced against the Debtors (or any of them), and
Debtors determine to contest the entry of an order for relief, the
Consenting Noteholders agree they shall not take, direct, instruct,
encourage or help any other person or entity to act inconsistently or not
in accordance with the terms of this Agreement; PROVIDED, HOWEVER, that if
the Debtors determine not to contest the entry of an order for relief, the
Debtors shall make any and all commercially reasonable efforts to cause
the case to be converted to a voluntary Chapter 11 proceeding (in the
event of an involuntary Chapter 7 case).
(E) Senior Management shall make any and all commercially reasonable
efforts while they are employed by the Debtors to remain licensed under
applicable gaming laws and regulations, to operate and manage the business
of the Debtors and to actively engage in the process of selling the
Operating Companies. Any and all costs incurred in this respect shall be
borne by the Debtors.
SECTION 9.3 NO IMPROPER SOLICITATION. Notwithstanding Section 9.2, this
Agreement is the product of negotiations among the Debtors, Senior Management
and the Consenting Noteholders. This Agreement is not and shall not be deemed to
be a solicitation for consents to a plan. No Consenting Noteholder's acceptance
of a plan shall be solicited until such party has received a disclosure
statement approved by the Bankruptcy Court and otherwise in compliance with
Section 1126 of the Bankruptcy Code.
SECTION 9.4 OFFICIAL NOTEHOLDER COMMITTEE. The Debtors shall, if requested
by Consenting Noteholders who are beneficial owners (or record owners) of a
majority of principal amount of the Notes, support the appointment of the
Official Noteholder Committee provided that the members of the Official
Noteholder Committee include Consenting Noteholders of no less than a majority
of the principal amount of Notes. The Debtors' ongoing support of an Official
Noteholder Committee will be conditional upon the Official Noteholder Committee
consisting of beneficial owners of no less than a majority in face amount of the
outstanding Notes. Upon the commencement of the Chapter 11 Cases, the Debtors
agree to support the retention of the Informal Committee Professionals by the
Official Noteholder Committee, with payment of fees and expenses in accordance
with an Interim Fee Procedures Motion and Order, copies of which are attached
hereto as Exhibit "9", as approved by the Bankruptcy Court.
SECTION 9.5 DEBTORS' PROFESSIONALS. Upon the commencement of the Chapter
11 Cases, Consenting Noteholders agree to direct the Informal Committee and the
Indenture Trustee to agree to the retention of the Debtors' Professionals upon
terms and conditions consistent with the Bankruptcy Rules and the U.S. Trustee
Guidelines. The Consenting Noteholders further agree that during the Chapter 11
<PAGE>
Cases, the Debtors' Professionals may be paid in the ordinary course in
accordance with an Interim Fee Procedures Motion and Order, as approved by the
Bankruptcy Court.
SECTION 9.6 RIGHTS OF PARTIES IN THE EVENT THE INDENTURE TRUSTEE ACTS IN A
MANNER INCONSISTENT WITH THIS AGREEMENT. If the Indenture Trustee acts in a
manner materially inconsistent with this Agreement, fails to act in a manner
materially consistent with this Agreement, or fails to act in a manner
materially consistent with this Agreement absent indemnity, the following
provisions shall control any other contrary provisions in this Agreement or in
any other Agreement between the parties:
(A) ACTIVITY IN SUPPORT OF THIS AGREEMENT. Any action taken by the
Debtors, the Informal Committee (or the Official Noteholder Committee, as
the case may be) to cause the Indenture Trustee to act in a manner
materially consistent with this Agreement, shall not be deemed a breach of
this Agreement.
(B) SUPPORT OF OTHER PARTIES' EFFORTS DIRECTED AT A RECALCITRANT
INDENTURE TRUSTEE. The Debtors shall direct the Debtors' Professionals,
and the Consenting Noteholders shall direct the Informal Committee (or the
Official Noteholder Committee, as the case may be) to support, with briefs
and argument before the Bankruptcy Court, the actions taken by the Debtors
and the Informal Committee (or the Official Noteholder Committee, as the
case may be) to cause the Indenture Trustee to act in a manner materially
consistent with this Agreement.
(C) LIMITATION ON CONSENTING NOTEHOLDERS' RIGHT TO TERMINATE
AGREEMENT. If such action or inaction is determined by the Bankruptcy
Court to have proximately caused an event that would allow the termination
of this Agreement, or the service of notice of a default under Section
11.10 of this Agreement, then, notwithstanding such right to terminate
this Agreement or serve such notice, this Agreement may not be terminated
based upon such event.
ARTICLE X
CONDUCT OF BUSINESS
SECTION 10.1 CONDUCT OF BUSINESS. The Debtors agree that, pending the
Petition Date and subject thereof until the Effective Date of FGC's Plan, unless
otherwise expressly contemplated or permitted by this Agreement, they shall
manage and operate their businesses in the ordinary course using sound business
judgment and:
(A) The Debtors shall not directly or indirectly, do or permit to
occur any of the following: (i) issue, sell, pledge, dispose of or
encumber any additional shares of, or any options, warrants, conversion
privileges or rights of any kind to acquire any shares of, any of their
capital stock except as required pursuant to currently outstanding
obligations; (ii) amend or propose to amend their articles of
incorporation; (iii) split, combine or reclassify any outstanding shares
of their capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect to
shares of capital stock, including the Existing Common Stock or Existing
Preferred Stock; (iv) redeem, purchase or acquire or offer to acquire any
<PAGE>
share of their capital stock; (v) acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership, joint venture or other business organization or
division or material assets thereof other than as set forth in Section
10.1 (d) and (e); (vi) enter into or propose to enter into, or modify or
propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 10.1(a); (vii)
commence or engage in any additional gaming ventures.
(B) The Debtors shall (i) maintain their good standing under the
laws of their respective states of incorporation or organization, as the
case may be, and (ii) notify the Informal Committee of any governmental or
third party complaints, investigations or hearings (or communications
indicating that the same are contemplated) other than ordinary course
audits.
(C) Subject to applicable privileges, the Debtors will keep the
Informal Committee and Informal Committee Professionals (or Official
Noteholder Committee professionals, as the case may be) informed of all
the developments regarding the liquidation process, including the
identities of prospective purchasers, those being solicited potential
purchasers and of all negotiations with such potential purchasers. In
addition, the Debtors shall keep the Informal Committee informed of the
status of the Debtors' capital expenditure programs, their operating
performance, financial status, and all material regulatory matters and
litigation matters, and will inform the Informal Committee Professionals
of each non-recurring capital expense in excess of $250,000.00.
(D) Any term in this Agreement to the contrary notwithstanding,
subject to Bankruptcy Court approval the Debtors, Senior Management and
the Consenting Noteholders agree that the Debtors may contract with a
third party, which may be a to-be-formed entity directly or indirectly
owned by one or more of the Executives (such an entity, a "Senior
Management Affiliate"), to provide risk management services to the Debtors
and, if requested, the trustee of the Liquidating Trust. The Debtors,
Senior Management and the Consenting Noteholders agree that the Debtors
may enter into agreements with a Senior Management Affiliate to sell
assets associated with FGC's risk management department. With respect to
the assets associated with FGC's risk management, the book value of such
assets shall not exceed $75,000.00 and such assets shall be sold for not
less than book value. The costs and expenses associated with a contract
with a Senior Management Affiliate to provide risk management services to
the Debtors, on the date of contracting, shall (i) not exceed seven and
one-half percent (7.5%) of the existing historical costs and expenses (ii)
not exceed the amount of any bid received by the Debtors for the same
services; PROVIDED, HOWEVER, that such costs and expenses cap shall not
apply to variable labor costs and expenses if the hourly rates for such
costs and the expenses do not exceed seven and one-half percent (7.5%) of
the fair market rate for such services and expenses. After the first year
and for each year thereafter, such costs and expenses associated with a
contract with a Senior Management Affiliate may increase an additional
three percent (3%) on an annual basis. Prior to the Debtors entering into
a contract with a Senior Management Affiliate to provide risk management
services to the Debtors, the Debtors shall obtain no less than two (2)
competitive bids from non-affiliates. The Informal Committee (or the
Official Noteholders Committee, as the case may be) will be advised by the
<PAGE>
Debtors of developments respecting services provided to the Debtors that
fall within the terms of this Subsection 10.1(d). The Informal Committee
(or the Official Noteholders Committee, as the case may be) will be
provided by the Debtors with copies of all agreements, requests for
quotation and bids and quotations respecting services provided to the
Debtors that fall within the terms of this Subsection 10.1 (d).
(E) Any term in this Agreement to the contrary notwithstanding,
subject to Bankruptcy Court approval the Debtors, Senior Management and
the Consenting Noteholders agree that the Debtors may enter into
agreements with a Senior Management Affiliate to lease from FMI dock
facilities, and public areas directly associated with such dock
facilities, owned or controlled by FMI provided such an agreement contains
customary terms and conditions and is on market terms (meaning in all
events, not less than book value). The Informal Committee (or the Official
Noteholders Committee, as the case may be) will be advised by the Debtors
of developments respecting a transaction that falls within the terms of
this Subsection 10.1(e). The Informal Committee (or the Official
Noteholders Committee, as the case may be) will be provided by the Debtors
with copies of all agreements respecting a transaction that falls within
the terms of this Subsection 10.1 (e).
SECTION 10.2 CAPITAL EXPENDITURES. Excluding the purchase of gaming
equipment, the Debtors will not spend more than $4,000,000.00 per year in
connection with "maintenance" capital expenditures. In addition, the Debtors
will not spend more than $4,000,000.00 per year in connection with purchasing,
upgrading and/or replacing gaming equipment. To the extent that the
aforementioned amounts are not fully expended within any given fiscal year, the
Debtors shall be permitted to carryover-unexpended amounts into subsequent
fiscal years. With respect to the Fitzgeralds Black Hawk expansion project, the
Debtors will not expend more than an additional $750,000.00 plus amounts
requested by purchaser of Operating Companies for which improvements the
purchaser is paying after the date of execution of this Agreement without
approval of the Informal Committee (or the Official Noteholder Committee, as the
case may be). The Fitzgeralds Black Hawk expansion expenditures will relate
primarily to securing the necessary entitlements, acquiring an adjacent
parcel/structure, demolishing (in part) existing structures and developing
architectural plans for the new structure.
ARTICLE XI
CONDITIONS SUBSEQUENT, DEFAULTS AND REMEDIES
SECTION 11.1 DEBTORS' RIGHT TO TERMINATE AGREEMENT UPON CONDITION
SUBSEQUENT. This Agreement, at the option of any of the Debtors', may be
terminated, effective at the time written notice of termination is given to the
Consenting Noteholders and each of the Executives, if:
(A) The Protocol Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date
(B) The Compensation Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date; or
<PAGE>
(C) The Interim Cash Collateral Order and the Final Cash Collateral
Orders are not entered in their entirety without modification by the
Bankruptcy Court or the Final Cash Collateral Order does not become a
Final Order of the Bankruptcy Court within 28 days of the Petition Date.
Provided, that if the Interim Cash Collateral Order and the Final Cash
Collateral Orders, or either of them, are not entered in there entirety solely
because the Bankruptcy Court fails to grant a priority to Majestic Investor,
LLC, there shall be no right to terminate this Agreement based upon such event.
Any notice of termination made pursuant to this Section 11.1 must be given so
that it is received by the Consenting Noteholders and each of the Executives not
later than 30 days after the Petition Date. The Debtors shall at all times have
the right to waive any such condition. The waiver by the Debtors of any
condition shall not relieve any other party of any liability or obligation with
respect to any covenant or agreement set forth in this Agreement.
SECTION 11.2 CONSENTING NOTEHOLDERS RIGHT TO TERMINATE AGREEMENT UPON
CONDITION SUBSEQUENT. This Agreement, at the option of Consenting Noteholders
who are beneficial owners (or record owners) of a majority of principal amount
of the Notes, may be terminated, effective at the time written notice of
termination is given to the Debtors and each of the Executives if:
(A) The Debtors fail to make the Pre-Petition Cash Distribution;
(B) The Protocol Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date;
(C) The Compensation Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date; or
(D) The Interim Cash Collateral Order and the Final Cash Collateral
Orders are not entered in its entirety without modification by the
Bankruptcy Court or the Final Cash Collateral Order does not become a
Final Order of the Bankruptcy Court within 28 days of the Petition Date.
Provided, that if the Interim Cash Collateral Order and the Final Cash
Collateral Orders, or either of them, are not entered in there entirety solely
because the Bankruptcy Court fails to grant a priority to Majestic Investor,
LLC, there shall be no right to terminate this Agreement based upon such event.
Any notice of termination made pursuant to this Section 11.2 must be given so
that it is received by the Debtors and each of the Executives not later than 30
days after the Petition Date. The Consenting Noteholders who are beneficial
owners (or record owners) of a majority of principal amount of the Notes shall
at all times have the right to waive any such condition. The waiver by such
Consenting Noteholders of any condition shall not relieve any other party of any
liability or obligation with respect to any covenant or agreement set forth in
this Agreement.
SECTION 11.3 SENIOR MANAGEMENT'S RIGHT TO TERMINATE AGREEMENT UPON
CONDITION SUBSEQUENT. This Agreement, at the option of Senior Management, may be
<PAGE>
terminated, effective at the time written notice of termination is given to the
Consenting Noteholders and the Debtors, if:
(A) The Protocol Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date
(B) The Compensation Motion is not approved in its entirety without
modification by a Final Order of the Bankruptcy Court within 28 days of
the Petition Date; or
(C) The Interim Cash Collateral Order and the Final Cash Collateral
Orders are not entered in their entirety without modification by the
Bankruptcy Court or the Final Cash Collateral Order does not become a
Final Order of the Bankruptcy Court within 28 days of the Petition Date.
Provided, that if the Interim Cash Collateral Order and the Final Cash
Collateral Orders, or either of them, are not entered in there entirety solely
because the Bankruptcy Court fails to grant a priority to Majestic Investor,
LLC, there shall be no right to terminate this Agreement based upon such event.
Any notice of termination made pursuant to this Section 11.3 must be given so
that it is received by the Debtors and Consenting Noteholders not later than 30
days after the Petition Date. Senior Management shall at all times have the
right to waive any such condition. The waiver by Senior Management of any
condition shall not relieve any other party of any liability or obligation with
respect to any covenant or agreement set forth herein.
SECTION 11.4 CONSENTING NOTEHOLDER DEFAULT. Any of the following shall be
deemed a Consenting Noteholder Default:
(A) The failure of any Consenting Noteholder to comply in all
material respects with its covenants under this Agreement, and ten (10)
Business Days shall have passed after written notice of such default is
given to the Consenting Noteholders, and such default remains uncured;
(B) Any Consenting Noteholder shall publicly announce its intention
to not support the Restructuring if such statement is not retracted after
three (3) Business Days notice to the Consenting Noteholders;
(C) The Purchase and Sale Agreement with Majestic Investor, LLC is
terminated as a result of a breach by any Consenting Noteholder of its
Undertaking dated November 22, 2000.
(D) Any of the Consenting Noteholders shall propose a plan or take
other action in the Chapter 11 Cases on terms and conditions that are not
materially consistent and in accordance with this Agreement and twenty
(20) Business Days shall have passed after written notice of such default
is given to the Consenting Noteholders, and such default remains uncured;
and
<PAGE>
(E) Any representation or warranty of the Consenting Noteholders
contained in this Agreement shall have been materially incorrect and shall
have been made fraudulently.
SECTION 11.5 REMEDIES IN THE EVENT OF A CONSENTING NOTEHOLDER DEFAULT.
Provided that the Debtors and/or Senior Management have not terminated this
Agreement pursuant to Sections 11.1, 11.3 or 11.12 of this Agreement,
respectively, in addition to any other rights and remedies afforded Debtors
and/or Senior Management under this Agreement or applicable law (not
inconsistent with this Agreement), upon the occurrence of a Consenting
Noteholder Default, Debtors and/or Senior Management may:
(A) Seek redress from the Bankruptcy Court for specific
performance or summary enforcement of this Agreement or other equitable
relief with respect to the breaching Consenting Noteholders. Such
relief may include obtaining the appointment of an individual under
Fed. R. Bankr. P. 7070 to urge and vote such Consenting Noteholder's
claim(s) in favor of the Motions and a Plan which provides the Debtors,
Senior Management and Noteholders treatment in accordance with the
terms of this Agreement;
(B) Seek damages against the breaching Consenting Noteholder for the
breach of this Agreement in the Bankruptcy Court to the extent permitted
by law; and
(C) Enforce any other right or remedy afforded under this Agreement
or applicable law in the Bankruptcy Court except termination of this
Agreement.
SECTION 11.6 DEBTORS' DEFAULT. Any of the following shall be deemed a
Debtors' Default:
(A) The Debtors shall not have filed the Chapter 11 Cases on or
before January 19, 2001;
(B) A purchase agreement approved by the Bankruptcy Court either
pursuant to a Plan or a 363 Motion is terminated as a result of a Debtor's
breach;
(C) The Purchase and Sale Agreement with Majestic Investor, LLC is
terminated as a result of a breach by any of the Debtors of their
Undertaking dated November 22, 2000 unless such breach is the result of
action or inaction taken by the Debtors to comply with this Agreement;
(D) Any of the Debtors shall publicly announce its intention not to
pursue the Plan on terms and conditions materially consistent and in
accordance with this Agreement if such statement is not retracted after
three (3) Business Days notice to the Debtors and each Executive;
(E) Any of the Debtors shall propose a Plan or take other action in
the Chapter 11 Cases on terms and conditions that are not materially
consistent and in accordance with this Agreement after notice to Debtors
and each Executive and ten (10) Business Days opportunity to cure;
<PAGE>
(F) Any of the Debtors shall fail to comply in all material respects
with its covenants under this Agreement, and ten (10) Business Days shall
have passed after written notice of such default is given to such Debtor
and each Executive, and such default remains uncured;
(G) Any representation or warranty of the Debtors contained in this
Agreement shall have been materially incorrect and shall have been made
fraudulently; or
(H) The Debtors fail to make a post-Petition Date Excess Cash
Distribution payment as described in Section 4.2 of this Agreement,
provided such payment is permitted by a final Bankruptcy Court order and
such failure has not been cured after ten (10) Business Days notice.
SECTION 11.7 REMEDIES IN THE EVENT OF A DEBTORS' DEFAULT. Provided that
Consenting Noteholders who are beneficial owners (or record owners) of a
majority of principal amount of the Notes or Senior Management have not
terminated this Agreement pursuant to Sections 11.2, 11.3 or 11.12 of this
Agreement, respectively, in addition to any other rights and remedies afforded
Consenting Noteholders who at the time are beneficial owners (or record owners)
of a majority of a principal amount of the Notes and/or Senior Management under
this Agreement or applicable law (not inconsistent with this Agreement), upon
the occurrence of a Debtors' Default, Consenting Noteholders who at the time are
beneficial owners (or record owners) of a majority of principal amount of the
Notes and/or Senior Management may:
(A) Seek redress from the Bankruptcy Court for specific performance
or summary enforcement of this Agreement or other equitable relief with
respect to the breaching Debtor, and such relief may include relief under
Bankruptcy Rule 7070;
(B) Seek damages against the breaching Debtor for the breach of this
Agreement in the Bankruptcy Court to the extent permitted by law; and
(C) Enforce any other right or remedy afforded under this Agreement
or applicable law in the Bankruptcy Court except termination of this
Agreement.
SECTION 11.8 SENIOR MANAGEMENT DEFAULT. Any of the following shall be
deemed a Senior Management Default:
(A) Any of the Debtors while in the control of Senior Management
shall publicly announce its intention not to pursue the Plan on terms and
conditions materially consistent and in accordance with this Agreement if
such statement is not retracted after three (3) Business Days notice to
the Debtors and each Executive;
(B) Any of the Debtors while in the control of Senior Management
shall propose a Plan or take other action in the Chapter 11 Cases on terms
and conditions that are not materially consistent and in accordance with
this Agreement after notice to Debtors and each Executive and ten (10)
Business Days opportunity to cure;
(C) Any of the Executives shall fail to comply in all material
respects with his covenants under this Agreement and twenty (20) Business
<PAGE>
Days shall have passed after written notice of such default is given to
such Executive, and such default remains uncured; and
(D) Any representation or warranty of Senior Management contained in
this Agreement shall have been materially incorrect and shall have been
made fraudulently.
SECTION 11.9 REMEDIES IN THE EVENT OF A SENIOR MANAGEMENT Default.
Provided that Consenting Noteholders who are beneficial owners (or record
owners) of a majority of principal amount of the Notes or the Debtors have not
terminated this Agreement pursuant to Sections 11.1, 11.3 or 11.12 of this
Agreement, respectively, in addition to any other rights and remedies afforded
Consenting Noteholders who at the time are beneficial owners (or record owners)
of a majority of a principal amount of the Notes and/or the Debtors under this
Agreement or applicable law (not inconsistent with this Agreement), upon the
occurrence of a Senior Management Default, Consenting Noteholders who at the
time are beneficial owners (or record owners) of a majority of principal amount
of the Notes and/or the Debtors may:
(A) Seek redress from the Bankruptcy Court for specific performance
or summary enforcement of this Agreement or other equitable relief with
respect to the breaching Executive, and such relief may include relief
under Bankruptcy Rule 7070;
(B) Seek damages against the breaching Executive for the breach of
this Agreement in the Bankruptcy Court to the extent permitted by law; and
(C) Enforce any other right or remedy afforded under this Agreement
or applicable law in the Bankruptcy Court except termination of this
Agreement.
SECTION 11.10 LIMITED RIGHT TO TERMINATE AGREEMENT BY CONSENTING
NOTEHOLDERS. Except as permitted by Section 11.1, 11.2, 11.3 and 11.12 of this
Agreement, this Agreement may not be terminated unless by Consenting Noteholders
who are beneficial owners (or record owners) of a majority of principal amount
of the Notes, and then only if:
(A) Relief shall be granted pursuant to a final order of the
Bankruptcy Court to any person other than a Consenting Noteholder or the
Indenture Trustee under Section 362(d) of the Bankruptcy Code, in a manner
that materially impairs the benefits of the Restructuring for the
Consenting Noteholders, and the order granting such relief shall not have
been stayed pending appeal, provided Debtors and Senior Management are
given notice under this Section within five (5) Business Days after a
motion for stay relief is filed;
(B) Any examiner with expanded powers or trustee shall be appointed
in the Chapter 11 Cases, or any such cases shall be converted to cases
under chapter 7 or dismissed unless such appointment or conversion occurs
due to the urging of a Consenting Noteholder, the Informal Committee (or
the Official Noteholder Committee, as the case may be), the Indenture
Trustee or any of their professionals, except as provided in Section
11.10(c) of this Agreement;
(C) The Bankruptcy Court enters a final order granting a motion for
relief brought by Consenting Noteholders who at the time are beneficial
<PAGE>
owner (or record owners of a majority of the principal amount of the Notes
seeking (i) the appointment of an examiner with expanded powers, (ii) the
appointment of a trustee in the Chapter 11 Cases, or (iii) conversion of
the Chapter 11 Cases to cases under Chapter 7 or dismissal of the Chapter
11 Cases; PROVIDED, HOWEVER the granting of the relief is predicated upon
a finding of fraud by one or more of the Executives;
(D) There has been a breach of Section 2.2 of this Agreement by the
Debtors while Senior Management is in control of the Debtors that has not
been cured after twenty (20) Business Days notice to the Debtors and each
of the Executives;
(E) The Debtors fail to make a post-Petition Date Excess Cash
Distribution payment as described in Section 4.2 of this Agreement,
provided such payment is permitted by a final order of the Bankruptcy
Court and such failure has not been cured after ten (10) Business Days
notice to the Debtors and each of the Executives;
(F) The Debtors assume the existing employment agreements with
Senior Management pursuant to Section 365 of the Bankruptcy Code;
(G) There has been a breach of Section 5.8 of this Agreement by an
Executive or his Affiliate that is not cured after twenty (20) Business
Days notice to the Debtors and each of the Executives.
(H) There has been a breach of Section 9.1 of this Agreement by the
Debtors and such breach has not been cured after five (5) Business Days
notice to the Debtors and each of the Executive, PROVIDED, further,
HOWEVER, that such default must be exercised no later than fifteen (15)
Business Days after the Petition Date;
(i) The Debtors file Plan(s) that do not seek the orderly
liquidation of the Operating Companies assets (or stock) and such default
is not cured after fifteen (15) Business Days notice to the Debtors and
each of the Executives;
(J) There is a breach by an Executive of Section 5.5(b) of this
Agreement that is not cured after twenty (20) Business Days notice to the
Debtors and each of the Executives;
(K) The Bankruptcy Court has not confirmed, by December 1, 2001,
Plan(s) contemplating the sale of any assets (or stock) of the Debtors not
then subject to be sold pursuant to an order of the Bankruptcy Court,
provided Senior Management remains in control of the Debtors;
(L) There is a breach by the Debtors of Section 10.1(a)(v) or (vii)
that is not cured after twenty (20) Business Days notice to the Debtors
and each of the Executives; or
(M) Any representation or warranty of the Debtors contained in
Sections 8 (a), (b), (c) or (d) of this Agreement shall have been
materially incorrect when made and shall have been made fraudulently.
<PAGE>
Written notice of any termination of this Agreement made pursuant to this
Section 11.10 must be given to the Debtors and each of the Executives within ten
(10) days of the occurrence of the basis for such termination. The Consenting
Noteholders who at the time are beneficial owners (or record owners) of a
majority of principal amount of the Notes shall at all times have the right to
waive any such condition. The waiver by such Consenting Noteholders of any
condition shall not relieve any other party of any liability or obligation with
respect to any covenant or agreement set forth in this Agreement.
SECTION 11.11 PROHIBITION ON RIGHT TO TERMINATE AGREEMENT BY THE DEBTORS'
OR SENIOR MANAGEMENTS' DEFAULT. Except as provided in Sections 11.1, 11.3 and
11.12, neither the Debtors nor Senior Management, or any of them, may terminate
this Agreement, unless the Indenture Trustee acts in a manner materially
inconsistent with this Agreement, fails to act in a manner materially consistent
with this Agreement, or fails to act in a manner materially consistent with this
Agreement absent indemnity, and such action or inaction results in a material
detriment to the Debtors or Senior Management, or any of them.
SECTION 11.12 TERMINATION DUE TO FAILURE TO SETTLE PAPERS AND ORDERS. Any
party to this Agreement shall have the right to terminate this Agreement by
notice to all other parties to this Agreement that any of the papers or orders
made an exhibit to this Agreement (or an exhibit to an exhibit or a schedule to
this Agreement) have not been agreed upon by such party, in his or its sole and
absolute discretion. Any notice of termination under this Section shall not be
enforceable unless RECEIVED by all non terminating parties to this Agreement on
or before 11 AM PDT on December 1, 2000
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. Other than the right of a Consenting Noteholder to assign
its rights hereunder in accordance with the provisions of Article VII, a party
hereto may not assign or transfer its rights or obligations under this
Agreement.
SECTION 12.2 SETTLEMENT; RELEASE.
(A) RELEASE. On the Liquidation Date, each of Debtors, Senior
Management and the Consenting Noteholders and their successors and assigns
shall release and forever discharge each other and all of their officers,
directors, employees and agents, including all Debtors' Professionals and
Informal Committee Professionals, from any and all actions, causes of
action, debts, dues, claims, demands, liabilities and obligations of every
kind and nature, both in law and equity, known or unknown, whether matured
or unmatured, absolute or contingent, with respect of conduct or
activities occurring prior to, on, or subsequent to the execution of this
Agreement relating to the Notes except for the rights and obligations of
the parties under this Agreement, the Liquidating Trust or Nevada Purchase
Note(s), whether or not subject to a pending dispute before the Bankruptcy
Court; PROVIDED, HOWEVER, that such release shall not apply to (i) matters
<PAGE>
contemplated by the Plan(s) and (ii) any liability of an attorney to its
client not subject to a release under the Bankruptcy Code or a Plan(s).
(B) EXCULPATION. Subject to Bankruptcy Court approval, each Plan
shall provide that none of Senior Management, Consenting Noteholders, the
Indenture Trustee, Informal Committee, Official Noteholder Committee or
any of their respective present or former members, officers, directors,
employees, advisors, attorneys or agents shall have or incur any liability
to any holder of a claim, Debtors or any other party-in-interest in the
Chapter 11 Cases, or any of their respective officers, directors, agents,
employees, representatives, financial advisors, attorneys or affiliates or
any of their successors or assigns, for any act or omission, in connection
with, relating to or arising out of the Chapter 11 Cases, pursuit of
confirmation of a Plan, the consummation of a Plan, Liquidating Trust or
363 Motion, except for willful misconduct, and in all respects such
persons shall be entitled to reasonably rely upon the advice of counsel
with respect to their duties and obligations under a Plan; PROVIDED,
HOWEVER, that such exculpation shall not apply to (i) matters contemplated
by the Plan(s) and (ii) any liability of an attorney to its client not
subject to exculpation under the Bankruptcy Code or a Plan(s).
(C) RESERVATION OF RIGHTS. Except as expressly provided herein,
nothing in this Agreement (i) is intended to in any manner waive, limit,
impair or restrict the ability of the Consenting Noteholders to protect
and preserve their respective rights, remedies and interests, including
without limitation their respective claims against FGC and the Guarantors
and their respective full participation in the Chapter 11 Cases, (ii)
shall be deemed an admission of any sort, or (iii) shall effect a
modification of any Consenting Noteholder's rights under any document or
agreement unless and until the Motions are approved, and the Plan is
confirmed and becomes effective. If the transactions contemplated hereby
are not consummated or if this Agreement is terminated for any reason,
each of the parties hereto fully reserve any and all of their rights.
SECTION 12.3 NOTICES. Any notice by any party to another party hereunder
shall be deemed sufficiently given if in writing either served by personal
delivery or sent by overnight courier guaranteeing next-day delivery or by
telecopy, addressed (until further written notice of change of address), as
follows:
if to Debtors, to: Fitzgeralds Gaming Corporation
301 Fremont Street
Las Vegas, NV 89101
Attn: Philip D. Griffith
Telephone (702) 388-2242
Fax: (702) 388-5562
<PAGE>
with a copy to: Gordon & Silver, Ltd.
3960 Howard Hughes Parkway, 9th Floor
Las Vegas, NV 89109
Attn: Gerald M. Gordon, Esq.
Telephone: (702) 796-5555
Fax: (702) 369-2666
if to Senior Management, to: Michael E. McPherson
Fitzgeralds Gaming Corporation
301 Fremont Street
Las Vegas, NV 89101
Telephone: (702) 388-2242
Fax: (702) 388-5562
if to Informal Committee and/or Consenting Noteholders:
Putnam Investments, Inc. MSDW Advisors
One Post Office Square Two World Trade Center
Boston, Massachusetts 02109 New York, New York 10048
Telecopier: 617-760-8639 Telecopier: 212-392-0094
Attn: Paul Quistberg Attn: Matthew Shulkin
Contrarian Capital Prudential Investments
411 West Putnam Avenue Two Gateway Center
Greenwich, Connecticut 06830 Newark, New Jersey
Telecopier: 203-629-1977 Telecopier: 973-367-8047
Attn: Jon Bauer Attn: Terence Wheat
COPY TO EACH OF:
Ropes & Gray Houlihan Lokey Howard & Zukin Capital
One International Place 685 Third Avenue
Boston, Massachusetts 02110 New York, New York 10017
Telephone: 617-951-7000 Telephone: 212-497-4100
Telecopier: 617-951-7050 Telecopier: 212-661-3070
Attn: Don DeAmicis, Esq. Attn: William H. Hardie
Notice given by personal delivery shall be effective upon delivery. Notice
transmitted by overnight courier guaranteeing next-day delivery shall be
effective on the next Business Day following timely delivery to such courier.
Notice transmitted by telecopy shall be effective when receipt is acknowledged.
<PAGE>
SECTION 12.4 AMENDMENTS. This Agreement shall not be modified, amended or
otherwise changed without the written agreement of all of the parties hereto.
SECTION 12.5 ENFORCEMENT. The parties hereby agree to jurisdiction of the
Bankruptcy Court with respect to questions arising under this Agreement.
SECTION 12.6 HEADINGS. The table of contents and the headings at the
beginning of the articles, sections and subsections of this Agreement are solely
for the convenience of the parties and are not a part of this Agreement.
SECTION 12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
SECTION 12.8 ENTIRE AGREEMENT. This Agreement (including all Exhibits
hereto) contains the entire understanding between the parties relating to its
subject matter and supersedes all prior agreements, understandings,
representations and statements, oral or written.
SECTION 12.9 TIME IS OF THE ESSENCE. Time is of the essence under this
Agreement.
SECTION 12.10 EXTENSION OF SENIOR MANAGEMENT'S EMPLOYMENT. In the event
all of the Operating Companies have not been sold by the Liquidation Date, the
parties agree to use reasonable efforts to negotiate a continuation of Senior
Management's employment in order to resolve any remaining issues and liquidate
any remaining assets.
SECTION 12.11 EFFECT OF TERMINATION OF THIS AGREEMENT. If this Agreement
is terminated pursuant to Sections 11.1, 11.2 or 11.3, it shall be deemed null
and void and of no further force and effect, provided all other remedies for any
violation of this Agreement prior to such termination shall be preserved.
SECTION 12.12 JURISDICTION; WAIVER OF JURY TRIAL. Each of the parties
hereby irrevocably consents to the jurisdiction of the Bankruptcy Court prior to
any dismissal of the Chapter 11 Cases to hear any dispute arising out of or
related to this Agreement and the transactions contemplated hereby, whether in
the nature of an adversary proceeding or a contested matter. Each party
irrevocably waives any defense of forum nonconveniens in such action so long as
it is brought in the Bankruptcy Court, also waives any argument that any such
action is a non-core matter, and hereby consents such may be tried to, with
final judgment entered by, the Bankruptcy Court, subject to any rights of
appeal.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Restructuring Agreement
to be executed as of the date first above written.
FITZGERALDS GAMING CORPORATION
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS BLACK HAWK, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS BLACK HAWK II, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS LAS VEGAS, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS MISSISSIPPI, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
<PAGE>
FITZGERALDS RENO, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS SOUTH, INC.
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
101 MAIN STREET, Limited Liability Company
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
FITZGERALDS FREMONT EXPERIENCE CORPORATION
By: /S/ PHILIP D. GRIFFITH
-------------------------------
Its: President
<PAGE>
PUTNAM INVESTMENT MANAGEMENT, INC.
On behalf of:
Notes: $3,170,000 PUTNAM FUNDS TRUST - PUTNAM HIGH YIELD
TRUST II
Notes: $5,660,000 PUTNAM FUNDS TRUST - PUTNAM HIGH YIELD
TRUST II
Notes: $16,855,000 PUTNAM HIGH YIELD ADVANTAGE FUND
Notes: $15,195,000 PUTNAM HIGH YIELD TRUST
Notes: $1,260,000 PUTNAM VARIABLE TRUST - PUTNAM VT
DIVERSIFIED INCOME FUND
Notes: $790,000 PUTNAM MASTER INCOME TRUST
Notes: $4,630,000 PUTNAM VARIABLE TRUST-PUTNAM VT HIGH
YIELD FUND
Notes: $2,020,000 PUTNAM PREMIER INCOME TRUST
Notes: $6,890,000 PUTNAM DIVERSIFIED INCOME TRUST
Notes: $1,460,000 PUTNAM MASTER INTERMEDIATE INCOME TRUST
Notes: $380,000 PUTNAM STRATEGIC INCOME FUND
Notes: $420,000 PUTNAM MANAGED HIGH YIELD TRUST
Notes: $190,000 PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND
<PAGE>
Notes: $160,000 PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME
TRUST
Notes: $650,000 PUTNAM ASSET ALLOCATION FUNDS - GROWTH
PORTFOLIO
Notes: $140,000 PUTNAM VARIABLE TRUST-PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
Notes: $180,000 PUTNAM ASSET ALLOCATION FUND - CONSERVATIVE
PORTFOLIO
Notes: $300,000 TRAVELERS SERIES FUND INC. - PUTNAM
DIVERSIFIED INCOME PORTFOLIO
Notes: $70,000 LINCOLN NATIONAL GLOBAL ASSET ALLOCATION
FUND, INC.
By: /S/ JOHN VERANI
-------------------------------
Title: Senior Vice President
THE PUTNAM ADVISORY COMPANY, INC.
On behalf of:
Notes: $500,000 AMERITECH PENSION TRUST
Notes: $240,000 STRATEGIC GLOBAL FUND-HIGH YIELD FIXED
INCOME(PUTNAM) FUND
Notes: $220,000 ABBOTT LABORATORIES ANNUITY RETIREMENT PLAN
Notes: $45,000 PUTNAM WORLD TRUST II-PUTNAM HIGH YIELD BOND
FUND (DUBLIN)
Notes: $1,915,000 PUTNAM CBO I, LIMITED
<PAGE>
Notes: $3,000,000 PUTNAM CBO II, LIMITED
By: /S/ JOHN VERANI
-------------------------------
Title: Senior Vice President
PUTNAM FIDUCIARY TRUST COMPANY
On behalf of:
Notes: $1,090,000 PUTNAM HIGH YIELD MANAGED TRUST
Notes: $270,000 PUTNAM HIGH YIELD FIXED INCOME FUND, LLC
By: /S/ JOHN VERANI
-------------------------------
Title: Senior Vice President
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD
SECURITIES, INC.
Notes: $20,500,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
MORGAN STANLEY DEAN WITTER HIGH INCOME
ADVANTAGE TRUST
Notes: $3,000,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
MORGAN STANLEY DEAN WITTER HIGH INCOME
ADVANTAGE TRUST II
Notes: $4,500,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
MORGAN STANLEY DEAN WITTER HIGH INCOME
ADVANTAGE TRUST III
Notes: $1,500,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
MORGAN STANLEY DEAN WITTER VARIABLE
INVESTMENT SERIES--HIGH YIELD PORTFOLIO
Notes: $9,915,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
<PAGE>
MORGAN STANLEY DEAN WITTER DIVERSIFIED
INCOME TRUST
Notes: $8,900,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
MORGAN STANLEY DEAN WITTER SELECT DIMENSIONS
INVESTMENT SERIES--THE DIVERSIFIED INCOME
PORTFOLIO
Notes: $850,000 By: /S/ PETER AVELAR
-------------------------------
Title: Vice President
CONTRARIAN CAPITAL
MANAGEMENT, L.L.C.
Notes: $28,554,000 By: /S/ JOHN BAUER
-------------------------------
Title: Managing Member
CONTRARIAN CAPITAL ADVISORS, L.L.C.
Notes: $5,296,000 By: /S/ JOHN BAUER
-------------------------------
Title: Managing Member
PRUDENTIAL HIGH YIELD FUND, INC. By
Prudential Investment Corporation, as
Investment Advisor
Notes: $15,000,000 By: /S/ GEORGE EDWARDS
-------------------------------
Title: Managing Director
<PAGE>
THE PRUDENTIAL SERIES FUND, INC., HIGH YIELD
BOND PORTFOLIO, By Prudential Investment
Corporation, as Investment Advisor
Notes: $2,375,000 By: /S/ GEORGE EDWARDS
-------------------------------
Title: Managing Director
<PAGE>
SENIOR MANAGEMENT
/S/ PHILIP D. GRIFFITH
------------------------------------
Philip D. Griffith
/S/ MICHAEL E. MCPHERSON
------------------------------------
Michael E. McPherson
/S/ MAX L. PAGE
------------------------------------
Max L. Page
/S/ PAUL H. MANSKE
------------------------------------
Paul H. Manske
<PAGE>
EXHIBIT "1"
PROTOCOL MOTION
<PAGE>
EXHIBIT "2"
[FORM OF] ESCROW AGREEMENT FOR THE
RETENTION AND SEVERANCE PAYMENT (SEE SECTION 7.2(b))
<PAGE>
EXHIBIT "3"
COMPENSATION MOTION
<PAGE>
EXHIBIT "4"
[FORM OF] LIQUIDATING TRUST AGREEMENT
<PAGE>
EXHIBIT "5"
[FORM OF] TRANSFEREE AGREEMENT
<PAGE>
EXHIBIT "6"
[FORM OF] LEGAL OPINION
<PAGE>
EXHIBIT "7"
SUBSIDIARIES
1. Fitzgeralds Black Hawk, Inc.
2. Fitzgeralds Black Hawk II, Inc.
3. Fitzgeralds Las Vegas, Inc.
4. Fitzgeralds Mississippi, Inc.
5. Fitzgeralds Reno, Inc.
6. Fitzgeralds South, Inc.
7. 101 Main Street, Limited Liability Company
8. Fitzgeralds Incorporated
9. Fitzgeralds Fremont Experience Corporation
10. Fitzgeralds Arizona Management, Inc.
11. Nevada Club
12. Fitzgeralds Management Corporation
13. Fitzgeralds Sugar Creek, Inc., a revoked Missouri corporation owned by
Fitzgeralds Incorporated
<PAGE>
EXHIBIT "8"
AGREEMENT REGARDING USE OF CASH COLLATERAL
<PAGE>
EXHIBIT "9"
INTERIM FEE PROCEDURES MOTION AND ORDER
<PAGE>
SCHEDULE 2.3
LIENS
ENTITY SECURED CREDITOR DESCRIPTION OF COLLATERAL
1. FGC Foothill Capital Pledge of FGC's interest in
Corporation FSI; pledge of FSI's interest in
FMI and FLVI; pledge of FLVI's
interest in FFEC; pledge of FI's
interest in FBHI membership
interest in 101Main; security
interest in certain real and
personal property assets; trademark
security interest in certain
trademarks; copyright security
interest in certain copyrights;
deed of trust in all real and
personal property assets; and a
First Preferred Ship Mortgage on
the whole of the Fitzgeralds Tunica.
Nevada State Bank Letter of Credit ($164,000)
2. FLVI Foothill Capital Pledge of FGC's interest in
Corporation FSI; pledge of FSI's interest in
FMI and FLVI; pledge of FLVI's
interest in FFEC; pledge of FI's
interest in FBHI membership
interest in 101Main; security
interest in certain real and
personal property assets; trademark
security interest in certain
trademarks; copyright security
interest in certain copyrights;
deed of trust in all real and
personal property assets; and a
First Preferred Ship Mortgage on
the whole of the Fitzgeralds Tunica.
Colonial Pacific Leasing Purchase money security interest in
computer equipment
IBM Credit Corporation Purchase money security interest in
certain equipment
CIT Group Equipment Equipment Lease (Forklift)
NFTC Capital Corporation Equipment Lease
Simplex Equipment lease for time recorder
and software
3. FMI Foothill Capital Pledge of FGC's interest in
Corporation FSI; pledge of FSI's interest in
FMI and FLVI; pledge of FLVI's
interest in FFEC; pledge of FI's
interest in FBHI membership
<PAGE>
interest in 101Main; security
interest in certain real and
personal property assets; trademark
security interest in certain
trademarks; copyright security
interest in certain copyrights;
deed of trust in all real and
personal property assets; and a
First Preferred Ship Mortgage on
the whole of the Fitzgeralds Tunica.
IBM Credit Corporation Purchase money security interest in
certain equipment
Colonial Pacific Leasing Purchase money security interest in
computer equipment
NTFC Capital Corp. Equipment Lease
Northwest Carpets Lien on all carpets
4. 101Main Foothill Capital Pledge of FGC's interest in
Corporation FSI; pledge of FSI's interest in
FMI and FLVI; pledge of FLVI's
interest in FFEC; pledge of FI's
interest in FBHI membership
interest in 101Main; security
interest in certain real and
personal property assets; trademark
security interest in certain
trademarks; copyright security
interest in certain copyrights;
deed of trust in all real and
personal property assets; and a
First Preferred Ship Mortgage on
the whole of the Fitzgeralds Tunica.
5. FRI Foothill Capital Pledge of FGC's interest in
Corporation FSI; pledge of FSI's interest in
FMI and FLVI; pledge of FLVI's
interest in FFEC; pledge of FI's
interest in FBHI membership
interest in 101Main; security
interest in certain real and
personal property assets; trademark
security interest in certain
trademarks; copyright security
interest in certain copyrights;
deed of trust in all real and
personal property assets; and a
First Preferred Ship Mortgage on
the whole of the Fitzgeralds Tunica.
IBM Credit Corporation Purchase money security interest in
certain equipment
Scout Development Secured by real property (parking
garage)
Young Electric Sign Co. Purchase money security interest in
signage
<PAGE>
Ecolab Leasing of Dishwashers
Any non-consensual lien in favor of governmental unit entitled to priority as a
matter of applicable law, including any perpetual lien for property taxes,
assessments or other charges.
<PAGE>
SCHEDULE 8.1
CLAIMS/INTERESTS
1. Philip D. Griffith Employment Agreement dated June 28, 1999 w/all
rights thereunder
2. Indemnification Agreement dated July 14, 1995 between FGC and Philip D.
Griffith
3. Philip D. Griffith FGC Stock Ownership of Record (3,419,105); FGC Stock
Options (100,000)
4. Max Page Employment Agreement dated September 1, 1999 w/all rights
thereunder
5. Max Page FGC Stock Ownership of Record (123,565); FGC Stock Options
(9,000)
6. Michael E. McPherson Employment Agreement dated July 5, 1999 w/all
rights thereunder
7. Indemnification Agreement dated July 14, 1995 between FGC and Michael
E. McPherson
8. Michael E. McPherson FGC Stock Options (19,000)
9. Paul H. Manske Employment Agreement dated September 1, 1999 w/all
rights thereunder
10. Paul H. Manske FGC Stock Ownership of Record (123,565); FGC Stock
Options (19,000)
11. Claims of Philip D. Griffith in respect of any actions respecting
Missouri gaming licensing and gaming operation, including any claims of
Philip D. Griffith against Fitzgeralds Sugar Creek, Inc., a revoked
Missouri corporation in this regard
12. Any possible claims that the Senior Management may have as officers and
directors of the Debtors or non-Debtor affilliates under various state
corporate laws for indemnification, contribution and subrogation
For each of the Executives, any rights pursuant to any insurance policies
including Directors and Officers Liability Insurance.
Philip D. Griffith /s/ PG (initials)
Paul H. Manske /s/ PM (initials)
Max L. Page /s/ MP (initials)
Michael E. McPherson /s/ MM (initials)
