Amended And Restated Credit Agreement

AMENDED AND RESTATED CREDIT AGREEMENT Among PINNACLE ENTERTAINMENT, INC., as Borrower, the Several Lenders From Time to Time Parties Hereto, LEHMAN BROTHERS INC., and BEAR, STEARNS & CO. INC., as Joint Advisors, Joint Lead Arrangers and Joint Book ...


EXHIBIT 99.1

 

$400,000,000

 

AMENDED AND RESTATED

CREDIT AGREEMENT

 

among

 

PINNACLE ENTERTAINMENT, INC.,

 

as Borrower,

 

The Several Lenders

from Time to Time Parties Hereto,

 

LEHMAN BROTHERS INC., and

 

BEAR, STEARNS & CO. INC.,

as Joint Advisors, Joint Lead Arrangers and Joint Book Runners,

 

SOCIETE GENERALE, and

 

WELLS FARGO BANK, N.A.,

as Joint Documentation Agents,

 

BEAR STEARNS CORPORATE LENDING INC.,

as Syndication Agent

 

and

 

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

 

Dated as of August 27, 2004

 



TABLE OF CONTENTS

 

          Page

SECTION 1.

   DEFINITIONS    1

1.1

   Defined Terms    1

1.2

   Other Definitional Provisions    37

SECTION 2.

   AMOUNT AND TERMS OF COMMITMENTS    37

2.1

   Term Loan and Delayed Draw Term Loan Commitments    37

2.2

   Procedure for Term Loan and Delayed Draw Term Loan Borrowing    38

2.3

   Repayment of Term Loans and Delayed Draw Term Loans    38

2.4

   Revolving Credit Commitments    39

2.5

   Procedure for Revolving Credit Borrowing    39

2.6

   Swing Line Commitment    40

2.7

   Procedure for Swing Line Borrowing; Refunding of Swing Line Loans    40

2.8

   Incremental Term Loans; Additional Loans    42

2.9

   Repayment of Loans; Evidence of Debt    43

2.10

   Commitment Fees, etc.    44

2.11

   Termination or Reduction of Commitments    44

2.12

   Optional Prepayments    45

2.13

   Mandatory Prepayments and Commitment Reductions    45

2.14

   Conversion and Continuation Options    48

2.15

   Minimum Amounts and Maximum Number of Eurodollar Tranches    48

2.16

   Interest Rates and Payment Dates    48

2.17

   Computation of Interest and Fees    49

2.18

   Inability to Determine Interest Rate    50

2.19

   Pro Rata Treatment and Payments    50

2.20

   Requirements of Law    52

2.21

   Taxes    53

2.22

   Indemnity    55

2.23

   Illegality    55

2.24

   Change of Lending Office    56

SECTION 3.

   LETTERS OF CREDIT    56

3.1

   L/C Commitment    56

3.2

   Procedure for Issuance of Letter of Credit    56

3.3

   Fees and Other Charges    57

3.4

   L/C Participations    57

3.5

   Reimbursement Obligation of the Borrower    58

3.6

   Obligations Absolute    59

3.7

   Letter of Credit Payments    59

3.8

   Applications    59

 

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SECTION 4.

   REPRESENTATIONS AND WARRANTIES    60

4.1

   Financial Condition    60

4.2

   No Change    60

4.3

   Organizational Existence; Compliance with Law    61

4.4

   Organizational Power; Authorization; Enforceable Obligations    61

4.5

   No Legal Bar    61

4.6

   No Material Litigation    61

4.7

   No Default    62

4.8

   Ownership of Property; Liens    62

4.9

   Intellectual Property    62

4.10

   Taxes    62

4.11

   Federal Regulations    62

4.12

   Labor Matters    63

4.13

   ERISA    63

4.14

   Investment Company Act; Other Regulations    63

4.15

   Subsidiaries    63

4.16

   Use of Proceeds    64

4.17

   Environmental Matters    64

4.18

   Accuracy of Information, etc.    65

4.19

   Security Documents    65

4.20

   Solvency    66

4.21

   Senior Indebtedness    66

4.22

   Regulation H    66

4.23

   Gaming Laws    66

4.24

   Current Project Entitlements    67

SECTION 5.

   CONDITIONS PRECEDENT; COMPLETION RESERVE ACCOUNT; CONDO COMPONENT; DESIGNATION OF CURRENT PROJECTS    67

5.1

   Conditions to Initial Extension of Credit    67

5.2

   Conditions to Each Extension of Credit    71

5.3

   Completion Reserve Account    72

5.4

   Condo Component    75

5.5

   Designation of Current Projects    76

SECTION 6.

   AFFIRMATIVE COVENANTS    77

6.1

   Financial Statements    77

6.2

   Certificates; Other Information    78

6.3

   Payment of Obligations    79

6.4

   Conduct of Business and Maintenance of Existence, etc.    79

6.5

   Maintenance of Property; Insurance    79

6.6

   Inspection of Property; Books and Records; Discussions    79

6.7

   Notices    80

6.8

   Environmental Laws    80

6.9

   Interest Rate Protection    81

 

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6.10

   Additional Collateral, etc.    81

6.11

   Post-Closing Filings with Gaming Authorities    83

6.12

   The Lake Charles Vessel    83

6.13

   Further Assurances    83

SECTION 7.

   NEGATIVE COVENANTS    84

7.1

   Financial Condition Covenants    84

7.2

   Limitation on Indebtedness    85

7.3

   Limitation on Liens    87

7.4

   Limitation on Fundamental Changes    89

7.5

   Limitation on Disposition of Property    89

7.6

   Limitation on Restricted Payments    90

7.7

   Limitation on Investments    91

7.8

   Limitation on Optional Payments and Modifications of Debt Instruments, etc.    92

7.9

   Limitation on Transactions with Affiliates    93

7.10

   Limitation on Sales and Leasebacks    93

7.11

   Limitation on Changes in Fiscal Periods    93

7.12

   Limitation on Negative Pledge Clauses    93

7.13

   Limitation on Restrictions on Subsidiary Distributions    94

7.14

   Limitation on Lines of Business    94

7.15

   Limitation on Hedge Agreements    94

7.16

   Capital Expenditures    95

7.17

   Maximum Expenditures Outside Completion Reserve Account    96

7.18

   Current Projects    96

7.19

   Limitation on Changes to Deferred Compensation Plan    98

7.20

   Directors’ and Officers’ Trust    98

SECTION 8.

   EVENTS OF DEFAULT    98

SECTION 9.

   THE AGENTS    101

9.1

   Appointment    101

9.2

   Delegation of Duties    101

9.3

   Exculpatory Provisions    102

9.4

   Reliance by Agents    102

9.5

   Notice of Default    102

9.6

   Non-Reliance on Agents and Other Lenders    103

9.7

   Indemnification    103

9.8

   Agent in Its Individual Capacity    104

9.9

   Successor Administrative Agent    104

9.10

   Authorization to Release Liens and Guarantees    104

9.11

   The Arrangers; the Syndication Agent; the Documentation Agent    104

 

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SECTION 10.

   MISCELLANEOUS    105

10.1

   Amendments and Waivers    105

10.2

   Notices    107

10.3

   No Waiver; Cumulative Remedies    107

10.4

   Survival of Representations and Warranties    108

10.5

   Payment of Expenses    108

10.6

   Successors and Assigns; Participations and Assignments    109

10.7

   Adjustments; Set-off    112

10.8

   Counterparts    113

10.9

   Severability    113

10.10

   Integration    113

10.11

   GOVERNING LAW    113

10.12

   Submission To Jurisdiction; Waivers    113

10.13

   Acknowledgments    114

10.14

   Confidentiality    114

10.15

   Release of Collateral and Guarantee Obligations    115

10.16

   Accounting Changes    115

10.17

   Delivery of Lender Addenda    116

10.18

   WAIVERS OF JURY TRIAL    116

10.19

   USA Patriot Act Notification    116

10.20

   Gaming Laws and Liquor Laws    116

 

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ANNEXES:

 

A Pricing Grid

 

SCHEDULES:

 

1.1(a)

   Description of Lake Charles Project

1.1(b)

   List of Real Property Mortgages (Leasehold and Fee)

1.1(c)

   List of Amendments to Preferred Ship Mortgages

1.1(d)

   List of Post-Closing Gaming Pledges

4.1(d)

   Dispositions

4.4

   List of Outstanding Consents, Authorizations, Filings and Notices

4.15

   List of Subsidiaries (Unrestricted and Restricted)

4.19(a)

   UCC Financing Statements

4.19(b)

   Mortgage Filing Jurisdictions

5.3(d)(iii)

   List of Designated Assets

7.2(d)

   List of Existing Indebtedness

7.3(f)

   List of Existing Liens

7.7(d)

   List of Existing Investments

 

EXHIBITS:

 

A

   Form of Collateral Assignment of Construction Contract

B

   Form of Collateral Assignment of Vessel Contract

C

   Form of Collateral Assignment of Cooperative Endeavor Agreement

D

   Form of Collateral Assignment of Architects’ Contract

E

   Form of Compliance Certificate

F

   Form of Lender Addendum

G-1

   Form of Amendment to Mortgage

G-2

   Form of Mortgage

H-1

   Form of Amendment to Preferred Ship Mortgage

H-2

   Form of Preferred Ship Mortgage

I-1

   Form of Amended and Restated Security Agreement

I-2

   Form of Amended and Restated Subsidiary Guaranty

J

   Form of Amended and Restated Trademark Collateral Assignment

K-1

   Form of Borrowing Notice

K-2

   Form of Term Note

K-3

   Form of Delayed Draw Term Note

K-4

   Form of Revolving Credit Note

K-5

   Form of Swing Line Note

L

   Form of Exemption Certificate

M

   Form of Closing Certificate

N-1

   Form of Legal Opinion of Irell & Manella LLP

N-2

   Form of Legal Opinion of Jack Godfrey, Esq., General Counsel

O

   Form of Amended and Restated Completion Reserve Account Control Agreement

 


P

   Form of Disbursement Certificate

Q

   Form of Assignment and Acceptance

R

   Form of Solvency Certificate

S

   Form of Construction Funding Certificate

T

   Current Project Designation Request

U

   Form of In Balance Certificate

V

   Form of Collateral Assignment of Redevelopment Agreement

W

   Form of Excess Cash Certificate

 


This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 27, 2004, among PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), LEHMAN BROTHERS INC. (“Lehman”), and BEAR, STEARNS & CO. INC. (“Bear Stearns”), as joint advisors, joint lead arrangers and joint book runners (in such capacities, the “Arrangers”), SOCIETE GENERALE and WELLS FARGO BANK, N.A., as joint documentation agents (in such capacity and collectively, the “Documentation Agent”), BEAR STEARNS CORPORATE LENDING INC., as syndication agent (“BSCL”, in such capacity, the “Syndication Agent”), and LEHMAN COMMERCIAL PAPER INC., as administrative agent (“LCPI”, in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, together with Lehman, Bear Stearns, LCPI, BSCL and the several lenders from time to time (the “Existing Lenders”) entered into that existing Credit Agreement (the “Existing Credit Agreement”), dated as of December 17, 2003, pursuant to which the Existing Lenders agreed to make certain advances to Borrower; and

 

WHEREAS, the Borrower has requested and the Lenders have agreed to amend and restate the Existing Credit Agreement for the purpose of, among other things, increasing the revolving credit facility from $75,000,000 to $125,000,000, and replacing the term facility with two term facilities in an aggregate amount of $275,000,000, such that the aggregate principal amount of the available credit facilities shall increase from $300,000,000 to $400,000,000, subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth, the parties hereto hereby agree as follows:

 

SECTION 1.

DEFINITIONS

 

1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

 

Administrative Agent”: as defined in the preamble hereto.

 

Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

Agents”: the collective reference to the Syndication Agent, the Documentation Agent and the Administrative Agent.

 


Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a) until the Effective Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans, (ii) the amount of such Lender’s undrawn Term Loan Commitments, (iii) the aggregate then unpaid principal amount of such Lender’s Delayed Draw Term Loans, (iv) the amount of such Lender’s undrawn Delayed Draw Term Loan Commitments, and (v) the amount of such Lender’s Revolving Credit Commitment then in effect or, if the Revolving Credit Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

 

Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the sum of the Aggregate Exposures of all Lenders at such time.

 

Agreement”: this Amended and Restated Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.

 

Annualized Adjusted EBITDA”: for any period, for the Borrower and its Restricted Subsidiaries, Consolidated EBITDA for such period plus (a) to the extent reflected in Consolidated EBITDA for such period, non-cash asset write-downs made during the period from the Effective Date through December 31, 2004 (but not later), in an aggregate amount not to exceed $3,000,000, plus (b) to the extent deducted in arriving at Consolidated EBITDA for such period, non-cash write downs to goodwill required by Financial Accounting Standards Board Statement No. 142, and any non-cash reductions to the value of the assets of the Borrower and its Restricted Subsidiaries required by Financial Accounting Standards Board Statement No. 121, plus (c) the amount of Distributed Unrestricted Subsidiary Income received by the Borrower or any Restricted Subsidiary during such period, plus (d) the Argentina Receipts that were (x) received during such period by the Borrower or any Restricted Subsidiary and (y) irrevocably designated during such period as Reclassified Argentina Receipts; provided that, for any period ending on or after the last day of the first full fiscal quarter of operations following the date of a Current Project Opening and ending on or before the last day of the fourth full fiscal quarter following such Opening, that portion of Consolidated EBITDA which is attributable to the applicable Current Project shall be included only for the period consisting of the full fiscal quarters since the date of such Current Project Opening, annualized on a straight-line basis; provided that for purposes of calculating Annualized Adjusted EBITDA of the Borrower and its Restricted Subsidiaries for any period, (i) the Consolidated EBITDA of any Person or operating gaming business or any other business not prohibited by Section 7.14 hereof acquired by the Borrower or its Restricted Subsidiaries during such period shall be included on a pro forma basis for such period (as if the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such period) if the consolidated balance sheet of such acquired Person or business and its consolidated Subsidiaries as at the end of the period preceding the acquisition of such Person and the related consolidated statements of income and stockholders’ equity and of cash flows for the period in respect of which Consolidated EBITDA is to be calculated (x) have been previously provided to the Administrative Agent and the Lenders and (y) either (1) have been reported on without a qualification arising out of the scope of the audit by independent certified public accountants of nationally recognized standing or (2) have been found acceptable by the Administrative Agent

 

2


and (ii) the Consolidated EBITDA of any Person Disposed of by the Borrower or its Restricted Subsidiaries during such period shall be excluded for such period (as if the consummation of such Disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period).

 

Applicable Margin”: for each Type of Loan under each Facility or any other facility established pursuant to this Agreement, the rate per annum over the Base Rate or Eurodollar Rate, as applicable, which for the following Facilities shall be the rate set forth in the relevant column heading below:

 

     Base Rate
Loans


  Eurodollar Rate
Loans


Revolving Credit Facility

   See Annex A   See Annex A

Swing Line Loans

   See Annex A   NA

Term Loan Facility

   2.00%   3.00%

Delayed Draw Term Loan Facility

   2.00%   3.00%

 

Application”: an application, in such form as the relevant Issuing Lender may specify from time to time, requesting such Issuing Lender to issue a Letter of Credit.

 

Architect”: (i) with regards to the Lake Charles Project, Bergman, Walls and Associates, Ltd. or any other architect reasonably approved by the Administrative Agent, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, the architect for the St. Louis City Project reasonably approved by the Administrative Agent, or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the architect for the St. Louis County Project reasonably approved by the Administrative Agent.

 

Argentina Disposition”: any sale or other disposition by Borrower or a Restricted Subsidiary of the Capital Stock of either Argentina Subsidiary.

 

Argentina Receipts”: any dividend, distribution, payment, reimbursement or other amounts received in cash from an Argentina Subsidiary by the Borrower or any Restricted Subsidiary.

 

Argentina Subsidiaries”: collectively, Casino Magic Neuquen S.A. and Casino Magic Support Services S.A. and any successors thereto and any other Subsidiary which conducts operations solely in Argentina.

 

Asset Sale”: any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by clause (a), (b), (c), (d), (f), (g), (i), (k), (l) or (n) of Section 7.5) which yields gross proceeds to the Borrower or any of its Restricted Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds), in excess of $1,000,000.

 

Assignee”: as defined in Section 10.6(c).

 

3


Assignor”: as defined in Section 10.6(c).

 

Available Revolving Credit Commitment”: with respect to any Revolving Credit Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Credit Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding; provided, that in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Revolving Credit Commitment pursuant to Section 2.10(a), the aggregate principal amount of Swing Line Loans then outstanding shall be deemed to be zero.

 

Available Delayed Draw Term Loan Commitment”: with respect to any Delayed Draw Term Loan Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Delayed Draw Term Loan Commitment then in effect over (b) such Lender’s Delayed Draw Term Loans then outstanding.

 

Base Rate”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. For purposes hereof: “Prime Rate” shall mean the prime lending rate as set forth on the British Banking Association Telerate Page 5 (or such other comparable page as may, in the opinion of the Administrative Agent, replace such page for the purpose of displaying such rate), as in effect from time to time. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

 

Base Rate Loans”: Loans for which the applicable rate of interest is based upon the Base Rate.

 

Belterra Tower Project”: the hotel tower, consisting of 300 guest rooms and related improvements, currently being constructed in Switzerland County, Indiana.

 

Benefited Lender”: as defined in Section 10.7(a).

 

Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

Borrower”: as defined in the preamble hereto.

 

Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

 

Borrowing Notice”: with respect to any request for borrowing of Loans hereunder, a written notice from the Borrower, substantially in the form of, and containing the information prescribed by, Exhibit K-1, delivered to the Administrative Agent.

 

Business Day”: (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close and (b) with respect to all notices and determinations

 

4


in connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

 

Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a balance sheet of such Person.

 

Capital Lease Obligations”: with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

 

Cash”: all monetary items treated as cash in accordance with GAAP, consistently applied.

 

Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States or issued by FNMA, FHLMC or FFCB, in each case maturing within one year from the date of acquisition; (b) corporate notes issued by domestic corporations that are rated at least A by Standard & Poor’s Ratings Services (“S&P”) or A by Moody’s Investors Service, Inc. (“Moody’s”), in each case maturing within one year from the date of acquisition; (c) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days with respect to securities issued or fully guaranteed or insured by the United States Government; (d) commercial paper of a domestic issuer rated at least A-1 by S&P or P-1 by Moody’s, maturing within six months of the date of acquisition; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) auction rate securities including taxable municipals, taxable auction notes, and money market preferred; provided that the availability of principal, credit quality, and “reset period” are consistent with clause (b) of this definition; and (h) shares of money market mutual

 

5


or similar funds which invest primarily in assets satisfying the requirements of clauses (a) through (g) of this definition.

 

Change of Control”: the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 30% of the outstanding common stock of the Borrower; (b) the board of directors of the Borrower shall cease to consist of a majority of Continuing Directors; (c) the Borrower shall cease to own and control, of record and beneficially, directly or indirectly, 100% of each class of outstanding Capital Stock of the Subsidiaries listed on Part A of Schedule 4.15 attached hereto free and clear of all Liens (except Liens created by the Security Documents); or (d) a Specified Change of Control.

 

Code”: the Internal Revenue Code of 1986, as amended from time to time.

 

Collateral”: all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

 

Collateral Assignment of Architects’ Contract”: a collateral assignment of the prime architect contract for the Lake Charles Project substantially in the form of Exhibit D.

 

Collateral Assignment of Construction Contract”: a collateral assignment of the prime construction contract for the Lake Charles Project substantially in the form of Exhibit A.

 

Collateral Assignment of Cooperative Endeavor Agreement”: a collateral assignment of the Cooperative Endeavor Agreement substantially in the form of Exhibit C.

 

Collateral Assignment of Redevelopment Agreement”: a collateral assignment of the Redevelopment Agreement substantially in the form of Exhibit V.

 

Collateral Assignment of Vessel Contract”: a collateral assignment of the Vessel Construction Contract substantially in the form of Exhibit B.

 

Commitment”: with respect to any Lender, each of the Term Loan Commitment, the Delayed Draw Term Loan Commitment and the Revolving Credit Commitment of such Lender.

 

6


Commitment Fee Rate”: with respect to (i) the Delayed Draw Term Loan Commitment, 1.00% per annum; and (ii) the Revolving Credit Commitment, the percentage per annum set forth in the appropriate column below opposite the percentage of the Revolving Credit Commitment which is then outstanding in the form of Loans or Letters of Credit (not including, for purposes hereof only, Swing Line Loans):

 

Percentage of Revolving Credit

Commitment Outstanding


 

Commitment Fee Rate for

Revolving Credit Commitment


Less than or equal to 33%

  1.25%

Greater than 33% and less than or equal to 66%

  1.00%

Greater than 66%

  0.75%

 

Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

 

Completion Date”: (i) with regards to the Lake Charles Project, the date that is six (6) months following the Opening Date of the Lake Charles Project, (ii) with regards to the St. Louis City Project, the date that is six (6) months following the Opening Date of the St. Louis City Project, or (iii) with regards to the St. Louis County Project, the date that is six (6) months following the Opening Date of the St. Louis County Project.

 

Completion Ratio”: on the date of determination, (i) with regards to the Lake Charles Project (a) the amount of Expenses related to the Lake Charles Project incurred as of such date less the amount of such Expenses which constitute interest expense and pre-opening costs, divided by (b) the total Expenses related to the Lake Charles Project contemplated under the applicable Construction Budget (less the budgeted amounts for capitalized interest and pre-opening costs), (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5 (a) the amount of Expenses related to the St. Louis City Project incurred as of such date less the amount of such Expenses which constitute interest expense and pre-opening costs, divided by (b) the total Expenses related to the St. Louis City Project contemplated under the applicable Construction Budget (less the budgeted amounts for capitalized interest and pre-opening costs) and (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5 (a) the amount of Expenses related to the St. Louis County Project incurred as of such date less the amount of such Expenses which constitute interest expense and pre-opening costs, divided by (b) the total Expenses related to the St. Louis County Project contemplated under the applicable Construction Budget (less the budgeted amounts for capitalized interest and pre-opening costs).

 

Completion Reserve Account”: the account established and maintained pursuant to Section 5.3.

 

Completion Reserve Account Control Agreement”: the Amended and Restated Completion Reserve Account Control Agreement executed and delivered by the Borrower on the Effective Date, substantially in the form of Exhibit O, as may be supplemented, modified, amended, extended or supplanted from time to time.

 

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Compliance Certificate”: a certificate duly executed by a Responsible Officer, substantially in the form of Exhibit E.

 

Condo Component”: a residential housing or mixed-use/retail development within downtown City of St. Louis.

 

Condo Investment Amount”: the aggregate amount the Borrower and/or its Restricted Subsidiaries are obligated to fund (which amount shall not exceed $50,000,000) to acquire land for the Condo Component and complete development and construction of the Condo Component pursuant to the then approved construction budget less the amount of any construction financing (or commitments for construction financing) permitted under Section 7.2(m); provided that prior to the Administrative Agent’s approval of the Condo Component pursuant to Section 5.4, the “Condo Investment Amount” shall be zero.

 

Condo Modification”: as defined in Section 5.4(d).

 

Condo Modification Information”: as defined in Section 5.4(d).

 

Confidential Information Memorandum”: the Confidential Information Memorandum dated July 2004 as supplemented prior to the Effective Date and furnished to the initial Lenders in connection with the syndication of the Facilities.

 

Consolidated Current Assets”: of any Person at any date, all amounts (other than Cash, Cash Equivalents and deferred tax accounts) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at such date.

 

Consolidated Current Liabilities”: of any Person at any date, all amounts (other than deferred tax accounts) that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at such date, but excluding, with respect to the Borrower, (a) the current portion of any Funded Debt of the Borrower and its Subsidiaries and (b), without duplication, all Indebtedness consisting of Revolving Credit Loans or Swing Line Loans, to the extent otherwise included therein.

 

Consolidated EBITDA”: of any Person for any period, Consolidated Net Income of such Person and its Subsidiaries that are Restricted Subsidiaries for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) Consolidated Interest Expense of such Person and its Subsidiaries that are Restricted Subsidiaries, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization and write-off of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), (f) pre-opening and related promotional expenses incurred in connection with a Current Project and the Belterra Tower Project, (g) solely with respect to the fiscal years ending on December 31, 2004 and December

 

8


31, 2005, the aggregate amount of the expenses incurred by the Borrower during such fiscal years with respect to the initiative process related to gaming in the State of California, but not to exceed $3,500,000 in the aggregate through December 31, 2005; (h) any other non-cash charges; (i) any charges and payments incurred or made prior to the Effective Date with respect to the expensing of an agreement for a consultant that assisted with the disposition of Borrower’s surplus land in Inglewood, but not to exceed $1,500,000 in the aggregate; and (j) any amounts expended after January 1, 2004 towards the development of businesses not prohibited by Section 7.14, in an amount not to exceed, during the term of this Agreement, $7,000,000; and minus, without duplication and to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) interest income (except to the extent deducted in determining Consolidated Interest Expense), (b) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on sales of assets outside of the ordinary course of business) and (c) any other non-cash income, all as determined on a consolidated basis.

 

Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a) Annualized Adjusted EBITDA of the Borrower and its Restricted Subsidiaries for such period minus the aggregate amount actually paid by the Borrower and its Restricted Subsidiaries in cash during such period on account of Capital Expenditures (other than Capital Expenditures under Section 7.16(a) through (g)) to (b) Consolidated Fixed Charges for such period.

 

Consolidated Fixed Charges”: for any period, the sum (without duplication) of (a) Consolidated Interest Expense (net of interest income) of the Borrower and its Restricted Subsidiaries for such period; (b) cash income taxes paid or payable (net of tax refunds received) by the Borrower or any of its Restricted Subsidiaries on a consolidated basis in the case of such income taxes or tax refunds in respect of income included in Consolidated EBITDA for such period; provided that for the fiscal periods ending on or before June 30, 2006 cash income taxes shall be reduced (but not below zero) by the amount of all tax refunds received during the fiscal year which ended on December 31, 2005; and (c) scheduled payments made during such period on account of principal of Indebtedness of the Borrower or any of its Restricted Subsidiaries (including scheduled principal payments in respect of the Term Loans and the Delayed Draw Term Loans).

 

Consolidated Interest Expense”: for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of the Borrower and its Restricted Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Restricted Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

 

Consolidated Leverage Ratio”: as at the last day of any period of four consecutive fiscal quarters of the Borrower, the ratio of (a) Consolidated Total Debt (less the existing balance in the Completion Reserve Account) on such day to (b) Annualized Adjusted EBITDA of the Borrower and its Restricted Subsidiaries for such period.

 

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Consolidated Net Income”: of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, that in calculating Consolidated Net Income of the Borrower and its consolidated Subsidiaries for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

 

Consolidated Senior Debt”: all Consolidated Total Debt other than Subordinated Obligations.

 

Consolidated Senior Debt Ratio”: as of the last day of any period of four consecutive fiscal quarters, the ratio of (a) Consolidated Senior Debt (less the existing balance contained in the Completion Reserve Account) on such day to (b) Annualized Adjusted EBITDA of the Borrower and its Subsidiaries for such period.

 

Consolidated Total Debt”: at any date, the aggregate principal amount of all Indebtedness of the Borrower and its Restricted Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP; provided, however, with respect to the Indebtedness permitted under Section 7.2(j), such Indebtedness is only included for purposes of this definition to the extent (if at all) that on such date the amount of such Indebtedness is greater than the market value of the assets held in the Rabbi Trust in connection with the Deferred Compensation Plan.

 

Consolidated Working Capital”: at any date, the difference of (a) Consolidated Current Assets of the Borrower on such date less (b) Consolidated Current Liabilities of the Borrower on such date.

 

Construction Budget”: (i) with regards to the Lake Charles Project, the amended construction budget in the aggregate amount of $365,000,000 (as may be further amended pursuant to Section 7.16(a)), which budget shall be delivered to the Administrative Agent on the Effective Date, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, the construction budget for the St. Louis City Project approved by the Administrative Agent and any amendment to increase the construction budget approved by the Administrative Agent, not to exceed $208,000,000 (as may be amended pursuant to Section 7.16(c)), or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the construction budget for the St. Louis County Project approved by the Administrative Agent and any amendment to increase the construction budget approved by the Administrative Agent, not to exceed $300,000,000 (as may be amended pursuant to Section 7.16(d)).

 

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Construction Consultant”: Professional Associates Construction Services, Inc. (Kent Robertson, Principal), or any replacement thereto as Administrative Agent may designate from time to time.

 

Construction Plans”: (i) with regards to the Lake Charles Project, the amended construction plans and drawings for the Lake Charles Project delivered to the Administrative Agent on the Effective Date, as at any time supplemented or amended in accordance with the terms of this Agreement, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, the construction plans and drawings for the St. Louis City Project reasonably approved by the Administrative Agent, as at any time supplemented or amended in accordance with the terms of this Agreement, or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the construction plans and drawings for the St. Louis County Project reasonably approved by the Administrative Agent, as at any time supplemented or amended in accordance with the terms of this Agreement.

 

Construction Progress Report”: as defined in Section 5.3(e)(iv).

 

Construction Sublimit”: $25,000,000, unless either the St. Louis City Project or the St. Louis County Project (or both) are designated as a Current Project pursuant to Section 5.5, then $40,000,000.

 

Construction Timetable”: (i) with regards to the Lake Charles Project, the construction timetable for the Lake Charles Project heretofore delivered to the Construction Consultant and the Administrative Agent, as at any time amended in accordance with the terms of this Agreement, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, the construction timetable for the St. Louis City Project approved by the Administrative Agent, as at any time amended in accordance with the terms of this Agreement, or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the construction timetable for the St. Louis County Project approved by the Administrative Agent, as at any time amended in accordance with the terms of this Agreement.

 

Continuing Directors”: the directors of the Borrower on the Effective Date, and each other director of the Borrower, if, in each case, such other director’s nomination for election to the board of directors of the Borrower is recommended by at least a majority of the then Continuing Directors.

 

Contractor”: (i) with regards to the Lake Charles Project, Manhattan Construction Company, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, either Manhattan Construction Company or the general contractor for the St. Louis City Project reasonably approved by the Administrative Agent, or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, either Manhattan Construction Company or the general contractor for the St. Louis County Project reasonably approved by the Administrative Agent.

 

Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.

 

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Control Investment Affiliate”: as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

Cooperative Endeavor Agreement”: that certain Cooperative Endeavor Development Agreement dated as of November 8, 1989, as amended by an amendment dated as of April 22, 2003, among the Lake Charles Harbor and Terminal District, the Calcasieu Parish Police Jury, the City of Lake Charles, Louisiana, and the Borrower.

 

Current Project”: means each of the following (i) the Lake Charles Project until the applicable Completion Date, (ii) the St. Louis City Project from the date designated as a Current Project by Administrative Agent pursuant to Section 5.5 until the applicable Completion Date, and (iii) the St. Louis County Project from the date designated as a Current Project by Administrative Agent pursuant to Section 5.5 until the applicable Completion Date.

 

Declining Term Loan Lender”: as defined in Section 2.13(d).

 

Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

Deferred Compensation Plan”: that certain Hollywood Park, Inc. Executive Deferred Compensation Plan, effective January 1, 2000, as amended, modified or supplemented from time to time in accordance with this Agreement.

 

Delayed Draw Term Loan Commitment”: as to any Lender, the obligation of such Lender, if any, to make Delayed Draw Term Loans in an aggregate principal amount not to exceed the amount set forth under the heading “Delayed Draw Term Loan Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Delayed Draw Term Loan Commitments is $150,000,000.

 

Delayed Draw Term Loan Commitment Period”: the period commencing on the Effective Date and ending on September 30, 2005 (or such earlier date on which (a) the Loans become due and payable pursuant to Section 8) and (b) the Delayed Draw Term Loan Commitment is terminated pursuant to Section 2.11(b).

 

Delayed Draw Term Loan Facility”: that term loan facility described in Section 2.1(b).

 

Delayed Draw Term Loan Lenders”: each Lender that has a Delayed Draw Term Loan Commitment or that is the holder of Delayed Draw Term Loans.

 

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Delayed Draw Term Loan Maturity Date”: the sixth anniversary of the Effective Date (or such earlier date on which the Loans become due and payable pursuant to Section 8); provided, however, in the event that on or prior to the Early Maturity Date the Borrower has not repaid, refinanced or extended (beyond the sixth anniversary of the Effective Date) the maturity of the Existing Subordinated Obligations issued pursuant to the Senior Subordinated Notes Indenture 1999, then the Early Maturity Date (or such earlier date on which the Loans become due and payable pursuant to Section 8).

 

Delayed Draw Term Loan Percentage”: as to any Delayed Draw Term Loan Lender at any time, the percentage which the sum of such Lender’s unfunded Delayed Draw Term Loan Commitment plus the aggregate principal amount of such Lender’s Delayed Draw Term Loans then outstanding constitutes of the sum of the aggregate unfunded Delayed Draw Term Loan Commitments and the aggregate principal amount of the Delayed Draw Term Loans then outstanding.

 

Delayed Draw Term Loans”: as defined in Section 2.1(b).

 

Delayed Draw Term Note”: as described in Section 2.9(e).

 

Derivatives Counterparty”: as defined in Section 7.6.

 

Designated Asset Sale”: any Disposition of any of the assets listed on Schedule 5.3(d)(iii) attached hereto.

 

Designation Deadline”: two (2) years from the Effective Date.

 

Directors’ and Officers’ Trust”: an irrevocable grantor trust holding funds deposited by Borrower to fund indemnification obligations to directors and officers of Borrower and its Subsidiaries.

 

Disposition”: with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof; and the terms “Dispose” and “Disposed of” shall have correlative meanings.

 

Distributed Unrestricted Subsidiary Income”: for any fiscal period, the amount of Cash received as Restricted Payments by the Borrower and its Restricted Subsidiaries during that period in Dollars from the Unrestricted Subsidiaries (other than the Argentina Subsidiaries), after deduction of all applicable withholding and other foreign taxes and other amounts applicable to any such Restricted Payment.

 

Dollars” and “$”: lawful currency of the United States of America.

 

Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States of America.

 

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Draw Package”: a monthly submission made by the Borrower to the Administrative Agent and the Construction Consultant in connection with any Current Project in accordance with Section 5.3, which shall include:

 

(a) to the extent the Draw Package includes a request for amounts to be paid to a Contractor whose request for payments are not included within or are otherwise outside of such Contractor’s request for payment, an Application and Certification for Payment from such Contractor and such other applicable contractors in the form commonly referred to as American Institute of Architects Document G702 and a detailed continuation sheet in the form commonly referred to as American Institute of Architects Document G703 (each, a “Contractor Application”, and, collectively, the “Contractor Applications”), in each case in form and substance satisfactory to the Administrative Agent and the Construction Consultant;

 

(b) each Contractor Application shall set forth the amount requested to be paid to such Contractor in connection with any Expenses (including amounts requested for advances or deposits, to the extent approved by the Administrative Agent and the Construction Consultant);

 

(c) each Contractor Application shall contain a certification from the respective contractor submitting such Contractor Application stating in substance that, to the best of such contractor’s knowledge, information and belief, the work covered by the applicable Contractor Application has been completed in accordance with the contract documents and Construction Plans applicable to such work, that all amounts requested to be paid with respect to any prior Contractor Applications submitted by such contractor have been paid (except in respect of any amounts described therein, or in the then current Contractor Application, or for which Borrower has withheld payment), and certifying the amounts then due to such contractor;

 

(d) to the extent the Draw Package includes a request for amounts to be paid with respect to Expenses which are not included in the Contractor Applications, such expenses shall be set forth on a separate application for payment prepared by Borrower, in a form substantially similar to the Contractor Application, which shall include copies of all applicable invoices and receipts to the extent requested by the Administrative Agent or the Construction Consultant;

 

(e) each Draw Package shall include a certification from the applicable Architect stating in substance that, in accordance with the contract documents for the applicable Current Project and the applicable Construction Plans, based upon on site observations and the data comprising the Contractor Applications submitted with the Draw Package, the Architect certifies to the Borrower that to the best of its knowledge, information and belief, the work associated with that Current Project has, as of the date of such Architect certification, progressed in accordance with the applicable Construction Plans and the applicable Construction Timetable, that the quality of such work is in accordance with such contract documents and Construction Plans, and that the contractors listed on the Contractor Applications are entitled to payment of the amounts set forth in such Contractor Applications; and

 

(f) each Draw Package shall include evidence of conditional lien releases for work performed in the prior month for the applicable Current Project, evidence of unconditional lien releases for work performed prior to the previous Draw Package for such Current Project, payrolls, receipted invoices or invoices with check vouchers attached, all to the extent requested by the Administrative Agent or the Construction Consultant and not previously provided, an updated schedule of values, an updated Construction Timetable for such Current Project, and any

 

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other evidence of work performed as reasonably required by the Administrative Agent or the Construction Consultant; provided, however, with respect to immaterial portions of the work for which Borrower could not reasonably obtain a lien release, Borrower shall provide the Administrative Agent and Construction Consultant with reasonable evidence of payment relating to such work or, in lieu thereof, a bond to cover such payment.

 

Early Maturity Date”: August 15, 2006.

 

ECF Percentage”: with respect to any fiscal year of the Borrower, (i) if the Consolidated Leverage Ratio as of the last day of such fiscal year is greater than 5.0 to 1.0, 75%; (ii) if the Consolidated Leverage Ratio as of the last day of such fiscal year is less than or equal to 5.0 to 1.0 and greater than 4.0 to 1.0, 50%; and (iii) if the Consolidated Leverage Ratio as of the last day of such fiscal year is less than or equal to 4.0 to 1.0, 0%.

 

Effective Date”: August 27, 2004.

 

Environmental Laws”: any and all laws, rules, orders, regulations, statutes, ordinances, guidelines, codes, decrees, or other legally enforceable requirements (including, without limitation, common law) of any international authority, foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or of human health, or employee health and safety, as has been, is now, or may at any time hereafter be, in effect.

 

Environmental Permits”: any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.

 

ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

Eurocurrency Reserve Requirements”: for any day, the aggregate (without duplication) of the maximum rates (expressed as a decimal or a fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

 

Eurodollar Base Rate”: with respect to each day during each Interest Period, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar Base Rate” for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent.

 

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Eurodollar Loans”: Loans for which the applicable rate of interest is based upon the Eurodollar Rate.

 

Eurodollar Rate”: with respect to each day during each Interest Period, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

 

   

Eurodollar Base Rate


   
    1.00 - Eurocurrency Reserve Requirements    

 

Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

 

Event of Default”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

Excess Cash”: as of any date of determination, the balance, as of the last day of the most recent calendar month prior to such date of determination for which an Excess Cash Certificate is required to be delivered pursuant to Section 6.2(f), of Cash and Cash Equivalents owned by the Borrower and its Restricted Subsidiaries net of (i) any restricted Cash and Cash Equivalents, and Restricted Argentina Cash, and (ii) the amount, in no event less than $42,500,000, which is then being utilized by the Borrower and its Restricted Subsidiaries for cage cash.

 

Excess Cash Certificate”: as defined in Section 6.2(f).

 

Excess Cash Flow”: for any fiscal year of the Borrower, the difference, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year, (iv) the aggregate net amount of non-cash loss on the Disposition of Property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income and (v) the net increase during such fiscal year (if any) in deferred tax accounts of the Borrower minus (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of Capital Expenditures (minus the principal amount of Indebtedness incurred during such fiscal year in connection with such expenditures and minus the amount of any such expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all prepayments of Revolving Credit Loans and Swing Line Loans during such fiscal year to the extent accompanying permanent optional reductions of the Revolving Credit Commitments and all optional prepayments of the Term Loans and Delayed Draw Term Loans during such fiscal year, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including, without limitation, the Term Loans and Delayed Draw Term Loans) of the Borrower and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit

 

16


facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) the amount of the increase, if any, in Consolidated Working Capital for such fiscal year, (vi) the aggregate net amount of non-cash gain on the Disposition of Property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income, (vii) the aggregate net amount of gain on all Dispositions of Property by the Borrower and its Restricted Subsidiaries during such fiscal year, to the extent included in arriving at such Consolidated Net Income, and (viii) the net decrease during such fiscal year (if any) in deferred tax accounts of the Borrower.

 

Excess Cash Flow Application Date”: as defined in Section 2.13(c).

 

Existing Credit Facility”: the credit facility evidenced by that certain Credit Agreement dated as of December 17, 2003, among the Borrower, Lehman, Bear Stearns, BSCL, LCPI and certain lenders party thereto.

 

Existing Subordinated Obligations”: (i) approximately $162,000,000 of 9.25% Senior Subordinated Notes due 2007 of the Borrower issued pursuant to the Indenture dated as of February 18, 1999 among the Borrower (under its former name, Hollywood Park, Inc.), the initial guarantors referred to therein, and The Bank of New York, as Trustee, as amended from time to time; (ii) the $135,000,000 8.75% Senior Subordinated Notes due 2013 of the Borrower issued pursuant to the First Supplemental Indenture dated as of September 25, 2003 among the Borrower, the initial guarantors referred to therein, and The Bank of New York, as Trustee, as amended from time to time, and (iii) the $200,000,000 8.25% Senior Subordinated Notes due 2012 of the Borrower issued pursuant to the Indenture dated as of March 15, 2004 among the Borrower, the initial guarantors referred to therein, and The Bank of New York, as Trustee, as amended from time to time.

 

Expansion Capital Expenditures”: Capital Expenditures of the Borrower and its Restricted Subsidiaries that are not Maintenance Capital Expenditures.

 

Expenses”: means (i) with regards to the Lake Charles Project, the aggregate costs and expenses (including construction costs, design, FF&E, soft costs, pre-opening and promotional costs) expended in the construction and development of the Lake Charles Project in accordance with the applicable Construction Plans and the applicable Construction Budget, (ii) with regards to the St. Louis City Project, the aggregate costs and expenses (including construction costs, design, FF&E, soft costs, pre-opening and promotional costs) expended in the construction and development of the St. Louis City Project in accordance with the applicable Construction Plans and the applicable Construction Budget if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, or (iii) with regards to the St. Louis County Project, the aggregate costs and expenses (including construction costs, design, FF&E, soft costs, pre-opening and promotional costs) expended in the construction and development of the St. Louis County Project in accordance with the applicable Construction Plans and the applicable Construction Budget if the St. Louis County Project is designated a Current Project pursuant to Section 5.5.

 

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Facility”: each of the Term Loan Facility, the Delayed Draw Term Loan Facility and the Revolving Credit Facility.

 

Fair Value Determination”: with respect to any Disposition of Property, a determination by (i) the management of the Borrower or (ii) the Board of Directors of the Borrower or the Executive Committee of such Board of Directors, as applicable, that such Disposition, taking into account all current consideration and direct and indirect future benefits anticipated to be received by the Borrower and its Subsidiaries in connection with such Disposition, is a reasonable and good faith exercise of business judgment.

 

Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

Fee Letter Agreement”: the letter agreement, dated as of July 22, 2004, between the Borrower and the Syndication Agent, the Administrative Agent and the Arrangers relating to the syndication of the Facilities.

 

Financial Condition Covenants”: the covenants of the Borrower set forth in Section 7.1.

 

Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic Subsidiary.

 

Free Cash Flow”: as of any date, (a) the Annualized Adjusted EBITDA for the 12-month period ending as of the most recent date prior to such date of determination for which financial statements have been delivered pursuant to Section 6.1(a), (b) or (c); plus (b) if either the Lake Charles Project or the St. Louis City Project has been in operation for less than one full fiscal quarter but has been in operation for at least two (2) full months, the amount of such Project’s Annualized Adjusted EBITDA for the number of full months it has operated shall be annualized on a straight-line basis; minus (c) Consolidated Interest Expense (net of interest income) for such 12-month period; minus (d) any Reclassified Argentina Receipts included in Annualized Adjusted EBITDA for such 12-month period; and minus (e) the greater of (i) $25,000,000, and (ii) the aggregate amount of Maintenance Capital Expenditures actually spent pursuant to Section 7.16(h) hereof, in each case for such 12-month period.

 

Funded Debt”: with respect to any Person, all Indebtedness of such Person of the types described in clauses (a) through (e) of the definition of “Indebtedness” in this Section, excluding any Indebtedness described in Section 7.2(j).

 

Funding Office”: the office specified from time to time by the Administrative Agent as its funding office by notice to the Borrower and the Lenders.

 

GAAP”: generally accepted accounting principles in the United States of America as in effect from time to time, except that for purposes of Section 7.1 and subject to

 

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Section 10.16, GAAP shall be determined on the basis of such principles used in the preparation of the December 31, 2003 audited financial statements.

 

Gaming Board”: collectively, (a) the California Attorney General (acting pursuant to the California Gambling Control Act), (b) the Nevada Gaming Commission, (c) the Nevada State Gaming Control Board, (d) the Indiana Gaming Commission, (e) the Mississippi Gaming Commission, (f) the Louisiana Gaming Control Board, (g) the Missouri Gaming Commission, and (h) any other Governmental Authority that holds regulatory, licensing or permit authority over gambling, gaming or casino activities conducted or proposed to be conducted by the Borrower and the Restricted Subsidiaries.

 

Gaming Laws”: all Laws pursuant to which any Gaming Board possesses regulatory, licensing or permit authority over gambling, gaming or casino activities conducted by the Borrower and the Restricted Subsidiaries.

 

Gaming License”: in any jurisdiction in which the Borrower or any of its Restricted Subsidiaries conducts or proposes to conduct any casino and gaming business or activities, any license, permit or other authorization to conduct gaming activities that is granted or issued by the applicable Gaming Board to the Borrower or any of its Restricted Subsidiaries.

 

Governmental Authority”: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, the Gaming Boards and Liquor Authorities.

 

Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit), if to induce the creation of such obligation of such other Person the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not

 

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stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

 

Guarantors”: the collective reference to the Subsidiary Guarantors.

 

Hedge Agreements”: all interest rate or currency swaps, caps or collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by the Borrower or its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies.

 

In Balance Requirement”: as defined in Section 7.1 (d).

 

Incremental Term Loans”: as defined in Section 2.8(a).

 

Incremental Facility Amendments”: as defined in Section 2.8(b).

 

Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of Property or services (other than trade payables, and chip and token liability incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit or similar facilities, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above; (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Hedge Agreements.

 

Indemnified Liabilities”: as defined in Section 10.5.

 

Indemnitee”: as defined in Section 10.5.

 

Indentures”: collectively, the Senior Subordinated Notes Indenture 1999, the Senior Subordinated Notes Indenture 2003, the Senior Subordinated Notes Indenture 2004, and any future indentures or other agreements governing any New Subordinated Obligations.

 

Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

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Insolvent”: pertaining to a condition of Insolvency.

 

Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

Interest Payment Date”: (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or shorter, the last day of such Interest Period, and (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period.

 

Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(a) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(b) any Interest Period that would otherwise extend beyond the Revolving Credit Termination Date or beyond the date final payment is due on the Term Loans or Delayed Draw Term Loans, as the case may be, shall end on the Revolving Credit Termination Date or such due date, as applicable; and

 

(c) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period.

 

Investments”: as defined in Section 7.7.

 

Issuing Lender”: any Revolving Credit Lender from time to time designated by the Borrower as an Issuing Lender with the consent of such Revolving Credit Lender and the Administrative Agent.

 

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L/C Commitment”: $30,000,000.

 

L/C Fee Payment Date”: the last day of each March, June, September and December and the last day of the Revolving Credit Commitment Period.

 

L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.

 

L/C Participants”: with respect to any Letter of Credit, the collective reference to all the Revolving Credit Lenders other than the Issuing Lender that issued such letter of Credit.

 

Lake Charles Project”: the resort casino and hotel project contemplated to be constructed by PNK (LAKE CHARLES), L.L.C. in Lake Charles, Louisiana, as more particularly described on Schedule 1.1(a), to be constructed in accordance with the applicable Construction Plans and the applicable Construction Budget.

 

Lake Charles Vessel”: the vessel to be constructed pursuant to the Vessel Construction Contract, upon which the gaming facilities associated with the Lake Charles Project are to be located.

 

Laws”: collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents, including, without limitation, Gaming Laws.

 

LEEVAC”: LEEVAC Industries, LLC and its successors.

 

Lender Addendum”: with respect to any initial Lender, a Lender Addendum, substantially in the form of Exhibit F, to be executed and delivered by such Lender on the Effective Date as provided in Section 10.17.

 

Lenders”: collectively, the Term Loan Lenders, the Delayed Draw Term Loan Lenders and the Revolving Loan Lenders.

 

Letters of Credit”: as defined in Section 3.1(a).

 

License Revocation”: the revocation, failure to renew, suspension of, refusal to issue, or the appointment of a receiver, supervisor or similar official with respect to, any Gaming License covering any present or reasonably proposed casino or gaming facility of Borrower or any Restricted Subsidiary.

 

Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

 

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Liquor Authorities”: in any jurisdiction in which the Borrower or any of its Restricted Subsidiaries sells and/or distributes liquor, or proposes to sell and/or distribute liquor, the applicable alcoholic beverage commission or other Governmental Authority responsible for interpreting, administering or enforcing the Liquor Laws.

 

Liquor Laws”: the laws, rules, regulations and orders applicable to or involving the sale and/or distribution of liquor by the Borrower or any of its Restricted Subsidiaries in any jurisdiction, as in effect from time to time, including the policies, interpretations or administration thereof by the applicable Liquor Authorities.

 

Liquor License”: in any jurisdiction in which the Borrower or any of its Restricted Subsidiaries sells and/or distributes liquor, or proposes to sell and/or distribute liquor, any license, permit or other authorization to sell and distribute liquor that is granted or issued by the applicable alcoholic beverage commission or other Governmental Authority responsible for interpreting, administering or enforcing the Liquor Laws.

 

Loan”: any loan made by any Lender pursuant to this Agreement.

 

Loan Documents”: this Agreement, the Subsidiary Guaranty, the Security Documents, the Fee Letter Agreement, the Applications and the Notes.

 

Loan Parties”: the Borrower and each Subsidiary of the Borrower that is a party to a Loan Document.

 

Maintenance Capital Expenditures”: Capital Expenditures that are incurred to maintain, restore, refurbish or replace fixed or capital assets or equipment of the Borrower and its Restricted Subsidiaries.`

 

Majority Facility Lenders”: with respect to any Facility (i) the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans, (ii) the holders of more than 50% of the aggregate unpaid principal amount of the Delayed Draw Term Loans and unfunded Delayed Draw Term Loan Commitments, or (iii) the holders of more than 50% of the aggregate unpaid principal amount of the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Credit Facility, prior to any termination of the Revolving Credit Commitments, the holders of more than 50% of the Total Revolving Credit Commitments).

 

Majority Revolving Credit Facility Lenders”: the Majority Facility Lenders in respect of the Revolving Credit Facility.

 

Material Adverse Effect”: a material adverse effect on (a) the business, assets, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder.

 

Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity, and any other

 

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substances or forces of any kind, whether or not any such substance or force is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to or could give rise to liability under any Environmental Law.

 

Maximum Argentina Investment Amount”: as of any date of determination, the sum of (a) $1,500,000; plus (b) all amounts received by the Borrower or any Restricted Subsidiary as Argentina Receipts after December 17, 2003 through such date of determination, minus (c) all Reclassified Argentina Receipts.

 

Maximum Expansion Capital Expenditures Amount”: as of any date of determination, the amount equal to the lesser of (a) $125,000,000 and (b) $80,000,000 plus the Net Cash Proceeds of any Capital Stock (other than Capital Stock issued in connection with compensatory stock options for employees and consultants) issued by the Borrower after the Effective Date less the amounts required to be applied from such Net Cash Proceeds towards the repayment of Loans and deposited into the Completion Reserve Account pursuant to Section 2.13(e).

 

Minimum Amenities”: in the case of the Lake Charles Project, those amenities specified on Schedule 1.1(a); and in the case of the St. Louis City Project or the St. Louis County Project, those amenities specified in the applicable Current Project Designation Request, as approved by the Administrative Agent in connection with the designation of such project as a Current Project pursuant to Section 5.5.

 

Mortgaged Properties”: the real properties listed on Schedule 1.1(b) as and when the Administrative Agent for the benefit of the Secured Parties is granted a Lien pursuant to one or more Mortgages in accordance with the terms of this Agreement.

 

Mortgages”: (i) each of the mortgages and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the secured parties, which mortgages and deeds of trust shall be amended as of the date hereof by an amendment substantially in the form of Exhibit G-1 (with such changes thereto as shall be advisable under the law of the jurisdiction in which such amendment is to be recorded), as the same may be further amended, amended and restated, restated, supplemented or otherwise modified from time to time and (ii) each of the mortgages and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the secured parties, which mortgages and deeds of trust shall be substantially in the form of Exhibit G-2 (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgages and deeds of trust are to be recorded), as the same may be further amended, amended and restated, restated, supplemented or otherwise modified from time to time.

 

Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

Net Cash Proceeds”: (a) in connection with any Asset Sale, any Recovery Event or any Designated Asset Sale, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as

 

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and when received) of such Asset Sale, Recovery Event or Designated Asset Sale, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset Sale, Recovery Event or Designated Asset Sale (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (b) in connection with any issuance or sale of equity securities or debt securities or instruments or the incurrence of loans, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith and (c) in connection with any Purchase Price Refund, the cash amount thereof, net of any expenses incurred in the collection thereof.

 

New Subordinated Obligations”: unsecured subordinated Indebtedness of the Borrower that (a) does not have any scheduled principal payment, mandatory principal prepayment or sinking fund payment due prior to the date that is six months following the Term Loan Maturity Date and Delayed Draw Term Loan Maturity Date, (b) is not secured by any Lien on the Property of Borrower or any of its Subsidiaries, and (c) is otherwise on terms (except for pricing) which are (i) in the aggregate not more favorable to the holders of such Indebtedness than those contained in the Existing Subordinated Obligations as in effect on the date hereof in any manner which is detrimental to the Agents or the Lenders or substantially identical thereto (in each case, as determined by the Administrative Agent in its discretion) or (ii) otherwise approved by the Required Lenders; provided, however, for purposes of this clause (c) Borrower shall be permitted to incur convertible subordinated debt on terms reasonably acceptable to the Administrative Agent and otherwise in compliance with clauses (a) and (b) above.

 

Non-Excluded Taxes”: as defined in Section 2.21(a).

 

Non-U.S. Lender”: as defined in Section 2.21(d).

 

Note”: any promissory note evidencing any Loan.

 

Obligations”: the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender or any Qualified Counterparty, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided, that (i) obligations of the

 

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Borrower or any Subsidiary under any Specified Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (ii) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements.

 

Opening”: when all of the following have occurred (i) with regards to the Lake Charles Project: (a) the Lake Charles Project amenities described in items 1 through 5 on Schedule 1.1(a) are substantially complete and operational, (b) a certificate of occupancy (which may be a temporary certificate of occupancy) has been issued in respect of the Lake Charles Project, and (c) the Lake Charles Project is legally open for business to hotel, resort and gaming patrons, (ii) with regards to the St. Louis City Project: (a) that portion of the applicable Minimum Amenities that are designated as required to be completed for the applicable Opening Date to occur in the applicable Current Project Designation Request is substantially complete and operational, (b) a certificate of occupancy (which may be a temporary certificate of occupancy) has been issued in respect of the St. Louis City Project, and (c) the St. Louis City Project is legally open for business to hotel, resort and gaming patrons as contemplated by the applicable Construction Plans, and (iii) with regards to the St. Louis County Project: (a) that portion of the applicable Minimum Amenities that are designated as required to be completed for the applicable Opening Date to occur in the applicable Current Project Designation Request is substantially complete and operational, (b) a certificate of occupancy (which may be a temporary certificate of occupancy) has been issued in respect of the St. Louis County Project, and (c) the St. Louis County Project is legally open for business to hotel, resort and gaming patrons as contemplated by the applicable Construction Plans.

 

Opening Date”: (i) with regards to the Lake Charles Project, the earlier of: (a) June 30, 2005, and (b) the date (as such date may be extended) upon which the Opening must occur as required by the Louisiana Gaming Control Board as a condition to licensure of the Lake Charles Project, (ii) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, the date projected for the Opening of the St. Louis City Project as approved by the Administrative Agent, which date shall not be more than 30 months following such designation, or (iii) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the date projected for the Opening of the St. Louis County Project as approved by the Administrative Agent, which date shall not be more than 42 months following such designation.

 

Other Taxes”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

Participant”: as defined in Section 10.6(b).

 

Payment Office”: the office specified from time to time by the Administrative Agent as its payment office by notice to the Borrower and the Lenders.

 

PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

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Permitted Refinancing Notes”: the notes evidencing the Permitted Refinancing Obligations.

 

Permitted Refinancing Obligations”: unsecured Indebtedness of the Borrower that (a) does not have any scheduled principal payment, mandatory principal prepayment or sinking fund payment due prior to the date that is six months following the Term Loan Maturity Date and Delayed Draw Term Loan Maturity Date; (b) is not secured by any Lien on the Property of Borrower or any of its Subsidiaries, and (c) is otherwise on terms (except for pricing) which are (i) not, in the aggregate, more favorable to the holders of such Indebtedness than those contained in the Existing Subordinated Obligations as in effect on the date hereof (except such Permitted Refinancing Obligations need not contain subordination provisions) in any manner which is detrimental to the Agents or the Lenders or substantially identical thereto (in each case, as determined by the Agent in its discretion) or (ii) otherwise approved by the Lenders who will represent Required Lenders after giving effect to the application of any proceeds of Permitted Refinancing Obligations to prepay Term Loans and Delayed Draw Term Loans (or if all Term Loans and Delayed Draw Term Loans have been repaid, to prepay Permitted Refinancing Obligations).

 

Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

Plan”: at a particular time, any Single Employer Plan or employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Pledge Agreements”: collectively, the Pledge Agreements (Gaming Regulated) and the Pledge Agreement (General).

 

Pledge Agreement (Gaming Regulated)”: the amended pledge agreements (including the Post-Closing Gaming Pledge Amendments) executed and delivered by the Borrower and the Restricted Subsidiaries in respect of the Capital Stock owned by the Borrower or any Restricted Subsidiary in any Subsidiary that conducts gambling, gaming or casino activities that are subject to Gaming Laws.

 

Pledge Agreement (General)”: the amended pledge agreement executed and delivered by the Borrower and the Restricted Subsidiaries covering the Capital Stock held by the Borrower and any of such Subsidiaries in all Subsidiaries of the Borrower, other than the Unrestricted Subsidiaries that are Foreign Subsidiaries or the Subsidiaries the Capital Stock of which is pledged pursuant to a Pledge Agreement (Gaming Regulated).

 

Pledged Stock”: Capital Stock pledged to the Administrative Agent for the benefit of the Secured Parties, pursuant to the Pledge Agreements.

 

Post-Closing Gaming Pledge Amendments”: the amendments to the Pledge Agreements (Gaming Regulated) listed on Schedule 1.1(d).

 

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Preferred Ship Mortgages”: (i) each of the preferred ship mortgages made by any Loan Party in favor of the Administrative Agent for the benefit of the Secured Parties, which preferred ship mortgages shall be amended as of the date hereof by an amendment substantially in the form of Exhibit H-1, as the same may be further supplemented, modified, amended, extended or supplanted from time to time, and (ii) each of the preferred ship mortgages made by a Loan Party in favor of the Administrative Agent for the benefit of the Secured Parties, which preferred ship mortgages shall be substantially in the form of Exhibit H-2, as the same may be further supplemented, modified, amended, extended or supplanted from time to time.

 

Pricing Grid”: the pricing grid attached hereto as Annex A.

 

Projected Free Cash Flow”: as of any date of determination on or after the St. Louis City Project is designated a Current Project, the product of (a) Free Cash Flow as of such date of determination times (b) a fraction, (i) the numerator of which is the lesser of (x) 24 months, and (y) the number of full calendar months that are remaining between the date of determination and the Opening Date for the St. Louis City Project, and (ii) the denominator of which is 12; provided, however, during any period in which the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the numerator shall be the lesser of (x) 36 months, and (y) the number of full calendar months that are remaining between the date of determination and the Opening Date for the St. Louis County Project, less (c) the sum of (i) $10,000,000 and (ii) the amount of scheduled principal payments on Indebtedness of the Borrower and its Restricted Subsidiaries during the months included in the numerator pursuant to clause (b) above (excluding principal payments with respect to Existing Subordinated Obligations issued pursuant to the Senior Subordinated Notes Indenture 1999).

 

Projections”: as defined in Section 6.2(c).

 

Property”: any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.

 

Purchase Price Refund”: any amount in excess of $1,000,000 received by the Borrower or any Restricted Subsidiary as a result of a purchase price adjustment or similar event in connection with any acquisition of Property by the Borrower or any Restricted Subsidiary.

 

Qualified Counterparty”: with respect to any Specified Hedge Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement was entered into, was a Lender or an affiliate of a Lender.

 

Rabbi Trust”: that certain Grantor Trust Agreement made the 1st day of January, 2000 by and between the Borrower and Wachovia Bank, N.A., as trustee (or any successor trustee), as amended, modified and supplemented from time to time in accordance with this Agreement.

 

Reclassified Argentina Receipts”: as of any date of determination, the aggregate amount of Argentina Receipts received by the Borrower or any Restricted Subsidiary after the Effective Date and through the date of determination (a) which have not been invested in any Argentina Subsidiary in accordance with the provisions of Section 7.7(j); and (b) with respect to

 

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which the Borrower has provided the Administrative Agent an irrevocable written notice prior to such date of determination that Argentina Receipts in such amount is not available for investment in any Argentina Subsidiary.

 

Recovery Event”: any settlement of or payment in excess of $1,000,000 in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of the Borrower or any of its Restricted Subsidiaries.

 

Redevelopment Agreement”: that certain Redevelopment Agreement dated as of April 22, 2004 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Borrower, as may be amended, extended, renewed, supplemented, restated, amended and restated or otherwise modified from time to time.

 

Refunded Swing Line Loans”: as defined in Section 2.7(b).

 

Refunding Date”: as defined in Section 2.7(c).

 

Register”: as defined in Section 10.6(d).

 

Regulation H”: Regulation H of the Board as in effect from time to time.

 

Regulation U”: Regulation U of the Board as in effect from time to time.

 

Reimbursement Obligation”: the obligation of the Borrower to reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing Lender.

 

Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by the Borrower or any of its Restricted Subsidiaries in connection therewith that are not applied to prepay the Term Loans or the Delayed Draw Term Loans or to reduce the Revolving Credit Commitments pursuant to Section 2.13(b) as a result of the delivery of a Reinvestment Notice.

 

Reinvestment Event”: any Asset Sale, Purchase Price Refund or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

Reinvestment Notice”: a written notice executed by a Responsible Officer and delivered to the Administrative Agent within five (5) Business Days after an Asset Sale, Purchase Price Refund or Recovery Event stating that no Default or Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Restricted Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale, Purchase Price Refund or Recovery Event to acquire assets useful in its business.

 

Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire assets useful in the Borrower’s business.

 

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Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier of (a) the date occurring nine months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

 

Related Fund”: with respect to any Lender, any fund that (x) invests in commercial loans and (y) is managed or advised by the same investment advisor (or an affiliate of such investment adviser) as such Lender, by such Lender or an Affiliate of such Lender.

 

Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

 

Required Lenders”: at any time, the holders of more than 50% of (a) until the Effective Date, the Commitments and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding, (ii) the unfunded Term Loan Commitments (if any), (iii) the aggregate unpaid principal amount of the Delayed Draw Term Loans then outstanding, (iv) the unfunded Delayed Draw Term Loan Commitments (if any), and (v) the Total Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.

 

Required Minimum Contingency”: (1) with respect to the Lake Charles Project, (a) $9,800,000 times (b) 1.00 minus the Completion Ratio of the Lake Charles Project, and (2) if the St. Louis City Project is designated a Current Project pursuant to Section 5.5, (a) until the Completion Ratio of the St. Louis City Project is 0.35, 5% of the applicable Construction Budget as reduced by capitalized interest and pre-opening costs; and (b) thereafter, (i) 5% of the applicable Construction Budget as reduced by capitalized interest and pre-opening costs times (ii) 1.00 minus the Completion Ratio of the St. Louis City Project, or (3) if the St. Louis County Project is designated a Current Project pursuant to Section 5.5, (a) until the Completion Ratio of the St. Louis County Project is 0.35, 5% of the applicable Construction Budget as reduced by capitalized interest and pre-opening costs; and (b) thereafter, (i) 5% of the applicable Construction Budget as reduced by capitalized interest and pre-opening costs times (ii) 1.00 minus the Completion Ratio of the St. Louis County Project.

 

Required Prepayment Lenders”: the Majority Facility Lenders in respect of each Facility.

 

Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

 

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Responsible Officer”: the chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer of the Borrower; provided that the treasurer of the Borrower may act as a Responsible Officer with respect to any Borrowing Notices to be delivered under this Agreement.

 

Restricted Argentina Cash”: as of the date of determination, the Maximum Argentina Investment Amount which has not been invested in any Argentina Subsidiary in accordance with the provisions of Section 7.7(j).

 

Restricted Payments”: as defined in Section 7.6.

 

Restricted Subsidiaries”: as of the date of determination, all Subsidiaries of the Borrower other than Subsidiaries of the Borrower which have been properly designated as Unrestricted Subsidiaries of the Borrower in accordance with the definition thereof.

 

Revolving Credit Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Credit Loans and participate in Swing Line Loans and Letters of Credit, in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Credit Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Revolving Credit Commitments is $125,000,000.

 

Revolving Credit Commitment Period”: the period from and including the Effective Date to the Revolving Credit Termination Date.

 

Revolving Credit Facility”: the revolving credit facility described in Section 2.4.

 

Revolving Credit Lender”: each Lender that has a Revolving Credit Commitment or that is the holder of Revolving Credit Loans.

 

Revolving Credit Loans”: as defined in Section 2.4.

 

Revolving Credit Note”: as defined in Section 2.9(e).

 

Revolving Credit Percentage”: as to any Revolving Credit Lender at any time, the percentage which such Lender’s Revolving Credit Commitment then constitutes of the Total Revolving Credit Commitments (or, at any time after the Revolving Credit Commitments shall have expired or terminated, the percentage which the aggregate amount of such Lender’s Revolving Extensions of Credit then outstanding constitutes the amount of the Total Revolving Extensions of Credit then outstanding).

 

Revolving Credit Termination Date”: December 17, 2008 (or such earlier date on which the Loans become due and payable pursuant to Section 8); provided, however, in the event that on or prior to the Early Maturity Date the Borrower has not repaid, refinanced or extended (beyond the sixth anniversary of the Effective Date) the maturity of the Existing Subordinated Obligations issued pursuant to the Senior Subordinated Notes Indenture 1999, then

 

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the Early Maturity Date (or such earlier date on which the Loans become due and payable pursuant to Section 8).

 

Revolving Extensions of Credit”: as to any Revolving Credit Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (b) such Lender’s Revolving Credit Percentage of the L/C Obligations then outstanding and (c) such Lender’s Revolving Credit Percentage of the aggregate principal amount of Swing Line Loans then outstanding.

 

SEC”: the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).

 

Secured Parties”: as defined in the Security Agreement.

 

Security Agreement”: the Amended and Restated Security Agreement executed and delivered by the Borrower and the Restricted Subsidiaries on the Effective Date, substantially in the form of Exhibit I-1, as may be supplemented, modified, amended, extended or supplanted from time to time.

 

Security Documents”: the collective reference to the Security Agreement, the Trademark Collateral Assignment, the Pledge Agreements (Gaming Regulated), the Pledge Agreement (General), the Mortgages, the Preferred Ship Mortgages, the Collateral Assignment of Construction Contract, the Collateral Assignment of Vessel Contract, the Collateral Assignment of Cooperative Endeavor Agreement, the Collateral Assignment of Architects’ Contract, the Collateral Assignment of the Redevelopment Agreement, the Completion Reserve Account Control Agreement and any other security agreement, pledge agreement, deed of trust, mortgage, and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

 

Senior Subordinated Notes Indenture 1999”: the Indenture dated as of February 18, 1999 among the Borrower (under its former name), the initial guarantors referred to therein, and The Bank of New York, as Trustee, as amended from time to time, pursuant to which certain of the Existing Subordinated Obligations were issued.

 

Senior Subordinated Notes Indenture 2003”: the Indenture dated as of September 25, 2003, among the Borrower, the initial guarantors referred to therein, and The Bank of New York, as Trustee, as supplemented by the First Supplemental Indenture dated as of September 25, 2003, and as further amended from time to time, pursuant to which certain of the Existing Subordinated Obligations were issued.

 

Senior Subordinated Notes Indenture 2004”: Indenture dated as of March 15, 2004 among the Borrower, the initial guarantors referred to therein, and The Bank of New York, as Trustee, as amended from time to time.

 

Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

 

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Solvent”: with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

Specified Change of Control”: a “Change of Control”, or like event, as defined in any Indenture or other document entered into by the Borrower or any Restricted Subsidiary with respect to any New Subordinated Obligations or Permitted Refinancing Obligations.

 

Specified Hedge Agreement”: any Hedge Agreement entered into by the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.

 

St. Louis City Project”: the resort casino and hotel project contemplated to be constructed in St. Louis, Missouri (not including the Condo Component).

 

St. Louis City Ground Lease”: a ground lease that may be entered into between the Borrower and the Land Clearance for Redevelopment Authority of the City of St. Louis for a tract of land, together with improvements thereon, located in the City of St. Louis, which ground lease is subject to an Option for Ground Lease dated May 24, 2004 by and between the Borrower and the Land Clearance for Redevelopment Authority of the City of St. Louis and reasonably approved by the Administrative Agent.

 

St. Louis City Pre-Development Costs”: any out-of-pocket expenses incurred prior to the designation of the St. Louis City Project as a Current Project pursuant to Section 5.5 in connection with the proposed development of the St. Louis City Project up to a maximum of $15,000,000 (not including amounts expended prior to the Effective Date).

 

St. Louis County Ground Lease”: a ground lease entered into between the Borrower and the St. Louis County Port Authority pursuant to that certain Lease and Development Agreement dated as of August 17, 2004, for an approximate 56 acre tract of land, together with the improvements thereon covered by such ground lease, located in the Lemay area of St. Louis County.

 

St. Louis County Pre-Development Costs”: any out-of-pocket expenses incurred prior to the designation of the St. Louis County Project as a Current Project pursuant to Section 5.5

 

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in connection with the proposed development of the St. Louis County Project up to a maximum of $30,000,000 (including amounts expended prior to the Effective Date).

 

St. Louis County Project”: the resort casino, community facilities and access road hotel project contemplated to be constructed in St. Louis County, Missouri.

 

St. Louis Riverboat Acquisition”: the acquisition of a riverboat (and associated assets) that as of the Effective Date is docked in St. Louis, Missouri.

 

Subordinated Notes”: the notes evidencing the Existing Subordinated Obligations or the New Subordinated Obligations.

 

Subordinated Obligations”: collectively, the Existing Subordinated Obligations and the New Subordinated Obligations.

 

Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

Subsidiary Guarantor”: each direct and indirect domestic (and, to the extent that it would not result in a material adverse tax consequence for the Company, foreign) Subsidiary of the Borrower, other than the Unrestricted Subsidiaries, that has executed a Subsidiary Guaranty or a joinder thereto.

 

Subsidiary Guaranty”: the Amended and Restated Subsidiary Guaranty executed and delivered by the Restricted Subsidiaries parties thereto on the Effective Date, substantially in the form of Exhibit I-2, as may be amended, supplemented or supplanted from time to time in accordance with the terms of this Agreement.

 

Swing Line Commitment”: the obligation of the Swing Line Lender to make Swing Line Loans pursuant to Section 2.6 in an aggregate principal amount at any one time outstanding not to exceed $15,000,000.

 

Swing Line Lender”: Lehman Commercial Paper Inc., in its capacity as the lender of Swing Line Loans.

 

Swing Line Loans”: as defined in Section 2.6.

 

Swing Line Note”: as defined in Section 2.9(e).

 

Swing Line Participation Amount”: as defined in Section 2.7(c).

 

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Syndication Date”: the earlier of (i) 90 days after the Effective Date and (ii) the date on which the Arrangers complete the syndication of the Facilities and the entities selected in such syndication process become parties to this Agreement.

 

Term Loan Commitment”: as to any Lender, the obligation of such Lender, if any, to make Term Loans in an aggregate principal amount not to exceed the amount set forth under the heading “Term Loan Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Term Loan Commitments is $125,000,000.

 

Term Loan Facility”: that term loan facility described in Section 2.1(a).

 

Term Loan Lenders”: each Lender that has a Term Loan Commitment or that is the holder of Term Loans.

 

Term Loan Maturity Date”: the sixth anniversary of the Effective Date (or such earlier date on which the Loans become due and payable pursuant to Section 8); provided, however, in the event that on or prior to the Early Maturity Date the Borrower has not repaid, refinanced or extended (beyond the sixth anniversary of the Effective Date) the maturity of the Existing Subordinated Obligations issued pursuant to the Senior Subordinated Notes Indenture 1999, then the Early Maturity Date (or such earlier date on which the Loans become due and payable pursuant to Section 8).

 

Term Loan Percentage”: as to any Term Loan Lender at any time, the percentage which such Lender’s Term Loans then outstanding constitutes of the aggregate principal amount of the Term Loans then outstanding.

 

Term Loans”: as defined in Section 2.1(a).

 

Term Loan Reduction Proceeds”: as defined in Section 2.13(e).

 

Term Note”: as described in Section 2.9(e).

 

Total Revolving Credit Commitments”: at any time, the aggregate amount of the Revolving Credit Commitments then in effect.

 

Total Revolving Extensions of Credit”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Credit Lenders outstanding at such time.

 

Trademark Collateral Assignment”: the Amended and Restated Trademark Collateral Assignment executed and delivered by the Borrower and the Restricted Subsidiaries on the Effective Date, substantially in the form of Exhibit J, as may be supplemented, modified, amended, extended or supplanted from time to time.

 

Transferee”: as defined in Section 10.15.

 

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Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

 

UCC”: the Uniform Commercial Code under New York law except to the extent the law of any local jurisdiction applies.

 

Undeveloped Reno Property”: approximately 500 acres of undeveloped land adjacent to the Boomtown Hotel and Casino in Reno, Nevada owned by the Borrower or any of its Restricted Subsidiaries as of the Effective Date.

 

Unexpended Construction Budget”: as of any date of determination, (a) the then Construction Budgets for the then Current Projects less (b) the sum, without duplication, of (i) the line item in such Construction Budgets for interest expense during construction, (ii) the cumulative construction expenditures for the then Current Projects, as reflected in the most recent Construction Progress Report delivered prior to such date of determination pursuant to Section 5.3(e)(iv), (iii) the aggregate amount of disbursements from the Completion Reserve Account applied to Expenses after the date of the Construction Progress Report referred to in clause (ii) and prior to such date of determination, and (iv) the aggregate amount of proceeds of Revolving Loans (x) applied to Expenses prior to such date of determination and not previously reimbursed with disbursements from the Completion Reserve Account and (y) specifically identified as to be applied to Expenses in the Borrowing Notice with respect to such Revolving Loans; provided, however, the amount deducted pursuant to this clause (iv) shall not exceed the Construction Sublimit.

 

Unrestricted Subsidiaries”: the Foreign Subsidiaries and the domestic Subsidiaries designated as Unrestricted Subsidiaries on Schedule 4.15 and any other Subsidiaries of the Borrower formed or acquired after the Effective Date and designated as Unrestricted Subsidiaries by the Borrower to Administrative Agent in writing, provided, however, that (a) no Subsidiary may be designated as an Unrestricted Subsidiary at any time when a Default or Event of Default has occurred and remains continuing, or would result from such designation, (b) the Borrower shall make any such designation prior to or substantially concurrently with the acquisition or formation of the relevant Subsidiary, and (c) no Unrestricted Subsidiary shall own, directly or indirectly, any portion of or rights in (i) any of the hotel, gaming or resort properties or related properties, or (ii) any equity or debt securities of any Restricted Subsidiary; provided, however, an Unrestricted Subsidiary may own the Condo Component.

 

Vessel Construction Contract”: the Vessel Construction Agreement dated as of August 27, 2003, by and between LEEVAC INDUSTRIES, LLC and PNK (LAKE CHARLES), L.L.C.

 

Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

 

Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned Subsidiary of the Borrower.

 

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1.2 Other Definitional Provisions.

 

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.

 

(c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(e) All calculations of financial ratios set forth in Section 7.1 and the calculation of the Consolidated Leverage Ratio for purposes of determining the Applicable Margin shall be calculated to the same number of decimal places as the relevant ratios are expressed in and shall be rounded upward if the number in the decimal place immediately following the last calculated decimal place is five or greater. For example, if the relevant ratio is to be calculated to the hundredth decimal place and the calculation of the ratio is 5.126, the ratio will be rounded up to 5.13.

 

SECTION 2.

AMOUNT AND TERMS OF COMMITMENTS

 

2.1 Term Loan and Delayed Draw Term Loan Commitments.

 

(a) Subject to the terms and conditions hereof, the Term Loan Lenders severally agree to make term loans to the Borrower, on a pro rata basis according to their respective Term Loan Percentage, in the maximum aggregate principal amount equal to $125,000,000 (collectively, the “Term Loans”). The Term Loans shall be made in a single drawing on the Effective Date. The Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.14; provided that no Term Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Term Loan Maturity Date.

 

(b) Subject to the terms and conditions hereof, the Delayed Draw Term Loan Lenders severally agree to make term loans to the Borrower, on a pro rata basis according to their respective Delayed Draw Term Loan Percentage, in the maximum aggregate principal amount equal to $150,000,000 (collectively, the “Delayed Draw Term Loans”). The Delayed Draw Term Loans shall be made in up to five (5) drawings of not less than $25,000,000 each during the Delayed Draw Term Loan Commitment Period (which drawings may not exceed, in the aggregate, $150,000,000). The proceeds of each Delayed Draw Term Loan shall be

 

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deposited into the Completion Reserve Account. The Delayed Draw Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.14; provided that no Delayed Draw Term Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Delayed Draw Term Loan Maturity Date.

 

2.2 Procedure for Term Loan and Delayed Draw Term Loan Borrowing.

 

(a) The Borrower shall deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans) requesting that the Term Loan Lenders make the requested Term Loans. Upon receipt of such Borrowing Notice the Administrative Agent shall promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon, New York City time, on the Borrowing Date, each Term Loan Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Term Loan to be made by such Term Loan Lender.

 

(b) The Borrower shall deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans) requesting that the Delayed Draw Term Loan Lenders make the requested Delayed Draw Term Loans. Upon receipt of such Borrowing Notice the Administrative Agent shall promptly notify each Delayed Draw Term Loan Lender thereof. Not later than 12:00 Noon, New York City time, on the Borrowing Date, each Delayed Draw Term Loan Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Delayed Draw Term Loan to be made by such Delayed Draw Term Loan Lender.

 

(c) The Administrative Agent shall make available to the Borrower the aggregate of the amounts made available to the Administrative Agent by the Lenders under clause (a) or (b), in like funds as received by the Administrative Agent. Any Term Loans and Delayed Draw Term Loans made on the Effective Date shall initially be Base Rate Loans, and no Term Loan or Delayed Draw Term Loans may be made as, converted into or continued as a Eurodollar Loan prior to the earlier of (x) 30 days after the Effective Date, and (y) the Syndication Date.

 

2.3 Repayment of Term Loans and Delayed Draw Term Loans.

 

(a) The Term Loans shall be payable as follows: (i) installments in an amount equal to 0.25% of the principal amount of the Term Loans outstanding on October 1, 2005, payable on the last day of each March, June, September and December, commencing with March 2006 and ending on the Term Loan Maturity Date and (ii) the remaining unpaid principal amount of the Term Loans on the Term Loan Maturity Date.

 

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(b) The Delayed Draw Term Loans shall be payable as follows: (i) installments in an amount equal to 0.25% of the principal amount of the Delayed Draw Term Loans outstanding on October 1, 2005, payable on the last day of each March, June, September and December, commencing with March 2006 and ending on the Delayed Draw Term Loan Maturity Date and (ii) the remaining unpaid principal amount of the Delayed Draw Term Loans on the Delayed Draw Term Loan Maturity Date.

 

2.4 Revolving Credit Commitments. Subject to the terms and conditions hereof, the Revolving Credit Lenders severally agree to make revolving credit loans (“Revolving Credit Loans”) to the Borrower from time to time during the Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding for each Revolving Credit Lender which, when added to such Lender’s Revolving Credit Percentage of the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate principal amount of the Swing Line Loans then outstanding, does not exceed the amount of such Lender’s Revolving Credit Commitment; provided that the aggregate amount of Revolving Credit Loans applied to pay Expenses without being deposited into the Completion Reserve Account shall not exceed the Construction Sublimit at any time. The Construction Sublimit shall be replenished and otherwise be available for borrowing by the Borrower to the extent that the costs and expenses previously paid with the proceeds of previous borrowings under the Construction Sublimit have become approved as part of a final Draw Package pursuant to Section 5.3(e). During the Revolving Credit Commitment Period the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Credit Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.14, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Revolving Credit Termination Date. The Borrower shall repay all outstanding Revolving Credit Loans on the Revolving Credit Termination Date.

 

2.5 Procedure for Revolving Credit Borrowing. The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Credit Commitment Period, provided that the Borrower shall deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans). Any Revolving Credit Loans made on the Effective Date shall initially be Base Rate Loans, and no Revolving Credit Loan may be made as, converted into or continued as a Eurodollar Loan prior to the earlier of (x) 30 days after the Effective Date, and (y) the Syndication Date. Each borrowing of Revolving Credit Loans under the Revolving Credit Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate Available Revolving Credit Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a whole multiple of $1,000,000 in excess thereof; provided, that the Swing Line Lender may request, on behalf of the Borrower, borrowings of Base Rate Loans under the Revolving Credit Commitments in other amounts pursuant to Section 2.7. Upon receipt of any such Borrowing Notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will make its Revolving Credit

 

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Percentage of the amount of each borrowing of Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent in like funds as received by the Administrative Agent.

 

2.6 Swing Line Commitment. Subject to the terms and conditions hereof, the Swing Line Lender agrees that, during the Revolving Credit Commitment Period, it will make available to the Borrower in the form of swing line loans (“Swing Line Loans”) a portion of the credit otherwise available to the Borrower under the Revolving Credit Commitments; provided that (i) the aggregate principal amount of Swing Line Loans outstanding at any time shall not exceed the Swing Line Commitment then in effect (notwithstanding that the Swing Line Loans outstanding at any time, when aggregated with the Swing Line Lender’s other outstanding Revolving Credit Loans hereunder, may exceed the Swing Line Commitment then in effect or such Swing Line Lender’s Revolving Credit Commitment then in effect) and (ii) the Borrower shall not request, and the Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to the making of such Swing Line Loan, the aggregate amount of the Available Revolving Credit Commitments would be less than zero. During the Revolving Credit Commitment Period, the Borrower may use the Swing Line Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. Swing Line Loans shall be Base Rate Loans only. The Borrower shall repay all outstanding Swing Line Loans on the Revolving Credit Termination Date.

 

2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.

 

(a) Subject to the terms and conditions hereof, the Borrower may borrow under the Swing Line Commitment on any Business Day during the Revolving Credit Commitment Period, provided, the Borrower shall give the Swing Line Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by the Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date. Each borrowing under the Swing Line Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in the borrowing notice in respect of any Swing Line Loan, the Swing Line Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of such Swing Line Loan. The Administrative Agent shall make the proceeds of such Swing Line Loan available to the Borrower on such Borrowing Date in like funds as received by the Administrative Agent.

 

(b) The Swing Line Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf), on one Business Day’s notice given by the Swing Line Lender to the Administrative Agent no later than 12:00 Noon, New York City time, request each Revolving Credit Lender to make, and each Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan (which shall initially be a Base Rate Loan), in an amount equal to such Revolving Credit Lender’s Revolving Credit Percentage of the aggregate amount of the Swing

 

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Line Loans (the “Refunded Swing Line Loans”) outstanding on the date of such notice, to repay the Swing Line Lender. Each Revolving Credit Lender shall make the amount of such Revolving Credit Loan available to the Administrative Agent at the Funding Office in immediately available funds, not later than 10:00 A.M., New York City time, one Business Day after the date of such notice. The proceeds of such Revolving Credit Loans shall be made immediately available by the Administrative Agent to the Swing Line Lender for application by the Swing Line Lender to the repayment of the Refunded Swing Line Loans.

 

(c) If prior to the time a Revolving Credit Loan would have otherwise been made pursuant to Section 2.7(b), one of the events described in Section 8(f) shall have occurred and be continuing with respect to the Borrower, or if for any other reason, as determined by the Swing Line Lender in its sole discretion, Revolving Credit Loans may not be made as contemplated by Section 2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit Loan was to have been made pursuant to the notice referred to in Section 2.7(b) (the “Refunding Date”), purchase for cash an undivided participating interest in the then outstanding Swing Line Loans by paying to the Swing Line Lender an amount (the “Swing Line Participation Amount”) equal to (i) such Revolving Credit Lender’s Revolving Credit Percentage times (ii) the sum of the aggregate principal amount of Swing Line Loans then outstanding which were to have been repaid with such Revolving Credit Loans.

 

(d) Whenever, at any time after the Swing Line Lender has received from any Revolving Credit Lender such Revolving Credit Lender’s Swing Line Participation Amount, the Swing Line Lender receives any payment on account of the Swing Line Loans, the Swing Line Lender will distribute to such Revolving Credit Lender its Swing Line Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swing Line Loans then due); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Revolving Credit Lender will return to the Swing Line Lender any portion thereof previously distributed to it by the Swing Line Lender.

 

(e) Each Revolving Credit Lender’s obligation to make the Loans referred to in Section 2.7(b) and to purchase participating interests pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Revolving Credit Lender or the Borrower may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Credit Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

 

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2.8 Incremental Term Loans; Additional Loans.

 

(a) Borrower may at any time prior to the third (3rd) anniversary of the Effective Date, by notice to Administrative Agent, request that, on the terms and subject to the conditions contained in this Agreement, Lenders and/or other financial institutions not then a party to this Agreement, that are approved by Administrative Agent, such approval not to be unreasonably withheld or delayed, provide up to an aggregate amount of $75,000,000 in additional term loans (the “Incremental Term Loans”), which Incremental Term Loans may be provided as an additional tranche of term loans; provided that (i) no Default or Event of Default shall have occurred and be continuing or result from such Incremental Term Loans, (ii) after giving pro forma effect to the funding of such Incremental Term Loans and the application of the proceeds thereof on such funding date, Borrower is in pro forma compliance with the Financial Conditions Covenants set forth in Section 7.1 (excluding Section 7.1(b)) as of the last day of the most recently ended fiscal quarter of the Borrower as if such Incremental Term Loans had been outstanding on the last day of such fiscal quarter of the Borrower for testing compliance therewith, and (iii) the terms of the Incremental Term Loans are in compliance with Section 2.8(c) below.

 

(b) Upon receipt of such notice and an officer’s certificate as to the satisfaction of the foregoing conditions, Administrative Agent shall use all commercially reasonable efforts to arrange for Lenders or other financial institutions approved of by Administrative Agent to provide such Incremental Term Loans. Alternatively, any Lender may commit to provide the full amount of the requested Incremental Term Loans and then offer portions of such Incremental Term Loans to the other Lenders or other financial institutions, subject to the approval of Administrative Agent. Nothing contained in this paragraph or otherwise in this Agreement is intended or will be required to commit any Lender or any Agent to provide any portion of any such additional Incremental Term Loans. In connection with the Incremental Term Loans described above, Administrative Agent and Borrower shall execute conforming amendments to this Agreement and the other Loan Documents (collectively, the “Incremental Facility Amendments”) to reflect such Incremental Term Loans without the consent of any Lender, including, without limitation, to provide for the terms set forth in Section 2.8(c) below and an appropriate adjustment to Section 7.1(d), if necessary.

 

(c) The Incremental Term Loans (a) shall rank pari passu in right of payment and of security with the Revolving Loan, the Term Loans and the Delayed Draw Term Loans, (b) shall not mature earlier than the Term Loan Maturity Date and Delayed Draw Term Loan Maturity Date (but may, subject to clause (c) below, have amortization prior to such date), (c) shall not have a weighted average life that is shorter than the then-remaining weighted average life of the Term Loans or the Delayed Draw Term Loans, and (d) except as set forth above, shall be treated substantially the same as (and in any event no more favorably than) the Term Loans and the Delayed Draw Term Loans (in each case, including with respect to mandatory and voluntary prepayments), provided that if the Applicable Margin relating to any Incremental Term Loan (as adjusted for upfront fees payable to Lenders of the Incremental Term Loans and original issue discount) exceeds the Applicable Margin relating to the Term Loans and the Delayed Draw Term Loans immediately prior to the effectiveness of the Incremental Facility Amendments by more than 0.25%, the Applicable Margin relating to the Term Loans and the Delayed Draw Term Loans shall be adjusted to an amount equal to the Applicable Margin of the Incremental Term Loans (as such Applicable Margin is adjusted to reflect for upfront fees payable to the Lenders of the Incremental Term Loans and original issue discount)

 

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minus 0.25%. The proceeds of any Incremental Term Loans shall be deposited into the Completion Reserve Account and disbursed in accordance with Section 5.3(e) and (f).

 

(d) Prior to the expiration of the Delayed Draw Term Loan Commitment Period, if this Agreement is amended, supplemented or restated to add an additional credit facility and/or additional term loans to refinance the existing Term Loans or the Delayed Draw Term Loans, the Applicable Margin on the new term loans cannot be less than the existing Applicable Margin on the Term Loans and the Delayed Draw Term Loans, without unanimous written consent of the Term Loan Lenders or Delayed Draw Term Loan Lenders.

 

2.9 Repayment of Loans; Evidence of Debt.

 

(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Revolving Credit Lender, Swing Line Lender, Term Loan Lender or Delayed Draw Term Loan Lender, as the case may be, (i) the then unpaid principal amount of each Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit Termination Date, (ii) the then unpaid principal amount of each Swing Line Loan of such Swing Line Lender on the Revolving Credit Termination Date, (iii) the principal amount of each Term Loan of such Term Loan Lender in installments according to the amortization schedule set forth in Section 2.3(a) and (iv) the principal amount of each Delayed Draw Term Loan of such Delayed Draw Term Loan Lender in installments according to the amortization schedule set forth in Section 2.3(b). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.16.

 

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 10.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.9(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.

 

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(e) The Borrower agrees that, upon request to the Administrative Agent by any Lender, the Borrower will promptly execute and deliver to such Lender a promissory note of the Borrower evidencing any Term Loans, Delayed Draw Term Loans, Revolving Credit Loans, or Swing Line Loans, as the case may be, of such Lender, substantially in the forms of Exhibit K-2, K-3, K-4, or K-5, respectively (a “Term Note”, “Delayed Draw Term Note”, “Revolving Credit Note”, or “Swing Line Note”, respectively), with appropriate insertions as to date and principal amount; provided, that delivery of Notes shall not be a condition precedent to the occurrence of the Effective Date or the making of Loans on a Borrowing Date.

 

2.10 Commitment Fees, etc.

 

(a) Revolving Credit Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the Effective Date to the last day of the Revolving Credit Commitment Period, computed at the Commitment Fee Rate applicable to the Revolving Credit Commitment on the average daily amount of the Available Revolving Credit Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Credit Termination Date, commencing on the first of such dates to occur after the date hereof.

 

(b) Delayed Draw Term Loan Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Delayed Draw Term Loan Lender a commitment fee for the period from and including the Effective Date to the last day of the Delayed Draw Term Loan Commitment Period, computed at the Commitment Fee Rate applicable to the Delayed Draw Term Loan Commitment on the average daily amount of the Available Delayed Draw Term Loan Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the last day of the Delayed Draw Term Loan Commitment Period, commencing on the first of such dates to occur after the date hereof.

 

(c) The Borrower agrees to pay to the Syndication Agent the fees in the amounts and on the dates previously agreed to in writing by the Borrower and the Syndication Agent.

 

(d) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates from time to time agreed to in writing by the Borrower and the Administrative Agent.

 

2.11 Termination or Reduction of Commitments.

 

(a) The Borrower shall have the right, upon not less than five Business Days’ notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans and Swing Line Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Credit Commitments. Any such reduction shall be in an amount

 

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equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect.

 

(b) The Borrower may at any time and from time to time, upon not less than five Business Days’ notice to the Administrative Agent, reduce the unused Delayed Draw Term Loan Commitment under the Facilities, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent, which notice shall specify the date and amount of such commitment reduction.

 

(c) No termination or reduction of the Revolving Credit Commitments or Delayed Draw Term Loan Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Delayed Draw Term Loans, Revolving Credit Loans and Swing Line Loans made on the effective date thereof, Borrower or any Restricted Subsidiary would be in violation of Section 7.1(d).

 

2.12 Optional Prepayments. The Borrower may at any time and from time to time prepay the Term Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto in the case of Eurodollar Loans and at least one Business Day prior thereto in the case of Base Rate Loans, which notice shall specify the date and amount of such prepayment, whether such prepayment is of Term Loans, Delayed Draw Term Loans or Revolving Credit Loans, and whether such prepayment is of Eurodollar Loans or Base Rate Loans; provided, that (i) if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.22, and (ii) no prior notice is required for the prepayment of Swing Line Loans. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of Revolving Credit Loans that are Base Rate Loans and Swing Line Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans, Delayed Draw Term Loans and Revolving Credit Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof.

 

2.13 Mandatory Prepayments and Commitment Reductions.

 

(a) Unless the Required Prepayment Lenders shall otherwise agree, upon any sale, issuance or incurrence of Indebtedness of the Borrower or its Restricted Subsidiaries by the Borrower or any of its Restricted Subsidiaries (excluding any Indebtedness incurred in accordance with Section 7.2 as in effect on the date of this Agreement (other than Section 7.2(h)), then on the date of such sale, issuance or incurrence, the Term Loans and the Delayed Draw Term Loans shall be prepaid, and/or the Revolving Credit Commitments shall be reduced, by an amount equal to the amount of the Net Cash Proceeds of such Indebtedness, as set forth in Section 2.13(f).

 

(b) Unless the Required Prepayment Lenders shall otherwise agree, if on any date the Borrower or any of its Restricted Subsidiaries shall receive Net Cash Proceeds from any Asset Sale (excluding a Purchase Price Refund or Recovery Event) then, unless a Reinvestment

 

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Notice shall be delivered in respect thereof, promptly and in any event not later than five Business Days after the date of receipt by the Borrower of such Net Cash Proceeds, the Term Loans and the Delayed Draw Term Loans shall be prepaid, and/or the Revolving Credit Commitments shall be reduced, by an amount equal to the amount of such Net Cash Proceeds, as set forth in Section 2.13(f); provided, that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the foregoing prepayment requirement pursuant to a Reinvestment Notice or Reinvestment Notices shall not exceed $50,000,000 in any fiscal year of the Borrower, and (ii) on each Reinvestment Prepayment Date the Term Loans and the Delayed Draw Term Loans shall be prepaid, and/or the Revolving Credit Commitments shall be reduced, by an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event, as set forth in Section 2.13(f). The provisions of this Section do not constitute a consent to the consummation of any Disposition not permitted by Section 7.5.

 

(c) Unless the Required Prepayment Lenders shall otherwise agree, on the later of the Designation Deadline and the date when the Completion Date has occurred with respect to all Current Projects, if there shall be Excess Cash Flow, then, on the relevant Excess Cash Flow Application Date, the Term Loans and the Delayed Draw Term Loans shall be prepaid and/or the Revolving Credit Commitments shall be reduced, by an amount equal to the ECF Percentage of such Excess Cash Flow, as set forth in Section 2.13(f). Each such prepayment and commitment reduction shall be made on a date (an “Excess Cash Flow Application Date”) no later than five days after the earlier of (i) the date on which the financial statements of the Borrower referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered.

 

(d) Unless the Required Prepayment Lenders shall otherwise agree, on the later of the Designation Deadline and the date when the Completion Date has occurred with respect to all Current Projects, the remaining balance in the Completion Reserve Account shall be applied to repay Term Loans and the Delayed Draw Term Loans as set forth in Section 2.13(f); provided, however, that the Borrower shall provide each of the Term Loan Lenders and the Delayed Draw Term Loan Lenders with five (5) Business Days prior written notice of such repayment and any Term Loan Lender or Delayed Draw Term Loan Lender, at its option, may elect, so long as there are any Term Loans or Delayed Draw Term Loans outstanding, not to accept its ratable portion of such prepayment in which event the provisions of the next sentence shall apply. Any Term Loan Lender or Delayed Draw Term Loan Lender declining such prepayment (such Lender being a “Declining Term Loan Lender” and the amount of such Lender’s ratable portion of such prepayment being the “Declined Term Amount”) shall give written notice to the Administrative Agent by 11:00 A.M. (New York City Time) on the Business Day immediately preceding the date on which such prepayment would otherwise be made and then the Declined Term Amount for all Declining Term Loan Lenders may be retained by the Borrower.

 

(e) Unless the Required Prepayment Lenders shall otherwise agree, if any Capital Stock of the Borrower is issued by the Borrower (excluding Capital Stock issued in connection with compensatory stock options for employees and consultants issued in the ordinary course of business), then promptly and in any event not later than two Business Days

 

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after receipt of the Net Cash Proceeds of such issuance, (i) twenty-five percent (25%) of such Net Cash Proceeds shall be applied to prepay the outstanding Revolving Credit Loans, and if no Revolving Credit Loans are outstanding, retained by the Borrower; and (ii) twenty-five percent (25%) of such Net Cash Proceeds (the “Term Loan Reduction Proceeds”) shall be allocated pro rata to the prepayment of the outstanding Term Loans and Delayed Draw Term Loans; provided that if, at the time of such required prepayment, there are unfunded Delayed Draw Term Loan Commitments, then in lieu of the prepayment of Delayed Draw Term Loans under this clause (ii), (x) an amount equal to the lesser of the Term Loan Reduction Proceeds and the amount of the unfunded Delayed Draw Term Loan Commitments shall be deposited into the Completion Reserve Account; (y) the Delayed Draw Term Loan Commitments shall be reduced by the amount of such deposit; and (z) the Term Loan Reduction Proceeds not deposited into the Completion Reserve Account pursuant to clause (x), if any, shall be applied to the prepayment of the outstanding Delayed Draw Term Loans and any amounts remaining thereafter retained by the Borrower. Any prepayment of Term Loans under this clause (e) shall be applied to the installments of the Term Loans in inverse order of maturity. Any prepayment of Delayed Draw Term Loans under this clause (e) shall be applied to the installments of the Delayed Draw Term Loans in inverse order of maturity. Any prepayment of Revolving Credit Loans under this clause (e) shall not result in a reduction in the Revolving Credit Commitments.

 

(f) Amounts to be applied in connection with prepayments and Commitment reductions made pursuant to clauses (a), (b), (c) or (d) of this Section 2.13 shall be allocated, first, (i) prior to the expiration of the Delayed Draw Term Loan Commitment Period, all such amounts shall be allocated pro rata to the Term Loan Facility and the Delayed Draw Term Loan Facility, to be applied (x) with respect to the Term Loan Facility, for the benefit of all Term Loan Lenders in accordance with their respective Term Loan Percentages as a prepayment towards the Term Loans and (y) with respect to the Delayed Draw Term Loan Facility, the then unfunded Delayed Draw Term Loan Commitments will be reduced by the lesser of the amount of such prepayment allocated to the Delayed Draw Term Loan Facility and the then amount of the unfunded Delayed Draw Term Loan Commitments, and an amount equal to the amount of the reduction in the Delayed Draw Term Loan Commitments shall be deposited into the Completion Reserve Account, and if the amount of such prepayment applied to the Delayed Draw Term Loan Facility is greater than the then unfunded Delayed Draw Term Loan Commitments, such excess shall be allocated, for the benefit of all Delayed Draw Term Loan Lenders in accordance with their respective Delayed Draw Term Loan Percentages as a prepayment towards the funded Delayed Draw Term Loans; and (ii) after the expiration of the Delayed Draw Term Loan Commitment Period, all such amounts shall be allocated pro rata towards the prepayment of the Term Loans and the Delayed Draw Term Loans, and second, to reduce permanently the Revolving Credit Commitments. Any such reduction of the Revolving Credit Commitments shall be accompanied by prepayment of the Revolving Credit Loans and/or Swing Line Loans to the extent, if any, that the Total Revolving Extensions of Credit exceed the amount of the Total Revolving Credit Commitments as so reduced, provided that if the aggregate principal amount of Revolving Credit Loans and Swing Line Loans then outstanding is less than the amount of such excess (because L/C Obligations constitute a portion thereof), the Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in Cash into a cash collateral account subject to documentation reasonably satisfactory to the Administrative Agent.

 

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2.14 Conversion and Continuation Options.

 

(a) The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent at least two Business Days’ prior irrevocable notice of such election, provided that any such conversion of Eurodollar Loans may be made only on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted into a Eurodollar Loan (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Facility Lenders in respect of such Facility have, determined in its or their sole discretion not to permit such conversions or (ii) after the date that is one month prior to the final scheduled termination or maturity date of such Facility. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

(b) The Borrower may elect to continue any Eurodollar Loan as such upon the expiration of the then current Interest Period with respect thereto by giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan under a particular Facility may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Facility Lenders in respect of such Facility have, determined in its or their sole discretion not to permit such continuations or (ii) after the date that is one month prior to the final scheduled termination or maturity date of such Facility, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso, such Loans shall be converted automatically to Base Rate Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

2.15 Minimum Amounts and Maximum Number of Eurodollar Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than fifteen Eurodollar Tranches shall be outstanding at any one time.

 

2.16 Interest Rates and Payment Dates.

 

(a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin in effect for such day.

 

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(b) Each Base Rate Loan shall bear interest for each day on which it is outstanding at a rate per annum equal to the Base Rate in effect for such day plus the Applicable Margin in effect for such day.

 

(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement Obligations (whether or not overdue) (to the extent legally permitted) shall bear interest at a rate per annum that is equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Credit Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Credit Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (after as well as before judgment).

 

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

 

2.17 Computation of Interest and Fees.

 

(a) Interest, fees, commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans on which interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365 (or 366, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.16(a).

 

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2.18 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

 

(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

 

(b) the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

 

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on the last day of the then current Interest Period with respect thereto, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurodollar Loans.

 

2.19 Pro Rata Treatment and Payments.

 

(a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee or Letter of Credit fee, and any reduction of the Commitments of the Lenders, shall be made pro rata according to the respective Term Loan Percentages, Delayed Draw Term Loan Percentages or Revolving Credit Percentages, as the case may be, of the relevant Lenders. Each payment (other than prepayments) in respect of principal or interest in respect of the Term Loans and Delayed Draw Term Loans and each payment in respect of fees payable hereunder shall be applied to the amounts of such obligations owing to the Lenders pro rata according to the respective amounts then due and owing to the Lenders.

 

(b) Each payment (including each prepayment) of the Term Loans shall be allocated among the Term Loan Lenders pro rata based on the principal amount of such Term Loans held by such Term Loan Lenders, and shall be applied to the installments of such Term Loans in the inverse order of the scheduled maturities of such installments. Amounts prepaid on account of the Term Loans may not be reborrowed.

 

(c) Each payment (including each prepayment) of the Delayed Draw Term Loans shall be allocated among the Delayed Draw Term Loan Lenders pro rata based on the principal amount of such Delayed Draw Term Loans held by such Delayed Draw Term Loan Lenders, and shall be applied to the installments of such Delayed Draw Term Loans in the inverse order of the scheduled maturities of such installments. Amounts prepaid on account of the Delayed Draw Term Loans may not be reborrowed.

 

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(d) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Revolving Credit Lenders. Each payment in respect of Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender that issued such Letters of Credit.

 

(e) The application of any payment of Loans under any Facility (including optional and mandatory prepayments) shall be made, first, to Base Rate Loans under such Facility and, second, to Eurodollar Loans under such Facility. Each payment of the Loans (except in the case of Swing Line Loans and Revolving Credit Loans that are Base Rate Loans) shall be accompanied by accrued interest to the date of such payment on the amount paid.

 

(f) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the relevant Lenders, at the Payment Office, in Dollars and in immediately available funds. Any payment made by the Borrower after 12:00 Noon, New York City time, on any Business Day shall be deemed to have been on the next following Business Day. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

(g) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower.

 

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(h) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

 

(h) If at any time insufficient funds are received by and available to the Administrative Agent to pay amounts of principal, unreimbursed L/C Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed L/C Obligations.

 

2.20 Requirements of Law.

 

(a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

 

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.21 and changes in the rate of tax on the overall net income of such Lender);

 

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate hereunder; or

 

(iii) shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any

 

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additional amounts pursuant to this Section, it shall promptly notify the Borrower in writing (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled, and setting forth in such notice, in reasonable detail, the basis and calculation of such amounts.

 

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor (which request shall set forth, in reasonable detail, the basis and calculation of the additional amount sought), the Borrower shall pay to such Lender such additional amount or amounts as set forth in the aforesaid notice; provided, that the Borrower shall not be required to compensate a Lender pursuant to this clause (b) for any amounts incurred more than six months prior to the date on which such Lender notified the Borrower of such Lender’s intention to claim compensation therefor; provided, further, that, if the circumstances giving rise to such claim have a retroactive effect, then such six month period shall be extended to include the period of such retroactive effect.

 

(c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) and setting forth, in reasonable detail, the basis and calculation of such amounts shall be conclusive in the absence of manifest error. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

2.21 Taxes.

 

(a) All payments made by the Borrower or any Guarantor under this Agreement or any other Loan Document shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender as a result of a present or former connection between such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent’s or such Lender’s having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or any Other Taxes are required to be withheld from any amounts payable to any Agent or any Lender

 

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hereunder, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder that would have been received hereunder or under any other Loan Document had such withholding not been required; provided, however, that neither the Borrower nor any Guarantor shall be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower or a Guarantor with respect to such Non-Excluded Taxes pursuant to this paragraph (a). The Borrower or the applicable Guarantor shall make any such required withholding and pay the full amount withheld to the relevant tax authority or other Governmental Authority in accordance with applicable Requirements of Law.

 

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for the account of the relevant Agent or Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(d) Each Lender (or Transferee) that is not a “United States Person” within the meaning of Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest” a statement substantially in the form of Exhibit L and a Form W-8BEN, or any subsequent versions thereof or successors thereto properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.

 

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Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

 

(e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.

 

2.22 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

2.23 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.22.

 

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2.24 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.20, 2.21(a) or 2.23 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of any Borrower or the rights of any Lender pursuant to Section 2.20, 2.21(a) or 2.23.

 

SECTION 3.

LETTERS OF CREDIT

 

3.1 L/C Commitment.

 

(a) Subject to the terms and conditions hereof, each Issuing Lender, in reliance on the agreements of the other Revolving Credit Lenders set forth in Section 3.4(a), agrees to issue standby letters of credit and, to the extent available from such Issuing Lender, commercial letters of credit (collectively, the “Letters of Credit”) for the account of the Borrower on any Business Day during the Revolving Credit Commitment Period in such form as may be approved from time to time by such Issuing Lender; provided, that no Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Revolving Credit Commitments would be less than zero. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date which is five Business Days prior to the Revolving Credit Termination Date; provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

 

(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

 

3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time to time request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender and the Administrative Agent at their addresses for notices specified herein an Application therefor, completed to the satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may request. Upon receipt of any Application, an Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower (but in no event shall any Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after receipt by such Issuing Lender and the Administrative Agent of the Application therefor and all

 

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such other certificates, documents and other papers and information relating thereto). Promptly after issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent. Each Issuing Lender shall promptly give notice to the Administrative Agent of the issuance of each Letter of Credit issued by such Issuing Lender (including the amount thereof).

 

3.3 Fees and Other Charges.

 

(a) The Borrower will pay a fee on the aggregate drawable amount of all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans under the Revolving Credit Facility, shared ratably among the Revolving Credit Lenders in accordance with their respective Revolving Credit Percentages and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date. In addition, the Borrower shall pay to the relevant Issuing Lender for its own account a fronting fee (in an amount to be agreed to by the Borrower and such Issuing Lender) on the aggregate drawable amount of all outstanding Letters of Credit issued by it, which fee shall be payable quarterly in arrears on each L/C Fee Payment Date after the issuance date.

 

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

 

3.4 L/C Participations.

 

(a) Each Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce each Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from each Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk, an undivided interest equal to such L/C Participant’s Revolving Credit Percentage in each Issuing Lender’s obligations and rights under each Letter of Credit issued by such Issuing Lender hereunder and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by such Issuing Lender for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Administrative Agent, for the account of such Issuing Lender, upon demand at the Administrative Agent’s Payment Office (and thereafter the Administrative Agent shall promptly pay to such Issuing Lender) an amount equal to such L/C Participant’s Revolving Credit Percentage of the amount of such draft, or any part thereof, that is not so reimbursed.

 

(b) If any amount required to be paid by any L/C Participant to the Administrative Agent, for the account of an Issuing Lender, pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is not paid to such Issuing Lender within three Business Days after the date such payment is due, such Issuing Lender shall so notify the Administrative Agent, who shall notify such L/C Participant and such L/C Participant shall pay to the Administrative Agent, for the account of

 

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such Issuing Lender on demand (and thereafter the Administrative Agent shall promptly pay to such Issuing Lender) an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to the Administrative Agent, for the account of such Issuing Lender, by such L/C Participant within three Business Days after the date such payment is due, the Administrative Agent on behalf of such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans under the Revolving Credit Facility. A certificate the Administrative Agent submitted on behalf of such Issuing Lender submitted to any L/C Participant with respect to any such amounts owing under this Section shall be conclusive in the absence of manifest error.

 

(c) Whenever, at any time after an Issuing Lender has made payment under any Letter of Credit and has received from the Administrative Agent or any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to the Administrative Agent, for the account of such L/C Participant (and thereafter the Administrative Agent shall promptly pay such L/C Participant), its pro rata share thereof; provided, however, that in the event that any such payment received by such Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to the Administrative Agent, for the account of such Issuing Lender (and thereafter the Administrative Agent shall promptly pay to such Issuing Lender), the portion thereof previously distributed by such Issuing Lender.

 

3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse each Issuing Lender, on each date on which such Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by such Issuing Lender, for the amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by such Issuing Lender in connection with such payment (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the “Payment Amount”). Each such payment shall be made to such Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. Interest shall be payable on each Payment Amount from the date of the applicable drawing until payment in full at the rate set forth in (i) until the second Business Day following the date of the applicable drawing, Section 2.16(b) and (ii) thereafter, Section 2.16(c). Each drawing under any Letter of Credit shall (unless an event of the type described in clause (i) or (ii) of Section 8(f) shall have occurred and be continuing with respect to the Borrower, in which case the procedures specified in Section 3.4 for funding by L/C Participants shall apply) constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 2.5 of Base Rate Loans (or, at the option of the Administrative Agent and the Swing Line Lender in their sole discretion, a borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such drawing. The Borrowing Date with respect to such borrowing shall be the first date on which a borrowing of Revolving Credit Loans (or, if applicable, Swing Line Loans)

 

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could be made, pursuant to Section 2.5 (or, if applicable, Section 2.7), if the Administrative Agent had received a notice of such borrowing at the time the Administrative Agent receives notice from the relevant Issuing Lender of such drawing under such Letter of Credit.

 

3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit issued by it or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards or care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.

 

3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the relevant Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit, in addition to any payment obligation expressly provided for in such Letter of Credit issued by such Issuing Lender, shall be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment appear on their face to be in conformity with such Letter of Credit.

 

3.8 Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply.

 

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SECTION 4.

REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to each Agent and each Lender that:

 

4.1 Financial Condition.

 

(a) The unaudited pro forma balance sheet of the Borrower and its consolidated Subsidiaries as at June 30, 2004 (including the notes thereto) (the “Pro Forma Balance Sheet”), copies of which have heretofore been furnished to each Lender, has been prepared giving effect to the transactions contemplated by this Agreement (as if such events had occurred on such date) and based on the best information available to the Borrower as of the date of delivery thereof, and presents fairly on a pro forma basis the estimated financial position of the Borrower and its consolidated Subsidiaries as at June 30, 2004, assuming such transactions had actually occurred at such date.

 

(b) The audited consolidated and unaudited consolidating balance sheets of the Borrower as of December 31, 2003, and as of the most recent fiscal year for which financial statements are required to be delivered under Section 6.1(a) and the related consolidated and consolidating statements of income and consolidated statements of cash flows for the fiscal years ended on such dates, in the case of consolidated financial statements, reported on by and accompanied by an unqualified report from a “Big Four” accounting firm or other independent certified public accountant reasonably acceptable to the Administrative Agent, in each case, present fairly the consolidated financial condition of the Borrower and its Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein).

 

(c) The unaudited consolidated and consolidating balance sheets of the Borrower as of June 30, 2004, and as of the most recent fiscal quarter for which financial statements are required to be delivered under Section 6.1(b) and the related consolidated and consolidating statements of income and consolidated statements of cash flows for the fiscal quarter and the year-to-date ended on such dates, in each case, present fairly the consolidated and consolidating financial condition of the Borrower and its Subsidiaries as at such date, and the consolidated and consolidating results of its operations and its consolidated cash flows for the respective fiscal period then ended (subject to year end adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein).

 

(d) The Borrower and its Subsidiaries do not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases other than those permitted hereunder or unusual forward or long-term commitments, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this Section 4.1. Except as set forth on Schedule 4.1(d), during the period from December 31, 2003 to and including the Effective Date there has been no Disposition by the Borrower of any material part of its business or Property.

 

4.2 No Change. Since December 31, 2003 there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

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4.3 Organizational Existence; Compliance with Law. Each of the Borrower and its Restricted Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the organizational power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification except to the extent that the failure to be so qualified or be in good standing could not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.4 Organizational Power; Authorization; Enforceable Obligations. Each Loan Party has the organizational power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate or other action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except (i) consents, authorizations, filings and notices which have been obtained or made and are in full force and effect; and certain consents, authorization, filings and notices specifically identified on Schedule 4.4 which have not been obtained, but have been requested and are anticipated to be received in the due course of business of the applicable party from whom such consent or authorization has been requested, and (ii) the filings referred to in Section 4.19 and Section 6.11. Each Loan Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate in any material respect any Requirement of Law or any Contractual Obligation of the Borrower or any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents). No Requirement of Law or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.

 

4.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the

 

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Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby except proceedings of the Gaming Boards identified on Schedule 4.4, or (b) that could reasonably be expected to have a Material Adverse Effect.

 

4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

 

4.8 Ownership of Property; Liens. Each of the Borrower and its Restricted Subsidiaries has marketable and insurable title to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material Property, and the Property is not subject to any Lien except as permitted by Section 7.3, except that the St. Louis County Ground Lease, prior to the approval of the St. Louis County Project by the appropriate Gaming Board, provides the lessor thereof rights to terminate such lease.

 

4.9 Intellectual Property. The Borrower and each of its Restricted Subsidiaries owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted. No material claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property in a manner that reasonably could be expected to result in a Material Adverse Effect, nor does the Borrower know of any valid basis for any such claim. The use of such Intellectual Property by the Borrower and its Restricted Subsidiaries does not infringe on the rights of any Person in any material respect in a manner that reasonably could be expected to result in a Material Adverse Effect.

 

4.10 Taxes. Each of the Borrower and each of its Restricted Subsidiaries has filed or caused to be filed all federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property and all other taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (other than those with respect to which the amount or validity thereof is being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien, other than Liens permitted under Section 7.3(a), has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.

 

4.11 Federal Regulations. No part of the proceeds of any Loans will be used for “purchasing” or “carrying” any “margin stock” (within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect) in a manner that is in violation of any of the Regulations of the Board or for any purpose that otherwise violates the provisions of the Regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

 

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4.12 Labor Matters. There are no strikes or other labor disputes against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from the Borrower or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the Borrower or the relevant Subsidiary.

 

4.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code except where such noncompliance could not reasonably be expected to result in a Material Adverse Effect. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.

 

4.14 Investment Company Act; Other Regulations. No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) which limits its ability to incur Indebtedness.

 

4.15 Subsidiaries.

 

(a) The Subsidiaries listed on Schedule 4.15 constitute all the Subsidiaries of the Borrower at the Effective Date. Schedule 4.15 sets forth as of the Effective Date the name and jurisdiction of formation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Capital Stock owned by each Loan Party. Schedule 4.15 also identifies all of the Unrestricted Subsidiaries as of the Effective Date.

 

(b) As of the Effective Date, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than (a) stock options granted to employees or directors and directors’ qualifying shares, and (b) with respect to the Capital

 

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Stock of the Borrower, subscriptions, options, warrants, calls, rights or other agreements or commitments to which the Borrower is not a party) of any nature relating to any Capital Stock of the Borrower or any Subsidiary, except as disclosed on Schedule 4.15.

 

4.16 Use of Proceeds. The proceeds of the Term Loans and Delayed Draw Term Loans may only be used (i) to repay the term loans under the Existing Credit Facility and for fees and expenses associated therewith, (ii) to pay all or a portion of the Expenses related to the Lake Charles Project, (iii) to pay certain costs and expenses related to the completion of the Belterra Tower Project, (iv) to pay for all or a portion of the St. Louis City Pre-Development Costs, (v) to pay for all or a portion of the St. Louis County Pre-Development Costs, (vi) to pay for all or a portion of the Expenses related to the St. Louis City Project, (vii) to pay for all or a portion of the Expenses related to the St. Louis County Project, (viii) to repay all or a portion of the amounts due under the Senior Subordinated Notes Indenture 1999, and (ix) to pay the fees and expenses related to this amendment and restatement of the Existing Credit Agreement. The proceeds of the Revolving Credit Loans may be used (i) to pay for all or a portion of the Expenses of any Current Project, (ii) to pay certain costs and expenses related to the completion of the Belterra Tower Project, and (ii) for general corporate purposes of the Borrower and its Restricted Subsidiaries.

 

4.17 Environmental Matters. Other than exceptions to any of the following that could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect:

 

(a) The Borrower and its Subsidiaries: (i) are, and within the period of all applicable statutes of limitation have been, in compliance with all applicable Environmental Laws; (ii) hold all Environmental Permits (each of which is in full force and effect) required for any of their current or intended operations or for any property owned, leased, or otherwise operated by any of them; (iii) are, and within the period of all applicable statutes of limitation have been, in compliance with all of their Environmental Permits; and (iv) reasonably believe that: each of their Environmental Permits will be timely renewed and complied with, without material expense; any additional Environmental Permits that may be required of any of them will be timely obtained and complied with, without material expense; and compliance with any Environmental Law that is or is expected to become applicable to any of them will be timely attained and maintained, without material expense.

 

(b) Materials of Environmental Concern are not present at, on, under, in, or about any real property now or formerly owned, leased or operated by the Borrower or any of its Subsidiaries, or at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage, or disposal) which could reasonably be expected to (i) give rise to liability of the Borrower or any of its Subsidiaries under any applicable Environmental Law or otherwise result in costs to the Borrower or any of its Subsidiaries, or (ii) interfere with the Borrower’s or any of its Subsidiaries’ continued operations, or (iii) impair the fair saleable value of any real property owned or leased by the Borrower or any of its Subsidiaries.

 

(c) There is no judicial, administrative, or arbitral proceeding (including any notice of violation or alleged violation) under or relating to any Environmental Law to which the

 

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Borrower or any of its Subsidiaries is, or to the knowledge of the Borrower or any of its Subsidiaries will be, named as a party that is pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened.

 

(d) Neither the Borrower nor any of its Subsidiaries has received any written request for information, or been notified that it is a potentially responsible party under or relating to the federal Comprehensive Environmental Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any Materials of Environmental Concern.

 

(e) Neither the Borrower nor any of its Subsidiaries has entered into or agreed to any consent decree, order, or settlement or other agreement, or is subject to any judgment, decree, or order or other agreement, in any judicial, administrative, arbitral, or other forum for dispute resolution, relating to compliance with or liability under any Environmental Law.

 

(f) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by contract or operation of law, any liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to any Material of Environmental Concern.

 

4.18 Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memorandum or any other document, certificate or statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum or in any other documents, certificates and statements furnished to the Agents and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

 

4.19 Security Documents.

 

(a) The Security Documents (other than Post-Closing Gaming Pledge Amendments) are effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. From and after execution and delivery thereof, the Post-Closing Gaming Pledges will be effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein

 

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and proceeds thereof. In the case of the Pledged Stock described in the Pledge Agreements, when any certificates representing such Pledged Stock that is a security under Section 8-102(a)(15) of the UCC are delivered to the Administrative Agent, and in the case of the other Collateral described in the Security Documents as to which a security interest can be perfected by filing of the UCC financing statement, when UCC financing statements in appropriate form are filed in the offices specified on Schedule 4.19(a) (which financing statements have been duly completed and delivered to the Administrative Agent), the security interests created by the Security Documents securing such collateral shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations, in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.3).

 

(b) Each of the Mortgages is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds thereof; and when the Mortgages are filed in the offices specified on Schedule 4.19(b) (in the case of the Mortgages to be executed and delivered on the Effective Date) or in the recording office designated by the Borrower (in the case of any Mortgage to be executed and delivered pursuant to Section 6.10(b)), each Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties described therein and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person (other than Persons holding Liens or other encumbrances or rights permitted by the relevant Mortgage).

 

4.20 Solvency. The Borrower and its Subsidiaries, taken as a whole, are, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be and will continue to be, Solvent.

 

4.21 Senior Indebtedness. The Obligations constitute “Senior Debt” of the Borrower under and as defined in the Indentures. The obligations of each Subsidiary Guarantor under the Subsidiary Guaranty constitute “Guarantor Senior Indebtedness” of such Subsidiary Guarantor under and as defined in the Indentures.

 

4.22 Regulation H. No Mortgage encumbers improved real property which is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968 (except any Mortgaged Properties as to which such flood insurance as required by Regulation H has been obtained and is in full force and effect as required by this Agreement).

 

4.23 Gaming Laws. The Borrower and the Restricted Subsidiaries are in compliance with all applicable Gaming Laws in all respects which are applicable to the operations, businesses and prospects of the Borrower and the Restricted Subsidiaries, taken as a whole except where such noncompliance could not reasonably be expected to result in a Material Adverse Effect.

 

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4.24 Current Project Entitlements.

 

(a) Except for permits, licenses and entitlements the failure to obtain and keep in effect could not reasonably be expected to delay the Opening of any Current Project beyond the Opening Date of the applicable Current Project, all permits, licenses and entitlements necessary and otherwise required to be in place to (i) cause the Opening of such Current Project to occur not later than the Opening Date of such Current Project, and (ii) to cause the completion of any Current Project to occur not later than the Completion Date of such Current Project, have been obtained and remain effective (except to the extent such permits, licenses and entitlements are no longer required or necessary to be maintained to complete any Current Project).

 

(b) The Opening of the Lake Charles Project is scheduled to occur on or before its Opening Date. The development and construction of the Lake Charles Project is schedule to be completed in accordance with the applicable Construction Timetable and the Expenses are expected to be within the parameters of the applicable Construction Budget.

 

SECTION 5.

CONDITIONS PRECEDENT; COMPLETION RESERVE ACCOUNT; CONDO

COMPONENT; DESIGNATION OF CURRENT PROJECTS

 

5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made by it hereunder is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Effective Date, of the following conditions precedent:

 

(a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower, (ii) the Subsidiary Guarantee, executed and delivered by a duly authorized officer of each Subsidiary Guarantor, (iii) the Security Documents (other than Post-Closing Gaming Pledge Amendments) covering the Collateral (including Mortgages for each of the Mortgaged Properties), executed and delivered by a duly authorized officer of each party thereto, (iv) a Lender Addendum executed and delivered by each Lender with a Term Loan, a Delayed Draw Term Loan, a Term Loan Commitment or a Delayed Draw Term Loan Commitment and accepted by the Borrower, and (v) a written consent by the Majority Revolving Credit Facility Lenders.

 

(b) No Default. No Default or Event of Default shall have occurred and be continuing on the Effective Date after giving effect to the extensions of credit to be made on such date and the application of the proceeds of such extensions of credit.

 

(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) audited and unaudited (which have been reviewed by the independent accountants for the Borrower as provided in Statement on Auditing Standards No. 100) financial statements of the Borrower and its Subsidiaries. There shall not have occurred any event, development or circumstance since December 31, 2003 (the date of the most recent audited financial statements delivered to the Lenders as of the date hereof) that has caused or could reasonably be expected to have a Material Adverse Effect or that calls into question in

 

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any material respect the projections previously supplied to the Lenders or any of the material assumptions on which such projections were prepared.

 

(d) Approvals. All governmental and third party approvals (excluding only the consents and approvals listed on Schedule 4.4 attached hereto) necessary or, in the discretion of the Administrative Agent, advisable in connection with the transactions contemplated by this Agreement and the continuing operations of the Borrower and its Subsidiaries as presently conducted shall have been obtained and be in full force and effect or otherwise applied for or requested (and the Borrower has no reason to believe that they will not be obtained in due course), and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the financing contemplated hereby.

 

(e) Related Agreements. The Administrative Agent shall have received (in a form reasonably satisfactory to the Administrative Agent), true and correct copies, certified as to authenticity by the Borrower, of any instrument evidencing Indebtedness or security agreement to which the Loan Parties may be a party.

 

(f) Lender Approvals; Amendment and Restatement of the Existing Credit Facility. The Administrative Agent shall have received the approval of the Majority Revolving Credit Facility Lenders to the increase of the Total Revolving Credit Commitments to $125,000,000 as contemplated by this Agreement and evidence satisfactory to the Administrative Agent that the term loans under the Existing Credit Agreement have been paid off and terminated. In connection with the foregoing, the Existing Credit Agreement shall be simultaneously amended and restated pursuant to the terms hereof, and arrangements satisfactory to the Administrative Agent shall have been made for the amendment of Liens and security interests granted in connection therewith.

 

(g) Completion Reserve Account. The Completion Reserve Account established by the Borrower in connection with the Existing Credit Facility shall have a minimum balance of $115,000,000. The Lenders shall have received a construction funding certificate and analysis from the chief financial officer of the Borrower which shall be substantially in the form of Exhibit S attached hereto (the “Construction Funding Certificate”) and which shall state that the sum of the undrawn amounts available under the Facilities, plus the existing balance in the Completion Reserve Account plus Excess Cash exceeds the aggregate costs to complete the Lake Charles Project (excluding all related interest expense during construction).

 

(h) Revolving Credit Facility. The Revolving Credit Facility shall be undrawn.

 

(i) Fees. The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Agents), on or before the Effective Date. All such amounts will be paid with proceeds of Loans made on the Effective Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Effective Date.

 

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(j) Business Plan. The Lenders shall have received a business plan for fiscal years 2005-2011 and a satisfactory written analysis of the business and prospects of the Borrower and its Subsidiaries for the period from the Effective Date through the final maturity of the Facilities, all in form and substance reasonably satisfactory to the Lenders.

 

(k) Sufficient Capital. The Lenders shall be satisfied, in their sole discretion, with the sufficiency of the amounts available under the Revolving Credit Facility to meet the ongoing working capital needs of the Borrower and its Subsidiaries following the Effective Date and the consummation of the transactions contemplated by this Agreement.

 

(l) Solvency Analysis. The Lenders shall have received a satisfactory solvency certificate and analysis by the chief financial officer of the Borrower in the form of Exhibit R attached hereto, which shall document the solvency of the Borrower and its Restricted Subsidiaries considered as a whole after giving effect to the transactions contemplated hereby, in form and substance reasonably satisfactory to the Lenders.

 

(m) Lien Searches. The Administrative Agent shall have received the results of recent lien searches in each of the jurisdictions in which Uniform Commercial Code financing statement or other filings or recordations should be made to evidence or perfect security interests in all or any portion of the assets of the Loan Parties (including, without limitation, tax liens, judgments, litigation, trademark liens, ship mortgages and UCC filings), and such searches shall reveal no liens on any of the assets of the Loan Parties, except for Liens permitted by Section 7.3.

 

(n) Environmental Matters. The Administrative Agent shall have received, with a copy for each Lender, a Phase 1 report with respect to the real property owned and leased by the Borrower and its Restricted Subsidiaries which is subject to the Mortgages, prepared by an environmental consultant acceptable to the Administrative Agent, in form, scope, and substance satisfactory to the Administrative Agent, together with a letter from the environmental consultant permitting the Agents and the Lenders to rely on the environmental assessment as if addressed to and prepared for each of them.

 

(o) Closing Certificate. The Administrative Agent shall have received a certificate of each Loan Party, dated the Effective Date, substantially in the form of Exhibit M, with appropriate insertions and attachments.

 

(p) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions:

 

(i) the legal opinion of Irell & Manella LLP, counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit N-1;

 

(ii) the legal opinion of Jack Godfrey, Esq., general counsel of the Borrower and its Subsidiaries, substantially in the form of Exhibit N-2; and

 

(iii) the legal opinion of local counsel in each of jurisdictions listed on Schedule 4.19(b) and of such other special and local counsel as may be required by the Administrative Agent.

 

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Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

 

(q) Pledged Stock; Stock Powers. The Administrative Agent shall have received the certificates representing the shares of Capital Stock that are securities under Section 8-102(a)(15) of the UCC pledged pursuant to the Pledge Agreements, together with an undated power or assignment for each such certificate executed in blank by a duly authorized officer of the pledgor thereof; provided, the Lenders and Administrative Agent acknowledge that the perfection of security interest in Capital Stock subject to the Pledge Agreements (Gaming Regulated) requires approval of the Post-Closing Gaming Pledge Amendments by the applicable Gaming Board.

 

(r) Filings, Registrations and Recordings. Each document (including, without limitation, any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 7.3), shall have been filed, registered or recorded or shall have been delivered to the Administrative Agent and be in proper form for filing, registration or recordation.

 

(s) Title Insurance; Flood Insurance. (i) The Administrative Agent shall have received, and the title insurance company issuing the policy referred to in clause (ii) below (the “Title Insurance Company”) shall have received, maps or plats of an as-built survey of the sites of the Mortgaged Properties (other than approximately 296 acres of undeveloped land in the Reno, Nevada area) certified to the Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated a date satisfactory to the Administrative Agent and the Title Insurance Company by an independent professional licensed land surveyor satisfactory to the Administrative Agent and the Title Insurance Company, which maps or plats and the surveys on which they are based shall be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing, there shall be surveyed and shown on such maps, plats or surveys the following: (A) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (B) the lines of streets abutting the sites and width thereof; (C) all access and other easements appurtenant to the sites; (D) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded, apparent from a physical inspection of the sites or otherwise known to the surveyor; (E) any encroachments on any adjoining property by the building structures and improvements on the sites; (F) if the site is described as being on a filed map, a legend relating the survey to said map; and (G) the flood zone designations, if any, in which the Mortgaged Properties are located.

 

(ii) The Administrative Agent shall have received in respect of each Mortgaged Property (other than approximately 296 acres of undeveloped land in the Reno, Nevada area) a mortgagee’s extended coverage (ALTA) title insurance policy (or policies) or marked up unconditional binder for such insurance. Each such policy shall (A) be in an

 

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amount that is not less than the aggregate fair market value of the real property covered thereby; (B) insure that the Mortgage insured thereby creates a valid first Lien on such Mortgaged Property free and clear of all defects and encumbrances, except as disclosed therein; (C) name the Administrative Agent for the benefit of the Secured Parties as the insured thereunder; (D) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies); (E) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (F) be issued by title companies satisfactory to the Administrative Agent (including any such title companies acting as co-insurers or reinsurers, at the option of the Administrative Agent). The Administrative Agent shall have received evidence satisfactory to it that all premiums in respect of each such policy, all charges for mortgage recording tax, and all related expenses, if any, have been paid.

 

(iii) If requested by the Administrative Agent, the Administrative Agent shall have received (A) a policy of flood insurance that (1) covers any parcel of improved real property that is encumbered by any Mortgage that is in a designated flood zone and for which insurance can be obtained under the National Flood Insurance Act of 1968 (2) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage that is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not later than the maturity of the indebtedness secured by such Mortgage or that may be extended to such maturity date and (B) confirmation that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H of the Board.

 

(iv) The Administrative Agent shall have received a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in clause (ii) above.

 

(t) Insurance. The Administrative Agent shall have received insurance certificates evidencing that the requirements of this Agreement and the Mortgages with respect to the maintenance of insurance have been satisfied.

 

5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it hereunder on any date (including, without limitation, its initial extension of credit on the Effective Date) is subject to the satisfaction of the following conditions precedent:

 

(a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date.

 

(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date and the application of the proceeds of such extensions of credit.

 

(c) In Balance Certificate. A certificate duly executed by a Responsible Officer, substantially in the form of Exhibit U attached hereto.

 

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(d) Current Projects. If any such extension of credit shall be for the St. Louis City Project or the St. Louis County Project, such project must have been theretofore designated as a Current Project pursuant to Section 5.5.

 

(e) Approvals. Until Administrative Agent has received evidence of approval by the Louisiana Gaming Control Board approving this Agreement (which order is reasonably satisfactory to Administrative Agent), Borrower shall not be permitted to request any Loans that would cause the aggregate principal amount of Loans outstanding under this Agreement to exceed $272,000,000.

 

(f) St. Louis City Project. If the proceeds of any such extension of credit shall be for Expenses associated with the St. Louis City Project, then (i) the Opening of the St. Louis City Project must be scheduled to occur on or before its Opening Date, and (ii) the development and construction of the St. Louis City Project must be scheduled to be completed in accordance with the applicable Construction Timetable and within the applicable Construction Budget.

 

(g) St. Louis County Project. If the proceeds of any such extension of credit shall be for Expenses associated with the St. Louis County Project, then (i) the Opening of each Current Project must be scheduled to occur on or before its respective Opening Date, and (ii) the development and construction of each Current Project must be scheduled to be completed in accordance with the applicable Construction Timetable and within the applicable Construction Budget.

 

5.3 Completion Reserve Account.

 

(a) General. The Borrower has established, and hereafter agrees to continue to maintain, the Completion Reserve Account. The Borrower hereby grants a security interest to the Administrative Agent in the Completion Reserve Account to secure the Obligations. The Borrower has entered into a Completion Reserve Account Control Agreement with the Administrative Agent in the form of Exhibit O attached hereto.

 

(b) Investments and Withdrawals. The Borrower may direct the Administrative Agent regarding investment of funds contained in the Completion Reserve Account in Cash Equivalents. The Borrower shall not have any right to withdraw funds from the Completion Reserve Account (or any of the income upon investment thereof), except in compliance with this Section 5.3 or upon the termination of the Completion Reserve Account in accordance with Section 2.13(d).

 

(c) Priority of Distributions. In the event that the Lenders elect to exercise their remedies under Section 8, the funds contained in the Completion Reserve Account shall be applied (a) first, to the reasonable expenses of the Administrative Agent, (b) second, to the outstanding principal amount of, and interest on, the Term Loans and Delayed Draw Term Loans until the same are paid in full, (c) third, to the outstanding principal amount of, and interest on, the Revolving Credit Loans and to the other Obligations until the same are paid in full, and then (d) fourth, after all obligations of the Borrower under the Agreement and the Loan Documents shall have been paid in full, returned to the Borrower or the other Persons legally entitled thereto.

 

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(d) Required Deposits. The Borrower and the Restricted Subsidiaries shall make the following deposits into the Completion Reserve Account, in each case on the relevant dates set forth below:

 

(i) On any Borrowing Date with respect to Delayed Draw Term Loans made after the Effective Date, the proceeds of any such Delayed Draw Term Loan;

 

(ii) On any Borrowing Date with respect to Revolving Credit Loans made after the Effective Date, the proceeds of any such Revolving Credit Loans in excess of the Construction Sublimit to the extent such proceeds will be used for (x) Expenses relating to any Current Project, and/or (y) costs and expenses related to the completion of the Belterra Tower Project;

 

(iii) Unless the Required Prepayment Lenders shall otherwise agree, if on any date the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from any Designated Asset Sale, then promptly and in any event not later than two Business Days after the date of receipt by the Borrower of such Net Cash Proceeds, one hundred percent (100%) of such Net Cash Proceeds shall be deposited into the Completion Reserve Account; and

 

(iv) The proceeds of any Argentina Disposition received by Borrower or any Restricted Subsidiary.

 

(e) Conditions to Disbursements for Current Projects. The right of the Borrower to make each withdrawal from the Completion Reserve Account which is applied to finance or support any Current Project, is subject to satisfaction of the following conditions at the time of such withdrawal:

 

(i) Not later than the third Business Day of each calendar month, the Borrower shall submit (or if applicable, shall cause the applicable Contractor to submit) to the Administrative Agent and the Construction Consultant a draft Draw Package, detailing all expenses associated with the applicable Current Project requested to be paid in the same calendar month in which the Draw Package is submitted;

 

(ii) On one or more dates which are mutually convenient to the Borrower and the Construction Consultant, but in any event prior to the tenth day of each calendar month, the Borrower shall cause representatives of the Borrower (and the applicable Contractor, if payment to such Contractor is expected to be made from such draw) to be available to meet with the Construction Consultant at the site of the applicable Current Project to review the draft Draw Package submitted by the Borrower, and shall attempt to resolve any discrepancies associated with the draft Draw Package.

 

(iii) Not later than the fifteenth day of each calendar month (or, if such date is not a Business Day, on the next Business Day), the Borrower shall submit (or if applicable, shall cause the applicable Contractor to submit) a revised and final Draw Package to the Administrative Agent and the Construction Consultant, together with any supporting materials requested by the Administrative Agent or the Construction Consultant in response to the draft Draw Package for that calendar month, provided that

 

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the Administrative Agent shall endeavor to provide any such requests as promptly as possible. The final Draw Package shall be accompanied by a Disbursement Certificate substantially in the form of Exhibit P attached hereto (“Disbursement Certificate”) signed by the Borrower stating (i) the amount of the disbursement requested by the Borrower in relation to the Draw Package, (ii) specifying that such disbursement is to be credited to the Borrower at least two (2) Business Days prior to the last day of the calendar month in which the Draw Package is submitted (provided that Borrower submitted the final Draw Package in accordance with this Section on a timely basis), and (iii) to the best of Borrower’s knowledge, information and belief, all applications for payment contained in the Draw Package (including the Contractor Applications) have been completed in accordance with the relevant contract documents and the applicable Construction Plans, and that all amounts have been paid with respect to any prior applications for payment (except in respect of any amounts described therein, or in the then current applications for payment, or for which Borrower has withheld payment).

 

(iv) The Construction Consultant shall have delivered a construction progress report to the Administrative Agent in a form reasonably acceptable to the Administrative Agent (the “Construction Progress Report”) detailing its findings in relation to the applicable Current Project through the then current month, and shall have approved the funding of the amount requested in the Disbursement Certificate (or a portion thereof mutually agreed upon as appropriate by the Administrative Agent, the Construction Consultant and the Borrower upon any discussion or review of the final Draw Package).

 

(v) The requested disbursement from the Completion Reserve Account shall be made at least two (2) Business Days prior to the last day of the calendar month in which the Draw Package is submitted (provided that Borrower has timely submitted (x) the final Draw Package as required by this Section, and (y) the Excess Cash Certificate for the prior calendar month).

 

(vi) No Default or Event of Default shall have occurred and be continuing.

 

(vii) Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct on and as of such date as if made on and as of such date.

 

(viii) Borrower shall certify to Administrative Agent and the Lenders that neither Borrower nor any of its Restricted Subsidiaries has any knowledge of any material matter, cause, impediment, issue, controversy or dispute that is reasonably likely to cause the Opening Date of the Current Project for which such disbursement from the Completion Reserve Account is being made to be delayed beyond, (x) with respect to the Lake Charles Project, June 30, 2005; (y) with respect to the St. Louis City Project, the date that is thirty (30) months after the St. Louis City Project is designated as a Current Project pursuant to Section 5.5; and (z) with respect to the St. Louis County Project, the date that is forty-two (42) months after the St. Louis County Project is designated as a Current Project pursuant to Section 5.5.

 

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(ix) With respect to disbursements for Expenses associated with the St. Louis City Project, Borrower shall certify to the Administrative Agent and the Lenders that (i) the Opening of the St. Louis City Project is scheduled to occur on or before its Opening Date, and (ii) the development and construction of the St. Louis City Project is scheduled to be completed in accordance with the applicable Construction Timetable and within the applicable Construction Budget.

 

(x) With respect to disbursements for Expenses associated with the St. Louis County Project, Borrower shall certify to the Administrative Agent and the Lenders that (i) the Opening of each Current Project is scheduled to occur on or before its respective Opening Date, and (ii) the development and construction of each Current Project is scheduled to be completed in accordance with the applicable Construction Timetable and within the applicable Construction Budget.

 

(f) Conditions for all Other Disbursements. To the extent that the disbursement will be used for purposes permitted pursuant to Section 4.16 hereof (including, without limitation, the St. Louis City Pre-Development Costs and the St. Louis County Pre-Development Costs) and not related to Expenses associated with a Current Project, each such disbursement shall be made within one (1) Business Day of the submission to the Administrative Agent of a Borrowing Notice provided that no Default or Event of Default shall have occurred and be continuing and that each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date.

 

5.4 Condo Component. In connection with the development of the St. Louis City Project, Borrower may separately construct the Condo Component, through one or more of its Subsidiaries or through an Investment in a joint venture with a third party; provided that Borrower has complied with the procedures set forth in this Section 5.4:

 

(a) Initial Submittal. Borrower shall deliver to the Administrative Agent, with respect to the Condo Component, the following information and materials (collectively, the “Condo Information Package”):

 

(i) construction budget, the construction timetable and the construction plans and specifications;

 

(ii) reasonable evidence that all approvals from the relevant Governmental Authorities (and, if applicable, third parties) which are required to commence construction of the Condo Component as contemplated by the relevant construction plans and specifications have been obtained;

 

(iii) copies of all documentation reasonably necessary to confirm the financing sources to be used to finance the construction of the Condo Component; and

 

(iv) copies of all documentation effecting easements, covenants (including, without limitation, covenants, conditions and restrictions), shared use agreements and similar documentation necessary to permit the separate ownership and financing of the Condo Component and which will govern, among other things, the

 

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respective rights of the owners and occupants of the Condo Component to access and/or use the remainder of the St. Louis City Project.

 

(b) Timing. The Administrative Agent shall have thirty (30) days from the delivery of the Condo Information Package to approve or disapprove the same (such approval not to be unreasonably withheld). The Borrower shall cause representatives of the Borrower to be available to discuss the Condo Information Package (and its contents) with the Administrative Agent and the Construction Consultant, and shall attempt to answer and resolve any questions the Administrative Agent may have concerning the Condo Information Package. In the event of any disapproval, the Administrative Agent, concurrently with written notification thereof, shall set forth in reasonable detail the basis for such disapproval.

 

(c) Release of Lien. If the Administrative Agent approves the Condo Component pursuant to this Section 5.4 and the Borrower or a Restricted Subsidiary is transferring the Condo Component pursuant to Section 7.5(n), the Administrative Agent agrees to promptly execute and deliver documentation reasonably necessary to release its Lien, if any, on the Condo Component.

 

(d) Amendment Submittal. The Borrower shall not make any material amendment, supplement or other modification of any kind to the construction budget, the construction timetable and the construction plans and specifications for the Condo Component or to any of the documents, agreements or other instruments previously submitted as a part of the Condo Information Package (a “Condo Modification”), without the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld or denied). If Borrower desires to implement a Condo Modification, it shall deliver to the Administrative Agent a description of such Condo Modification and, if applicable, the revised construction budget, the revised construction timetable and/or the revised construction plans and specifications for the Condo Component and the applicable documents, agreements or other instruments previously submitted as a part of the Condo Information Package (“Condo Modification Information”). The Administrative Agent shall have thirty (30) days from the delivery of the completed Condo Modification Information to approve or disapprove the Condo Modification (such approval not to be unreasonably withheld). The Borrower shall cause representatives of the Borrower to be available to discuss the Condo Modification and the Condo Modification Information with the Administrative Agent and the Construction Consultant, and shall attempt to answer and resolve any questions the Administrative Agent may have concerning the Condo Modification and the Condo Modification Information. In the event of any disapproval, the Administrative Agent, concurrently with written notification thereof, shall set forth in reasonable detail the basis for such disapproval.

 

5.5 Designation of Current Projects. The Borrower may, at any time on or prior to the Designation Deadline, request that the Administrative Agent designate either the St. Louis City Project or the St. Louis County Project (or both) as a “Current Project” if and when (i) the Borrower provides to the Administrative Agent a Request for Current Project Designation substantially in the form of Exhibit T (the “Current Project Designation Request”) completed and

 

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signed by the Borrower and any applicable Restricted Subsidiaries with all attachments thereto, and (ii) Borrower has secured all entitlements and approvals necessary to commence construction of the Current Project to be designated. The Administrative Agent shall have thirty (30) days from the date it receives the fully completed and executed Current Project Designation Request (including all information required therein and attachments thereto) to advise Borrower in writing as to whether Administrative Agent approves or disapproves Borrower’s request (approval not to be unreasonably withheld or delayed). Administrative Agent shall have the right to condition such approval upon Administrative Agent’s receipt of reasonable evidence to enable Administrative Agent to confirm that it holds (for the benefit of the Lenders) a first priority insured lien on the Current Project. Any disapproval shall include in the notification thereof, a reasonable explanation of the basis for such disapproval.

 

SECTION 6.

AFFIRMATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, the Borrower shall and shall cause each of its Restricted Subsidiaries to:

 

6.1 Financial Statements. Furnish to each Agent and each Lender:

 

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, (i) a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures as of the end of and for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by a “Big Four” accounting firm or other independent certified public accountant reasonably acceptable to the Administrative Agent; and (ii) supporting consolidating financial information in a form reasonably acceptable to the Administrative Agent;

 

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, (i) the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures as of the end of and for the corresponding period in the previous year, and (ii) supporting consolidating financial information in a form reasonably acceptable to the Administrative Agent, in each case; certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); and

 

(c) as soon as available, but in any event not later than 45 days after the end of each month occurring during each fiscal year of the Borrower (other than the third, sixth, ninth and twelfth such month), the unaudited consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such month and the related unaudited consolidated statement of income for such month and the portion of the fiscal year through the end of such month, setting

 

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forth in each case in comparative form the figures as of the end of and for the corresponding period in the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to year-end audit adjustments);

 

all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein).

 

6.2 Certificates; Other Information. Furnish to each Agent (with sufficient copies for Lenders):

 

(a) concurrently with the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate (it being understood that such certificate shall be limited to the items that independent certified public accountants are permitted to cover in such certificates pursuant to their professional standards and customs of the profession);

 

(b) concurrently with the delivery of any financial statements pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, a Compliance Certificate containing all information and calculations necessary for determining compliance by the Borrower and its Subsidiaries with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be;

 

(c) as soon as available, and in any event no later than 45 days after the end of each fiscal year of the Borrower, a detailed consolidated budget for the following fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, and the related consolidated statements of projected cash flow, projected changes in financial position and projected income), and, as soon as available, significant revisions, if any, of such budget and projections with respect to such fiscal year (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of a Responsible Officer stating that such Projections are based on reasonable estimates, information and assumptions and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect;

 

(d) if the Borrower is not required to file financial statements with the SEC, within 45 days after the end of each fiscal quarter of the Borrower, a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the

 

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end of such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year;

 

(e) within five days after the same are sent, copies (or if such statements are publicly available, notice of such availability) of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five days after the same are filed, copies of all financial statements and reports that the Borrower makes to, or files with, the SEC;

 

(f) as soon as available, and in any event no later than 20 days after the end of each calendar month, a certificate, in the form of Exhibit W attached hereto, setting forth the Excess Cash as of the last day of such calendar month (each such certificate an “Excess Cash Certificate”); and

 

(g) promptly, such additional financial and other information as any Lender may from time to time reasonably request.

 

6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings, if any, and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be.

 

6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i) Preserve, renew and keep in full force and effect its corporate or other existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 and except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law, except (i) to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, or (ii) with respect to Contractual Obligations and/or Requirements of Law being diligently contested in good faith; provided that the result of such contest could not reasonably be expected to have a Material Adverse Effect.

 

6.5 Maintenance of Property; Insurance. (a) Except as in the aggregate could not reasonably be expected to result in a Material Adverse Effect, keep all Property and systems useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks (but including in any event public liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.

 

6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and accounts in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) subject to any Gaming Laws restricting such actions, permit

 

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representatives of any Lender, to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and, if no Default or Event of Default has occurred, upon reasonable advance notice and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants.

 

6.7 Notices. Promptly give notice to the Administrative Agent and each Lender of:

 

(a) the occurrence of any Default or Event of Default;

 

(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

 

(c) any litigation or proceeding against the Borrower or any of its Restricted Subsidiaries in which the amount involved is $5,000,000 or more and not covered by insurance or which could reasonably be expected to have a Material Adverse Effect;

 

(d) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any material required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan; and

 

(e) and in any event within ten days of obtaining knowledge thereof, any development, event, or condition that, individually or in the aggregate with other developments, events or conditions, could reasonably be expected to result in a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or the relevant Restricted Subsidiary proposes to take with respect thereto.

 

6.8 Environmental Laws.

 

(a) Except as in the aggregate could not reasonably be expected to result in a Material Adverse Effect, comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws.

 

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(b) Except as in the aggregate could not reasonably be expected to result in a Material Adverse Effect, conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.

 

6.9 Interest Rate Protection. Not less than 50% of the aggregate principal amount of the Funded Debt of the Borrower shall either bear interest to its maturity at a fixed interest rate or shall be subject to Hedge Agreements which provide interest rate protection for a period of not less than three years, from the date of execution of each such Hedge Agreement and have terms and conditions reasonably satisfactory to the Administrative Agent.

 

6.10 Additional Collateral, etc.

 

(a) With respect to any Property acquired after the Effective Date by the Borrower or any of its Restricted Subsidiaries (other than (x) any Property described in paragraph (b) or paragraph (c) of this Section, and (y) any Property subject to a Lien expressly permitted by Section 7.3(g) and (h)) and subject to compliance with applicable Gaming Laws (which the Borrower agrees and agrees to cause the applicable Restricted Subsidiary to pursue approvals to permit any such pledges) as to which the Administrative Agent, for the benefit of the Secured Parties, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Security Documents or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such Property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in such Property (subject only to Liens permitted pursuant to Section 7.3 of this Agreement), including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested by the Administrative Agent; provided, if the Borrower gives notice that a Property acquired after the Effective Date will be used for the Condo Component, the Borrower will have thirty (30) days to execute and deliver to the Administrative Agent such amendments to the Security Documents or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such Property and if such Property is transferred in a transaction permitted pursuant to Section 7.7(n), no such security interest shall be required.

 

(b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $500,000 acquired after the Effective Date by the Borrower or any of its Restricted Subsidiaries (other than any such real property subject to a Lien expressly permitted by Section 7.3(g) and (h)), promptly (i) execute and deliver a first priority Mortgage in favor of the Administrative Agent, for the benefit of the Secured Parties, covering such real property (subject only to Liens permitted pursuant to Section 7.3 of this Agreement), (ii) if requested by the Administrative Agent in writing, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) as well as a current ALTA survey thereof, together with a

 

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surveyor’s certificate and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent; provided, if the Borrower gives notice that a Property acquired after the Effective Date will be used for the Condo Component, the Borrower will have thirty (30) days to execute and deliver to the Administrative Agent such amendments to the Security Documents or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such Property and if such Property is transferred in a transaction permitted pursuant to Section 7.7(n), no such security interest shall be required.

 

(c) With respect to any new Restricted Subsidiary created or acquired after the Effective Date (which, for the purposes of this paragraph, shall include any existing Subsidiary that ceases to be an Unrestricted Subsidiary by designation or otherwise) and subject to compliance with applicable Gaming Laws (which the Borrower agrees and agrees to cause the applicable Restricted Subsidiary to pursue approvals to permit any such security interests), by the Borrower or any of its Restricted Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such amendments to the Security Documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by the Borrower or any of its Subsidiaries (subject only to Liens permitted pursuant to Section 7.3 of this Agreement), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock that are securities under Section 8-102(a)(15) of the UCC, together with undated stock powers or assignments, in blank, executed and delivered by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Loan Documents and (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Secured Parties a perfected first priority security interest in the Collateral described in the Security Documents with respect to such new Subsidiary (subject only to Liens permitted pursuant to Section 7.3 of this Agreement), including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested by the Administrative Agent, and (iv) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(d) With respect to any new Unrestricted Subsidiary (other than the Foreign Subsidiaries) created or acquired after the Effective Date by the Borrower or any of its Restricted Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such amendments to the Loan Documents or such other documents as the Administrative Agent deems necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Capital Stock of such new Unrestricted Subsidiary that is owned by the Borrower or any of its Restricted Subsidiaries (other than any Foreign Subsidiaries), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock that are securities under Section 8-102(a)(15) of the UCC, together with undated stock

 

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powers or assignments, in blank, executed and delivered by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Lien of the Administrative Agent thereon, and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

6.11 Post-Closing Filings with Gaming Authorities.

 

(a) Promptly after the Effective Date, make filings with the Gaming Boards of all relevant jurisdictions in respect of the transactions contemplated by the Loan Documents to the extent that such filings are required by applicable Gaming Laws.

 

(b) Not later than 75 days after the Effective Date, the Borrower shall execute and deliver, and cause the applicable Restricted Subsidiary, to execute and deliver each of the Post-Closing Gaming Pledge Amendments.

 

6.12 The Lake Charles Vessel. The Lake Charles Vessel is currently being constructed pursuant to the Vessel Construction Contract at one or more shipyards by LEEVAC, and will be delivered to the coffer cell located at the site of the Lake Charles Project by LEEVAC and, in relation thereto the Borrower and its Restricted Subsidiaries shall:

 

(a) Assure that completion bonds acceptable to the Administrative Agent are obtained and maintained by LEEVAC (or on its behalf) at all times prior to the delivery of the Lake Charles Vessel to Lake Charles in accordance with the Vessel Construction Contract and its acceptance by the Borrower, provided that the amount thereof shall not be required to exceed the total consideration payable under the Vessel Construction Contract;

 

(b) Prior to final acceptance of the Lake Charles Vessel from LEEVAC and the final payment of the “Acceptance Payment” described in the Vessel Construction Contract, consult with the Construction Consultant regarding the conformity of the Lake Charles Vessel with the specifications of the Vessel Construction Contract;

 

(c) Promptly apply for, and receive prior to the Lake Charles Opening Date, appropriate certifications of the Lake Charles Vessel from the United States Coast Guard; and

 

(d) Promptly execute and deliver to the Administrative Agent a Preferred Ship Mortgage (in the form of Exhibit H-2) with respect to the Lake Charles Vessel, in any event within ten Business Days following the delivery of the Lake Charles Vessel to Lake Charles (or, if later, the date upon which all Coast Guard certifications required for a valid and perfected Preferred Ship Mortgage with respect thereto have been obtained).

 

6.13 Further Assurances. From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the

 

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Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Borrower or any Restricted Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, the Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lender may be required to obtain from the Borrower or any of its Restricted Subsidiaries for such governmental consent, approval, recording, qualification or authorization.

 

SECTION 7.

NEGATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, the Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

 

7.1 Financial Condition Covenants.

 

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters subsequent to the Effective Date) ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ending


   Consolidated
Leverage Ratio


After the Effective Date and on or prior to June 30, 2005    7.75
After June 30, 2005 and on or prior to September 30, 2005    7.00
After September 30, 2005 and on or prior to June 30, 2006    6.75
After June 30, 2006 and on or prior to December 31, 2006    7.00
After December 31, 2006 and on or prior to March 31, 2007    6.50
After March 31, 2007 and on or prior to September 30, 2007    6.25
After September 30, 2007 and on or prior to December 31, 2007    6.00
After December 31, 2007 and on or prior to June 30, 2008    5.00
After June 30, 2008 and on or prior to December 31, 2008    4.75
After December 31, 2008 and on or prior to December 31, 2009    4.50
Thereafter    4.25

 

(b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters subsequent to the Effective Date) ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ending


   Consolidated Fixed
Charge Coverage Ratio


After the Effective Date and on or prior to June 30, 2005    1.00
After June 30, 2005 and on or prior to September 30, 2005    1.25
After September 30, 2005 and on or prior to December 31, 2006    1.40
After December 31, 2006 and on or prior to December 31, 2007    1.50
Thereafter    1.75

 

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(c) Consolidated Senior Debt Ratio. Permit the Consolidated Senior Debt Ratio for any period of four consecutive fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters subsequent to the Effective Date) ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ending


   Consolidated
Senior Debt Ratio


After the Effective Date and on or prior to June 30, 2005    2.50
After June 30, 2005 and on or prior to December 31, 2006    2.65
After December 31, 2006 and on or prior to June 30, 2007    2.40
After June 30, 2007 and on or prior to December 31, 2007    2.25
After December 31, 2007 and on or prior to December 31, 2009    2.00
Thereafter    1.75

 

(d) In Balance Requirement. Permit, as of the last day of any fiscal quarter or any date of determination under this Agreement, (a) the sum of (i) the then undrawn portion of the Revolving Credit Commitments and the Delayed Draw Term Loan Commitments, plus (ii) the balance of the Completion Reserve Account, plus (iii) the Excess Cash, plus (iv) Projected Free Cash Flow, to be less than (b) the sum of (x) the Unexpended Construction Budget, and (y) the Condo Investment Amount minus the sum, without duplication, of (A) the actual expenditures on the Condo Component made by the Borrower and its Restricted Subsidiaries and (B) the amount of Investments made by the Borrower and its Restricted Subsidiaries pursuant to Section 7.7(n).

 

7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

 

(a) Indebtedness of any Loan Party pursuant to any Loan Document;

 

(b) Indebtedness of (i) the Borrower to any Subsidiary, (ii) any Wholly Owned Subsidiary Guarantor to the Borrower or any other Wholly Owned Subsidiary Guarantor, and (iii) any Restricted Subsidiary that is not a Wholly Owned Subsidiary Guarantor to any other Restricted Subsidiary that is not a Wholly Owned Subsidiary Guarantor; provided any such Indebtedness is unsecured and subordinated to the Obligations in a manner satisfactory to the Administrative Agent;

 

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(c) (i) Indebtedness (including, without limitation, Capital Lease Obligations) secured by Liens permitted by Section 7.3(g) and (ii) Indebtedness of any Person that becomes a direct or indirect Subsidiary of the Borrower after the Effective Date in an acquisition, provided such Indebtedness existed prior to the time such Person becomes a Subsidiary and neither the Borrower nor any other Loan Party (other than the newly acquired Subsidiary) is liable for such Indebtedness; provided that the aggregate principal amount of Indebtedness permitted pursuant to this Section 7.2(c) shall not exceed $50,000,000 at any time outstanding;

 

(d) Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d);

 

(e) Guarantee Obligations made in the ordinary course of business by the Borrower or any of its Restricted Subsidiaries of obligations of the Borrower or any Restricted Subsidiary;

 

(f) (i) Indebtedness of the Borrower in respect of the Existing Subordinated Obligations and (ii) Guarantee Obligations of any Subsidiary Guarantor in respect of such Indebtedness; provided that such Guarantee Obligations are subordinated to the obligations of such Subsidiary Guarantor under the Security Documents to the same extent as the obligations of the Borrower in respect of the Existing Subordinated Obligations are subordinated to the Obligations;

 

(g) New Subordinated Obligations (and Guaranty Obligations of any Subsidiary Guarantor in respect of such Indebtedness), all of the Net Cash Proceeds of which are used to refinance (including pursuant to a tender, redemption, exchange or other replacement) Existing Subordinated Obligations or New Subordinated Obligations (and all interest, and expenses incurred in connection therewith);

 

(h) New Subordinated Obligations and/or Permitted Refinancing Obligations (and Guaranty Obligations of any Subsidiary Guarantor in respect of such Indebtedness), all of the Net Cash Proceeds of which are used to refinance (including pursuant to a tender, redemption, exchange or other replacement) Term Loans, Delayed Draw Term Loans or Permitted Refinancing Obligations (and all interest, and expenses incurred in connection therewith);

 

(i) to the extent not available from the Lenders, (x) Guaranty Obligations with respect to commercial letters of credit up to an aggregate amount not to exceed $15,000,000 at any time outstanding so long as (i) such Indebtedness is incurred in the ordinary course of business and (ii) such Indebtedness is incurred for the purpose of effecting payment for goods or services required by the Borrower or any of its Restricted Subsidiaries, and (y) Guaranty Obligations with respect to standby letters of credit up to an aggregate amount of $4,500,000 at any time outstanding;

 

(j) Deferred compensation payable to employees, officers and/or directors under the Deferred Compensation Plan;

 

(k) any Indebtedness incurred in accordance with Section 2.8;

 

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(l) Indebtedness incurred pursuant to Section 4.21.3 of the Redevelopment Agreement in an aggregate principal amount not to exceed $10,000,000; and

 

(m) to the extent the Condo Component is approved pursuant to Section 5.4, Indebtedness used exclusively to finance the construction of the Condo Component in a principal amount not to exceed $50,000,000; provided, that after giving pro forma effect to the funding of such Indebtedness, Borrower is in pro forma compliance with the Financial Conditions Covenants set forth in Section 7.1 as of the last day of the most recently completed four (4) fiscal quarters (assuming for purposes of such calculation, the Indebtedness was incurred on the first day of such four (4) fiscal quarter period and that interest was paid during such four (4) fiscal quarter period at the interest rate in effect on the closing date for such Indebtedness).

 

7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except for:

 

(a) Liens for taxes, assessments and other similar governmental charges not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Restricted Subsidiaries, as the case may be, in conformity with GAAP;

 

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;

 

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

 

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory or regulatory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(e) easements, rights-of-way, encroachment, title defects, restrictions and other similar encumbrances incurred in the ordinary course of business (including, without limitation, (i) in connection with the subdivision of the Condo Component from the remainder of the St. Louis City Project) and (ii) in connection with obtaining the necessary approvals to develop an applicable Current Project that, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Restricted Subsidiaries;

 

(f) Liens in existence on the date hereof listed on Schedule 7.3(f);

 

(g) Liens securing Indebtedness of the Borrower or any other Restricted Subsidiary incurred pursuant to Section 7.2(c)(i) to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any Property other than the Property financed by such Indebtedness, (iii) the amount of Indebtedness

 

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secured thereby is not increased; and (iv) the amount of Indebtedness initially secured thereby is not less than 75%, or more than 100% of the purchase price of such fixed or capital asset;

 

(h) any Lien to secure Indebtedness permitted pursuant to Section 7.2(c)(ii); provided that (i) such Lien is on Property of a Person existing at the time such Person becomes a Subsidiary or is merged into or consolidated with the Borrower or any Restricted Subsidiary; (ii) such Lien was not created in contemplation of the acquisition of, merger or consolidation with or investment in such Person and (iii) such Lien does not extend to any assets other than those of the Person subject to such acquisition, merger, consolidation or investment.

 

(i) Liens created pursuant to the Security Documents;

 

(j) any lease affecting Property owned by the Borrower or any other Subsidiary entered into, assumed or otherwise acquired in the ordinary course of its business and covering only the assets so leased;

 

(k) Liens on cash deposited to secure reimbursement obligations under commercial letters of credit permitted under Section 7.2(i), so long as the amount of cash subject to any such Lien does not exceed 110% of the amount of the Indebtedness secured thereby;

 

(l) Intellectual Property rights granted by the Borrower or a Restricted Subsidiary in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of the Borrower or the Restricted Subsidiaries;

 

(m) any attachment or judgment Lien not constituting an event of default under Section 8(h);

 

(n) Liens arising from the filing of UCC financing statements relating solely to leases permitted by this Agreement;

 

(o) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(p) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property which does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole;

 

(q) Liens reflected as exceptions on the title policies issued to the Administrative Agent on the Effective Date as contemplated under Section 5.1(s)(ii), or in connection with Property acquired or mortgaged after the Effective Date, on title policies issued pursuant to Section 6.10 or Section 5.4;

 

(r) any Lien on the Property for the St. Louis City Project securing Indebtedness permitted pursuant to Section 7.2(l) not to exceed a principal amount of $10,000,000 and interest on such principal amount; and

 

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(s) any Lien securing Indebtedness permitted pursuant to Section 7.2(m) on Property comprising the Condo Component.

 

7.4 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that:

 

(a) any Person may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving entity and the Borrower shall comply with Section 6.13 in connection therewith) or with or into any Subsidiary Guarantor (provided that (i) the Subsidiary Guarantor shall be the continuing or surviving entity or (ii) simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor and the Borrower shall comply with Section 6.10 and Section 6.13 in connection therewith);

 

(b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any Restricted Subsidiary; and

 

(c) a conversion of any Restricted Subsidiary to another form of organization when no Default or Event of Default exists or would result therefrom; provided that the Borrower and such Restricted Subsidiary execute any assumption documents reasonably requested by the Administrative Agent to continue the perfection of Liens granted pursuant to the Loan Documents and to continue all other obligations under the Loan Documents to which such Restricted Subsidiary was a party.

 

7.5 Limitation on Disposition of Property. Dispose of any of its Property (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person, except:

 

(a) the Disposition of personal property that is no longer used or useful in the ordinary course of business;

 

(b) the Disposition of Cash or Cash Equivalents and the sale of inventory in the ordinary course of business;

 

(c) Dispositions permitted by Section 7.4;

 

(d) Dispositions by the Borrower or a Restricted Subsidiary to the Borrower or another Restricted Subsidiary;

 

(e) Dispositions of any Investment in an Unrestricted Subsidiary;

 

(f) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any Subsidiary Guarantor;

 

(g) any Designated Asset Sale; provided that a Fair Value Determination has been made with respect to such Disposition by (i) the management of the Borrower if the

 

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Disposition relates to Property with a value of less than $5,000,000 or (ii) the Board of Directors or the Executive Committee of the Board of Directors of the Borrower in all other circumstances;

 

(h) other Dispositions of Property in any one transaction or series of related transactions having a value not in excess of $5,000,000, and having an aggregate value not in excess of $15,000,000 in any fiscal year and not in excess of $25,000,000 during the term of this Agreement;

 

(i) Dispositions by the Borrower or any Restricted Subsidiary of its interest in the Argentina Subsidiaries;

 

(j) any Recovery Event, provided, that the requirements of Section 2.13(b) are complied with in connection therewith;

 

(k) any Disposition of any Investment permitted pursuant to Section 7.7(k);

 

(l) any Disposition constituting any lease otherwise permitted under Section 7.3(j);

 

(m) any Disposition of Intellectual Property otherwise permitted under Section 7.3(l);

 

(n) any Disposition of all or any portion of the Property comprising the Condo Component; provided that a Fair Value Determination has been made with respect to such Disposition by (i) the management of the Borrower if the Disposition relates to Property with a value of less than $5,000,000 or (ii) the Board of Directors and the Executive Committee of the Board of Directors of the Borrower in all other circumstances; and

 

(o) dedications of rights of way, easements or other development concessions made by Borrower or its Restricted Subsidiaries as may be required in connection with obtaining the necessary approvals to develop an applicable Current Project.

 

7.6 Limitation on Restricted Payments. Declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of the Borrower or any Restricted Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Restricted Subsidiary, or enter into any derivatives or other transaction with any financial institution, commodities or stock exchange or clearinghouse (a “Derivatives Counterparty”) obligating the Borrower or any Restricted Subsidiary to make payments to such Derivatives Counterparty as a result of any change in market value of any such Capital Stock (collectively, “Restricted Payments”), except that:

 

(a) (i) any Subsidiary may make Restricted Payments to the Borrower or any Wholly Owned Subsidiary Guarantor or (ii) any Restricted Subsidiary that is not a Wholly Owned Subsidiary Guarantor may make Restricted Payments to another Restricted Subsidiary that is not a Wholly Owned Subsidiary Guarantor;

 

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(b) the Borrower may make Restricted Payments in the form of common stock of the Borrower;

 

(c) the Borrower may repurchase or redeem Capital Stock of the Borrower to the extent required by any Gaming Board to prevent a License Revocation; and

 

(d) the Borrower may purchase the Borrower’s common stock or common stock options from present or former officers or employees of the Borrower or any Subsidiary following the death, disability or termination of employment of such officer or employee, provided, that the aggregate amount of payments under this paragraph subsequent to the Effective Date (net of any proceeds received by the Borrower during the corresponding period following the Effective Date in connection with resales of any common stock or common stock options so purchased) shall not exceed $1,000,000 per fiscal year.

 

7.7 Limitation on Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting an ongoing business from, or make any other investment in, any other Person (all of the foregoing, “Investments”), except:

 

(a) extensions of trade credit in the ordinary course of business (including, without limitation, advances to patrons of the casino operations of the Borrower or the Restricted Subsidiaries consistent with ordinary course gaming operations);

 

(b) Investments in Cash Equivalents;

 

(c) Investments arising in connection with the incurrence of Indebtedness permitted by Section 7.2(b) and (e);

 

(d) Investments in existence on the date hereof listed on Schedule 7.7(d);

 

(e) loans and advances to employees of the Borrower or any Restricted Subsidiaries of the Borrower in the ordinary course of business (including, without limitation, for travel, entertainment and relocation expenses) in an aggregate amount for the Borrower and Restricted Subsidiaries of the Borrower not to exceed $5,000,000 at any one time outstanding;

 

(f) Investments consisting of the extension of credit to customers and suppliers of the Borrower and the Restricted Subsidiaries in the ordinary course of business and Investments received in satisfaction or partial satisfaction thereof;

 

(g) Investments received in connection with the settlement of any bona fide dispute with another Person or in satisfaction of judgments;

 

(h) Investments in assets useful in a business not prohibited by Section 7.14 made by the Borrower or any of its Restricted Subsidiaries with the proceeds of any Reinvestment Deferred Amount;

 

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(i) Investments by the Borrower or any of its Restricted Subsidiaries in the Borrower or any Person that, prior to such Investment, is a Restricted Subsidiary;

 

(j) Investments in the Argentina Subsidiaries by the Borrower or a Restricted Subsidiary in an aggregate amount not to exceed the Maximum Argentina Investment Amount;

 

(k) in addition to Investments otherwise expressly permitted by this Section, Investments by the Borrower or any of its Subsidiaries in an aggregate amount outstanding at any time (valued at cost) not to exceed $10,000,000; provided that not more than $4,000,000 of such Investments shall be in Unrestricted Subsidiaries;

 

(l) Borrower or its Restricted Subsidiaries shall be permitted to transfer up to approximately forty (40) acres of the Undeveloped Reno Property to an Unrestricted Subsidiary;

 

(m) Investments made in connection with Hedge Agreements entered into by Borrower or any of its Subsidiaries as required by Section 6.9 and to the extent permitted by Section 7.15;

 

(n) to the extent the Condo Component is approved pursuant to Section 5.4, Investments in an Unrestricted Subsidiary or a joint venture which owns the Property comprising the Condo Component in an amount not to exceed the Condo Investment Amount;

 

(o) (i) Investments by the Borrower or any of its Restricted Subsidiaries in any Person that concurrently with such Investment becomes a Restricted Subsidiary or that is merged into or consolidated with Borrower or a Restricted Subsidiary pursuant to Section 7.4(a), or (ii) the acquisition of any assets (including by merger, consolidation or otherwise) constituting an ongoing business by a Borrower or a Restricted Subsidiary; provided that in the case of clause (i) and (ii), (x) the Borrower and the applicable Restricted Subsidiaries, if any, shall comply with Section 6.10 in connection therewith; (y) with respect to all such Investments or acquisitions (other than the St. Louis Riverboat Acquisition), notwithstanding the treatment provided pursuant to GAAP, the aggregate purchase price shall be treated as Capital Expenditures and subject to the restrictions and carveouts contained in Section 7.16; and (z) with respect to the St. Louis Riverboat Acquisition, a portion of the purchase price equal to the greater of (A) 50% of the aggregate purchase price and (B) the portion of the aggregate purchase price that is required to be allocated to fixed or capital assets or additions to equipment and which is required to be capitalized under GAAP on a balance sheet of the applicable Person shall be treated as Capital Expenditures and subject to the restrictions and carveouts contained in Section 7.16; and

 

(p) Investments made by Borrower in any Unrestricted Subsidiary received in exchange solely for common stock of the Borrower.

 

7.8 Limitation on Optional Payments and Modifications of Debt Instruments, etc. (a) Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or optionally defease, the principal of Subordinated Notes or the Permitted Refinancing Notes, or segregate funds for any such payment, prepayment, repurchase, redemption or defeasance, or enter into any derivative or other transaction with any Derivatives Counterparty obligating the Borrower or any Subsidiary to make payments to such Derivatives Counterparty as a result of any change in market value of the Subordinated Notes or

 

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the Permitted Refinancing Notes; provided that the Borrower may prepay Existing Subordinated Obligations or New Subordinated Obligations in connection with the refinancing of such Existing Subordinated Obligations or New Subordinated Obligations with the proceeds of New Subordinated Obligations permitted pursuant to Section 7.2(g); provided further that Borrower may make any optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or optionally defease the Borrower’s Indebtedness under the Senior Subordinated Notes Indenture 1999 with proceeds of Loans or cash on hand, provided that there is no Default or Event of Default (giving effect to such transaction); (b) amend, modify or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of the Subordinated Notes or the Permitted Refinancing Notes (other than any such amendment, modification, waiver or other change which would extend the maturity or reduce the amount of any payment of principal thereof, reduce the rate or extend the date for payment of interest thereon or relax any covenant or other restriction applicable to the Borrower or any of its Subsidiaries), (c) designate any Indebtedness (other than the Obligations) as “Designated Senior Indebtedness” for the purposes of the Indentures or (d) amend its certificate of incorporation in any manner determined by the Administrative Agent to be adverse to the Lenders.

 

7.9 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or any Restricted Subsidiary) unless such transaction is (a) otherwise permitted under this Agreement and (b) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate; provided that the provisions of this Section 7.9 shall not apply to transactions permitted pursuant to Section 7.6, Section 7.7(k), Section 7.7(p) or Section 7.20.

 

7.10 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by the Borrower or any Restricted Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Restricted Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary.

 

7.11 Limitation on Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.

 

7.12 Limitation on Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of the Borrower or any of its Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, to secure the Obligations or, in the case of any guarantor, its obligations under the Security Documents, other than (a) this Agreement and the other Loan Documents, (b) the Indentures, (c) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (d)

 

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customary provisions in leases and licenses entered into in the ordinary course of business consistent with past practices (in each case applicable solely to such lease or license or the Property subject to such lease or license), (e) customary restrictions in an agreement to Dispose of assets in a transaction permitted under Section 7.5 solely to the extent that such restrictions apply solely to the assets to be Disposed, (f) in accordance with applicable Gaming Laws, (g) restrictions in any joint venture agreement relating to the Condo Component or the Undeveloped Reno Property, (h) the St. Louis City Ground Lease and the St. Louis County Ground Lease, and (i) customary restrictions contained in agreements with respect to Indebtedness permitted pursuant to Section 7.2(c), (d) or (m).

 

7.13 Limitation on Restrictions on Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) make Restricted Payments in respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Restricted Subsidiary, (b) make Investments in the Borrower or any other Restricted Subsidiary, (c) customary restrictions contained in agreements with respect to Indebtedness permitted pursuant to Section 7.2(c), (d) or (m), or (d) transfer any of its assets to the Borrower or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents; (ii) any restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary; (iii) customary restrictions in an agreement to Dispose of assets in a transaction permitted under Section 7.5 solely to the extent that such restriction applies solely to the assets to be Disposed; (iv) customary anti-assignment provisions in leases and licenses entered into in the ordinary course of business consistent with past practices (in each case applicable solely to such lease or license or the Property subject to such lease or license); (v) customary restrictions on transfers of assets contained in any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (vi) restrictions in any joint venture agreement relating to the Condo Component or the Undeveloped Reno Property.

 

7.14 Limitation on Lines of Business. Enter into any business, either directly or through any Restricted Subsidiary, except for those businesses in which the Borrower and its Restricted Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto, except the Borrower may (i) enter into any joint venture or financing for the Condo Component to the extent permitted under Section 5.4 or (ii) pursue the pre-development of all or a part of the Undeveloped Reno Property.

 

7.15 Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge Agreements entered into in the ordinary course of business, and not for speculative purposes, to protect against changes in interest rates.

 

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7.16 Capital Expenditures. Make any Capital Expenditure, or become legally obligated to make any Capital Expenditure during the term of this Agreement, except:

 

(a) Capital Expenditures associated with the Lake Charles Project which do not result in the aggregate Expenses for the Lake Charles Project (including for this purpose, capitalized interest and capitalized pre-opening expenses) associated with that project (whether made prior to or after the Effective Date) being in excess of $365,000,000; provided that such amount may be increased by up to $10,000,000 upon consultation with and approval of the Administrative Agent;

 

(b) Capital Expenditures (including for this purpose, capitalized interest and capitalized pre-opening expenses) associated with the Belterra Tower Project which do not result in the aggregate Capital Expenditures associated with that project (made after the Effective Date) being in excess of $5,000,000.

 

(c) Prior to the St. Louis City Project being designated as a Current Project, Capital Expenditures associated with the St. Louis City Project which constitute St. Louis City Pre-Development Costs, and after the St. Louis City Project has been designated a Current Project pursuant to Section 5.5, Capital Expenditures associated with the St. Louis City Project which do not result in the aggregate St. Louis City Expenses (including for this purpose, capitalized interest and capitalized pre-opening expenses) associated with that project being in excess of $208,000,000; provided that such amount may be increased by up to $15,000,000 upon consultation with and approval of the Administrative Agent;

 

(d) Prior to the St. Louis County Project being designated as a Current Project, Capital Expenditures associated with the St. Louis County Project which constitute St. Louis County Pre-Development Costs, and after the St. Louis County Project is designated a Current Project pursuant to Section 5.5, Capital Expenditures associated with the St. Louis County Project which do not result in the aggregate Expenses for the St. Louis County Project (including for this purpose, capitalized interest and capitalized pre-opening expenses) being in excess of $300,000,000; provided that either such amount may be increased by up to $20,000,000 upon consultation with and approval of the Administrative Agent;

 

(e) Expansion Capital Expenditures (other than Capital Expenditures otherwise permitted under this Section 7.16) during the term of this Agreement not to exceed the Maximum Expansion Capital Expenditures Amount;

 

(f) Capital Expenditures associated with the acquisition, construction and development of the Condo Component (provided, that in no event shall the Condo Investment Amount be greater than $50,000,000);

 

(g) Capital Expenditures to the extent made with common stock of Borrower; and

 

(h) Other Capital Expenditures not in excess of $40,000,000 in any fiscal year, provided that (i) the aggregate amount of Capital Expenditures permitted to be made in any fiscal year pursuant to this subparagraph (h) may be increased by an amount, not to exceed $5,000,000 during any fiscal year, by the amount of any Capital Expenditures permitted by this subparagraph (h) and not expended in the immediately preceding fiscal year, and (ii) the aggregate amount of Capital Expenditures permitted to be made pursuant to this subparagraph

 

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(h) in any fiscal year may also be increased by the amount, not to exceed $1,500,000 in any fiscal year, which is received by the Borrower in consideration of the sale, transfer or other disposition of any Property that is no longer used by or useful to the Borrower and its Restricted Subsidiaries and replaced within 180 days.

 

7.17 Maximum Expenditures Outside Completion Reserve Account. Incur any Expenses (other than expenditures made with withdrawals from the Completion Reserve Account) in an amount greater than $25,000,000, or $40,000,000 if one or more Current Projects are designated pursuant to Section 5.5; provided that such amount may be replenished by disbursing funds to reimburse such costs and expenses from the Completion Reserve Account in accordance with the provisions of Section 5.3.

 

7.18 Current Projects.

 

(a) Fail to diligently pursue the construction of any Current Project in conformance with the applicable Construction Plans, Construction Budget and Construction Timetable so as to cause the Opening for such to occur on or prior to the Opening Date of such Current Project;

 

(b) Fail to provide the Construction Consultant with all reasonably requested access to any Current Project construction site without unreasonable delay (except for any portions thereof not controlled by the Borrower and its Restricted Subsidiary or the Contractor), and access to the applicable Construction Plans, Construction Budget, Construction Timetable and all related plans, budgets, drawings, timetables and other papers of that Current Project reasonably necessary for the evaluation of the foregoing;

 

(c) Fail to provide or cause to be provided to the Construction Consultant all information reasonably requested by the Administrative Agent or the Construction Consultant in connection with the preparation of the monthly Construction Progress Report to the Lenders;

 

(d) Fail to cooperate in the preparation of each Construction Progress Report and, if requested in writing by the Administrative Agent, fail to cause the Project Architect and the Contractor to certify that the improvements completed as of the date of any Construction Progress Report conform to the Construction Plans in all material respects;

 

(e) Fail to maintain or cause to be maintained a full set of the current working drawings at the construction office for any Current Project for review by the Construction Consultant;

 

(f) Fail, within 15 days following any written request by the Administrative Agent, to deliver, to the extent not previously delivered (i) then current Construction Plans for any applicable Current Project certified as true and correct by the Architect, (ii) then current lists of the names, addresses and telephone numbers of each material contractor, material subcontractor and material supplier with respect to any Current Project and the dollar value and amounts paid with respect to the related contracts, and (iii) then current versions of the applicable Construction Timetable and a status report and log describing all executed contracts and subcontracts to which the Borrower or any of its Restricted Subsidiaries are party for such work;

 

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(g) Make any change to the Construction Plans or Construction Budget which would (i) allocate the “contingency” line item in the Construction Budget and thereby reduce same below the Required Minimum Contingency, (ii) increase the aggregate amount of any Construction Budget (except as permitted by Section 7.16(a), (c) and (d)), or (iii) result in the deletion of any of the Minimum Amenities, or, in any event make any change to the Construction Plans, the Construction Budget or the Construction Timetable which would cause the Opening to occur after Opening Date; in the case of clause (i) above without the prior written consent of the Administrative Agent (not to be unreasonably withheld or delayed), and in the case of clauses (ii) and (iii) without the written consent of the Majority Lenders (not to be unreasonably withheld or delayed);

 

(h) Fail to construct any Current Project without material deviation from the applicable Construction Plans, and comply in all material respects with all existing Laws and requirements of all Governmental Authorities having jurisdiction over that applicable Current Project;

 

(i) Fail to promptly pay prior to delinquency (subject to applicable retentions) or otherwise discharge all Liens and other material claims for labor done and materials and services furnished in connection with the construction of any Current Project, other than Liens permitted pursuant to Section 7.3, and except for Liens and other claims contested in good faith by appropriate proceedings and without prejudice to the applicable Construction Timetable, provided that any such claims and Liens are covered by such payment bonds or title insurance policy endorsements as may be reasonably requested by the Administrative Agent;

 

(j) Fail, as and when required, to properly obtain, comply with and keep in effect all material permits, licenses and approvals which are required to be obtained from Governmental Authorities in order to construct and occupy any Current Project as of the then current stage of construction, and deliver copies of all such permits, licenses and approvals to the Administrative Agent promptly following a written request therefor;

 

(k) Fail to promptly notify the Administrative Agent if the Borrower or any Restricted Subsidiary pays $1,000,000 or more for any construction materials for any Current Project that are not located on the site of that applicable Current Project (other than any such payments in respect of the Lake Charles Vessel made prior to its delivery to the site in material conformity with the terms of the Vessel Construction Contract), or will not be delivered within thirty days after such payment (describing such construction materials, the purchase price therefor and the location thereof) and, if requested by the Administrative Agent in writing provide to the Administrative Agent the written acknowledgment of the Person having custody of such construction materials of the existence of the Administrative Agent’s Lien on such construction materials and the right of the Administrative Agent, as against such Person, to have access to and to remove such construction materials (subject to the requirement of the payment of any remaining purchase price for such materials);

 

(l) Fail on or before the Completion Date of any Current Project, to provide the Administrative Agent with a written certificate executed by the Architect, Contractor and the Construction Consultant (and any other relevant contracting parties reasonably requested by the Administrative Agent) certifying that that Current Project has been completed in all material

 

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respects in accordance with the Construction Plans and that Current Project has been or is ready to be opened for business together with a Certificate executed by a Responsible Officer to that effect, and such assurances as the Administrative Agent may require that such Current Project complies in all material respects with all applicable zoning, building and land use Laws; provided, however, that if Borrower fails to deliver the written certificate described in this subsection (l) solely as a result of an ongoing good faith dispute or disputes with one or more contracting parties involving in the aggregate a total potential liability or liabilities of less than $10,000,000, then such failure will not be deemed a Default or Event of Default for purposes of this Agreement so long as Borrower is diligently pursuing the resolution of such dispute.

 

(m) Fail, as soon as practicable after the Completion Date of any Current Project, to provide the Administrative Agent with an ALTA survey of that applicable Current Project as of the Completion Date that (i) sets forth all recorded easements and licenses (to the extent same can be shown on a survey) burdening that applicable Current Project as of the Completion Date, (ii) reflects no encroachments onto that applicable Current Project and no encroachments by that the Current Project onto adjoining real property, and (iii) certifies the legal description of that the Current Project to be the same as that set forth in the title insurance policy referred to in Section 5.1(s).

 

7.19 Limitation on Changes to Deferred Compensation Plan. Amend or modify the Deferred Compensation Plan in a manner that would change its nature from that of a “defined contribution plan,” within the meaning of Section 414(i) of the Code, to a “defined benefit plan,” within the meaning of Section 414(j) of the Code.

 

7.20 Directors’ and Officers’ Trust. Notwithstanding anything to the contrary contained in this Agreement (including the negative covenants in this Section 7), Borrower may deposit up to $5,000,000 into a Directors’ and Officers’ Trust.

 

SECTION 8.

EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a) The Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof or thereof; or

 

(b) Any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made or furnished; or

 

(c) Any Loan Party shall default in the observance or performance of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with respect to the Borrower only),

 

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Section 7 (other than Section 7.18), or (ii) an “Event of Default” under and as defined in any Mortgage shall have occurred and be continuing; or

 

(d) Any Loan Party shall default in, or an event of default shall occur with respect to, the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default or event of default shall continue unremedied for a period of 30 days; or

 

(e) The Borrower or any of its Restricted Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantee Obligation, but excluding the Loans and Reimbursement Obligations) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to or mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $10,000,000; or

 

(f) The Borrower or any of its Subsidiaries shall (i) commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

 

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(g) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders shall be likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect; or

 

(h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving for the Borrower and its Subsidiaries taken as a whole a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $10,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

 

(i) Any of the Security Documents shall cease, for any reason (other than by reason of the express release thereof pursuant to Section 10.15), to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or

 

(j) The guarantee contained in Subsidiary Guaranty shall cease, for any reason (other than by reason of the express release thereof pursuant to Section 10.15), to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

 

(k) Any Change of Control shall occur; or

 

(l) The Subordinated Notes or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of the Subsidiary Guarantors under the Security Documents, as the case may be, as provided in the applicable Indentures, or any Loan Party, any Affiliate of any Loan Party, the trustee in respect of the Subordinated Notes or the holders of at least 25% in aggregate principal amount of the Subordinated Notes shall so assert;

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without

 

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limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Majority Revolving Credit Facility Lenders, the Administrative Agent may, or upon the request of the Majority Revolving Credit Facility Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Credit Commitments to be terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).

 

SECTION 9.

THE AGENTS

 

9.1 Appointment. Each Lender hereby irrevocably designates and appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent.

 

9.2 Delegation of Duties. Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be

 

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responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

 

9.3 Exculpatory Provisions. Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

 

9.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 10.6 and all actions required by such Section in connection with such transfer shall have been taken. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

 

9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such

 

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Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither any of the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition, prospects and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans or other credit advances hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition, prospects and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

 

9.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), for, and to save each Agent harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final

 

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and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

 

9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor agent from among the Lenders. Effective upon the acceptance of its appointment as successor agent hereunder, the Person acting as such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. The Syndication Agent may, at any time, by notice to the Lenders and the Administrative Agent, resign as Syndication Agent hereunder, whereupon the duties, rights, obligations and responsibilities of the Syndication Agent hereunder shall automatically be assumed by, and inure to the benefit of, the Administrative Agent, without any further act by the Syndication Agent, the Administrative Agent or any Lender. After any retiring Agent’s resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.

 

9.10 Authorization to Release Liens and Guarantees. The Administrative Agent is hereby irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee obligations contemplated by Section 10.15.

 

9.11 The Arrangers; the Syndication Agent; the Documentation Agent. Except to the extent expressly provided in this Agreement, neither the Arrangers, the Syndication Agent

 

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nor the Documentation Agent, in their respective capacities as such, shall have any duties or responsibilities, and neither shall incur liability, under this Agreement and the other Loan Documents.

 

SECTION 10.

MISCELLANEOUS

 

10.1 Amendments and Waivers. Neither this Agreement or any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan Party to the relevant Loan Document may, or (with the written consent of the Required Lenders) the Agents and each Loan Party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall:

 

(i) forgive the principal amount or extend the final scheduled date of maturity of any Loan or Reimbursement Obligation, extend the scheduled date of any amortization payment in respect of any Term Loan or Delayed Draw Term Loan, reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof (including modifying the definition of the term “Interest Period” so as to permit intervals in excess of six months), or increase the amount or extend the expiration date of any Commitment of any Lender, in each case without the consent of each Lender directly affected thereby;

 

(ii) amend, modify or waive any provision of this Section or reduce any percentage specified in the definition of Required Lenders or Required Prepayment Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release or subordinate all or substantially all of the Collateral or release or subordinate all or substantially all of the Subsidiary Guarantors from their guarantee obligations under the Subsidiary Guaranty, in each case without the consent of all Lenders;

 

(iii) amend, modify or waive any condition precedent to any extension of credit under the Revolving Credit Facility set forth in Section 5.2 (including, without limitation, the waiver of an existing Default or Event of Default required to be waived in order for such extension of credit to be made) without the consent of any Majority Revolving Credit Facility Lenders;

 

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(iv) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility;

 

(v) amend, modify or waive any provision of Section 9 without the consent of any Agent directly affected thereby;

 

(vi) amend, modify or waive any provision of Section 2.6 or 2.7 without the written consent of the Swing Line Lender;

 

(vii) amend, modify or waive any provision of Section 2.19 or 2.13 without the consent of each Lender directly affected thereby;

 

(viii) amend, modify or waive any provision of Section 3 without the consent of the Issuing Lender; or

 

(ix) impose restrictions on assignments and participations that are more restrictive than, or additional to, those set forth in Section 10.6

 

Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided, that delivery of an executed signature page of any such instrument by facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

 

For the avoidance of doubt, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and each Loan Party to each relevant Loan Document (x) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof (collectively, the “Additional Extensions of Credit”) to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans, Delayed Draw Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders, Required Prepayment Lenders and Majority Revolving Facility Lenders; provided, however, that no such amendment shall permit the Additional Extensions of Credit to share ratably with or with preference to the Loans in the application of mandatory prepayments without the consent of the Required Prepayment Lenders.

 

Notwithstanding anything to the contrary contained herein, an amendment to this Agreement entered into in connection with the establishment of an Incremental Term Loans pursuant to Section 2.8 shall not require the approval of the Lenders and shall be effective upon

 

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the execution of an amendment (consistent with the terms of Section 2.8) of this Agreement between Administrative Agent and Borrower.

 

10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed (a) in the case of the Borrower and the Agents, as follows and (b) in the case of the Lenders, as set forth in an administrative questionnaire delivered to the Administrative Agent or on Schedule I to the Lender Addendum to which such Lender is a party or, in the case of a Lender which becomes a party to this Agreement pursuant to an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto:

 

The Borrower:

   Pinnacle Entertainment, Inc.
     3800 Howard Hughes Parkway
     Las Vegas, Nevada 89109
    

Attention:

   Stephen H. Capp
    

With copies to:

   John A. Godfrey
          Chris Plant
     Telecopy: (702) 784-7778
     Telephone: (702) 784-7777

The Syndication Agent:

   Bear Stearns Corporate Lending Inc.
     383 Madison
     New York, NY 10179
     Attention: Stephen G. O’Keefe
     Telecopy: 212 272-9184
     Telephone: 212 272-9430

The Administrative Agent:

   Lehman Commercial Paper Inc.
     745 Seventh Avenue
     New York, New York 10019
     Attention: Frank Turner
     Telecopy: 646 758-4648
     Telephone: 212 526-6590

Issuing Lender:

   As notified by such Issuing Lender to the Administrative Agent and the Borrower

 

provided that any notice, request or demand to or upon the any Agent, the Issuing Lender or any Lender shall not be effective until received.

 

10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other

 

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or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

10.4 Survival of Representations and Warranties. All representations and warranties made herein, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

 

10.5 Payment of Expenses. The Borrower agrees (a) to pay or reimburse the Agents for all their reasonable out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (other than fees payable to syndicate members) and the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements and other charges of counsel to the Administrative Agent and the charges of Intralinks, (b) to pay or reimburse each Lender and the Agents for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any other documents prepared in connection herewith or therewith, including, without limitation, the fees and disbursements of counsel (including the allocated fees and disbursements and other charges of in-house counsel) to each Lender and of counsel to the Agents, (c) to pay, indemnify, or reimburse each Lender and the Agents for, and hold each Lender and the Agents harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective affiliates, and their respective officers, directors, trustees, employees, advisors, agents and controlling persons (each, an “Indemnitee”) for, and hold each Indemnitee harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against the Borrower hereunder (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), provided, that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by unauthorized persons of Information or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by such

 

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persons or for any special, indirect, consequential or punitive damages in connection with the Facilities. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section shall be payable not later than 30 days after written demand therefor. Statements payable by the Borrower pursuant to this Section shall be submitted to Chris Plant (Telephone No. (702) 784-7727) (Fax No. (702) 784-7778), at the address of the Borrower set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a notice to the Administrative Agent. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder.

 

10.6 Successors and Assigns; Participations and Assignments.

 

(a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agents, all future holders of the Loans and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agents and each Lender.

 

(b) Any Lender may, without the consent of the Borrower, in accordance with applicable law, at any time sell to one or more banks, financial institutions or other entities (each, a “Participant”) participating interests in any Loan owing to such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Loan Documents, and the Borrower and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents. In no event shall any Participant under any such participation have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would require the consent of all Lenders pursuant to Section 10.1. The Borrower agrees that if amounts outstanding under this Agreement and the Loans are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if such Participant were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.20, 2.21 and 2.22 with respect to its participation in the Commitments and the Loans outstanding from time to time as if such Participant were a Lender; provided that, in the case of Section 2.21, such Participant shall have complied with the requirements of said

 

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Section, and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such Section than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.

 

(c) Any Lender (an “Assignor”) may, in accordance with applicable law and upon written notice to the Administrative Agent, at any time and from time to time assign to any Lender or any affiliate, Related Fund or Control Investment Affiliate thereof or, with the consent of the Borrower and the Administrative Agent and, in the case of any assignment of Revolving Credit Commitments, the written consent of the Issuing Lender and the Swing Line Lender (which, in each case, shall not be unreasonably withheld or delayed) (provided (x) that no such consent need be obtained by the Administrative Agent or any of its affiliates and (y) the consent of the Borrower need not be obtained with respect to any assignment of Term Loans or Delayed Draw Term Loans), to an additional bank, financial institution or other entity (an “Assignee”) all or any part of its rights and obligations under this Agreement pursuant to an Assignment and Acceptance, substantially in the form of Exhibit Q, executed by such Assignee and such Assignor (and, where the consent of the Borrower or, the Agents or the Issuing Lender or the Swing Line Lender is required pursuant to the foregoing provisions, by the Borrower and such other Persons) and delivered to the Administrative Agent for its acceptance and recording in the Register; provided that no such assignment to an Assignee (other than any Lender, Related Fund or any affiliate thereof) shall be in an aggregate principal amount of less than $5,000,000 as to the Revolving Credit Facility, $1,000,0000 as to the Term Loan Facility or the Delayed Draw Term Loan Facility (other than in the case of an assignment of all of a Lender’s interests under this Agreement), unless otherwise agreed by the Borrower and the Administrative Agent. Any such assignment need not be ratable as among the Facilities, but shall be a ratable portion of each Facility so assigned. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with Commitments and/or Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of an Assignor’s rights and obligations under this Agreement, such Assignor shall cease to be a party hereto, except as to Section 2.20, 2.21 and 10.5 in respect of the period prior to such effective date). Notwithstanding any provision of this Section, the consent of the Borrower shall not be required for any assignment that occurs at any time when any Event of Default shall have occurred and be continuing. For purposes of the minimum assignment amounts set forth in this paragraph, multiple assignments by two or more Related Funds shall be aggregated.

 

(d) The Administrative Agent shall, on behalf of the Borrower, maintain at its address referred to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, each Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of the Loans and any Notes evidencing such Loans recorded therein for all purposes of this Agreement. Any assignment of any Loan, whether or not evidenced by a Note,

 

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shall be effective only upon appropriate entries with respect thereto being made in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of a Loan evidenced by a Note shall be registered on the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or more new Notes in the same aggregate principal amount shall be issued to the designated Assignee, and the old Notes shall be returned by the Administrative Agent to the Borrower marked “canceled”. The Register shall be available for inspection by the Borrower or any Lender (with respect to any entry relating to such Lender’s Loans) at any reasonable time and from time to time upon reasonable prior notice. A list of current Lenders will be made available for any Lender who requests same while any amendment to this Agreement is pending.

 

(e) Upon its receipt of an Assignment and Acceptance executed by an Assignor and an Assignee (and, in any case where the consent of any other Person is required by Section 10.6(c), by each such other Person) together with payment to the Administrative Agent of a registration and processing fee of $3,500 (treating multiple, simultaneous assignments by or to two or more Related Funds as a single assignment) (except that no such registration and processing fee shall be payable in the case of an Assignee which is already a Lender or is an affiliate or Related Fund of a Lender or a Person under common management with a Lender), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Borrower. On or prior to such effective date, the Borrower, at its own expense, upon request, shall execute and deliver to the Administrative Agent (in exchange for the Revolving Credit Note, Term Note and/or Delayed Draw Term Note, as the case may be, of the assigning Lender) a new Revolving Credit Note, Term Note and/or Delayed Draw Term Note, as the case may be, to the order of such Assignee in an amount equal to the Revolving Credit Commitment, Term Loans and/or Delayed Draw Term Loan Commitment and Delayed Draw Term Loans, as the case may be, assumed or acquired by it pursuant to such Assignment and Acceptance and, if the Assignor has retained a Revolving Credit Commitment, Term Loan and/or Delayed Draw Term Loan Commitment and Delayed Draw Term Loans, as the case may be, upon request, a new Revolving Credit Note, Term Note and/or Delayed Draw Term Note, as the case may be, to the order of the Assignor in an amount equal to the Revolving Credit Commitment, Term Loans and/or Delayed Draw Term Loan Commitment and Delayed Draw Term Loans, as the case may be, retained by it hereunder. Such new Note or Notes shall be dated the Effective Date and shall otherwise be in the form of the Note or Notes replaced thereby.

 

(f) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this Section concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests in Loans and Notes, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law, or, in the case of a Lender which is a fund, to any holders of obligations owned or securities issued by such Lender or to any trustee for, or other representatives of, such holders. No such assignments creating security interest shall require the consent or approval of either the Administrative Agent or Borrower (provided, however, any absolute assignments do require such consent and approval as provided in this Section 10.6).

 

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(g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any state thereof. In addition, notwithstanding anything to the contrary in this Section 10.6(g), any SPC may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender, or with the prior written consent of the Borrower and the Administrative Agent (which consent shall not be unreasonably withheld) to any financial institutions providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans, and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC; provided that non-public information with respect to the Borrower may be disclosed only with the Borrower’s consent which will not be unreasonably withheld. This paragraph (g) may not be amended without the written consent of any SPC with Loans outstanding at the time of such proposed amendment.

 

10.7 Adjustments; Set-off.

 

(a) Except to the extent that this Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a “Benefited Lender”) shall at any time receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Obligations, such Benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Obligations, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

112


(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement or of a Lender Addendum by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

 

10.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

10.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Agents, the Arranger and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Arranger, any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

 

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally:

 

(a) submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

 

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(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

 

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

10.13 Acknowledgments. The Borrower hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

 

(b) neither the Arranger, any Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Arranger, the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Arranger, the Agents and the Lenders or among the Borrower and the Lenders.

 

10.14 Confidentiality. Each of the Agents and the Lenders agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to the Arranger, any Agent, any other Lender or any affiliate of any thereof, (b) to any Participant, pledgee or Assignee (each, a “Transferee”) or prospective Transferee that agrees to comply with the provisions of this Section or substantially equivalent provisions, (c) to any of its employees, directors, agents, attorneys, accountants and other professional advisors, (d) to any financial institution that is a direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e) upon the request or demand of any Governmental Authority having jurisdiction over it, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (g) in connection with any litigation or similar proceeding, (h) that has been publicly disclosed other than in breach of this Section, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally

 

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recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document. Notwithstanding anything to the contrary in the foregoing sentence or any other express or implied agreement, arrangement or understanding, the parties hereto hereby agree that, from the commencement of discussions with respect to the financing provided hereunder, any party hereto (and each of its employees, representatives, or agents) is permitted to disclose to any and all persons, without limitation of any kind, the tax structure and tax aspects of the transactions contemplated hereby, and all materials of any kind (including opinions or other tax analyses) related to such tax structure and tax aspects.

 

10.15 Release of Collateral and Guarantee Obligations.

 

(a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with any Disposition of Property permitted by the Loan Documents, the Administrative Agent shall promptly (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as shall be required to release its security interest in any Collateral being Disposed of in such Disposition, and to release any guarantee obligations under any Loan Document of any Person being Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition in accordance with the Loan Documents.

 

(b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than obligations in respect of any Specified Hedge Agreement and indemnification obligations which are not then due and payable) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding, upon request of the Borrower, the Administrative Agent shall promptly (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations under any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

 

10.16 Accounting Changes. In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an

 

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amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Change” refers to (a) any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC, the Borrower’s manner of accounting addressed in the preferability letter from the Borrower’s independent auditors to the Borrower in order for such auditor to deliver an opinion to the Borrower’s financial statements required to be delivered pursuant to Section 6.1 without qualification.

 

10.17 Delivery of Lender Addenda. Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the Borrower and the Administrative Agent.

 

10.18 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

10.19 USA Patriot Act Notification. The Lenders hereby notify the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the “Act”), the Lenders are required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower in accordance with the Act. The Borrower agrees to cooperate with each Lender with respect to the requirements of the Act and to provide true, accurate and complete information to each Lender in response to any request relating thereto.

 

10.20 Gaming Laws and Liquor Laws. Any other provision of this Agreement or any other Loan Documents to the contrary notwithstanding, all rights, remedies and powers provided in this Agreement and the other Loan Documents, including with respect to the Collateral, may be exercised only to the extent, and in the manner, that the exercise thereof does not violate any applicable Gaming Laws and Liquor Laws, and only to the extent that required approvals, including prior approvals are obtained from the requisite Gaming Boards and Liquor Authorities. Further, all provisions of this Agreement and the other Loan Documents, including with respect to the Collateral, are intended to be subject to all applicable mandatory provisions of the Gaming Laws and Liquor Laws and to be limited solely to the extent necessary to not render the provisions of this Agreement and the other Loan Documents invalid or unenforceable, in whole or in part. Administrative Agent will timely apply for and receive all required approvals, and otherwise comply with all rules and regulations, of the applicable Gaming Board and Liquor Authorities for the sale or other disposition of any Collateral, including, without limitation, any interest in any Restricted Subsidiary holding a Gaming License, Liquor License or any gaming property or equipment regulated by Gaming Laws (including any gaming equipment consisting of slot machines, gaming tables, cards, dice, gaming chips, player tracking systems, and all other “gaming devices” (as such terms or words of like import referring thereto are defined in the

 

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applicable Gaming Laws), and “associated equipment” (as such term or other words of like import referring thereto are defined in applicable Gaming Laws).

 

[signature pages to follow]

 

117


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

PINNACLE ENTERTAINMENT, INC.,

a Delaware corporation,

as Borrower

By:  

/s/    STEPHEN H. CAPP

   

Name:

 

Stephen H. Capp

   

Title:

 

Chief Financial Officer

 

S-1


LEHMAN BROTHERS INC.,

as Joint Lead Arranger

By:  

/s/    WILLIAM J. HUGHES

   

Name:

 

William J. Hughes

   

Title:

 

Managing Director

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

By:  

/s/    WILLIAM J. HUGHES

   

Name:

 

William J. Hughes

   

Title:

 

Managing Director

 

S-2


BEAR, STEARNS & CO. INC.,

as Joint Lead Arranger

By:  

/s/    KEITH C. BARNISH

   

Name:

 

Keith C. Barnish

   

Title:

 

Senior Managing Director

BEAR STEARNS CORPORATE LENDING INC., as Syndication Agent
By:  

/s/    KEITH C. BARNISH

   

Name:

 

Keith C. Barnish

   

Title:

 

Executive Vice President

 

S-3


SOCIETE GENERALE, as Joint Documentation Agent
By:  

/s/    THOMAS K. DAY

   

Name:

 

Thomas K. Day

   

Title:

 

Managing Director

 

S-4


WELLS FARGO BANK N.A.,

as Joint Documentation Agent

By:  

/s/    CLARK A. WOOD

   

Name:

 

Clark A. Wood

   

Title:

 

Vice President

 

S-5


Annex A

 

PRICING GRID FOR REVOLVING CREDIT LOANS

 

The margins set forth in the following table shall apply:

 

Consolidated Leverage Ratio


   Applicable Margin for Eurodollar Loans

  Applicable Margin for Base Rate Loans

Greater than 5.5

   3.50%   2.50%

Greater than 4.5 and less than or equal to 5.5

   3.25%   2.25%

Greater than 3.5 and less than or equal to 4.5

   3.00%   2.00%

Less than or equal to 3.5

   2.75%   1.75%

 

Changes in the Applicable Margin with respect to Revolving Credit Loans resulting from changes in the Consolidated Leverage Ratio shall become effective on the date (the “Adjustment Date”) on which financial statements are delivered to the Lenders pursuant to Section 6.1 (but in any event not later than the 45th day after the end of each of the first three quarterly periods of each fiscal year or the 90th day after the end of each fiscal year, as the case may be) and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified above, then, until such financial statements are delivered, the Consolidated Leverage Ratio as at the end of the fiscal period that would have been covered thereby shall for the purposes of this definition be deemed to be greater than 5.5. In addition, at all times while an Event of Default shall have occurred and be continuing, the Consolidated Leverage Ratio shall for the purposes of this Pricing Grid be deemed to be greater than 5.5. Each determination of the Consolidated Leverage Ratio pursuant to this Pricing Grid shall be made for the periods and in the manner contemplated by Section 7.1(a).

 


EXHIBIT A TO CREDIT AGREEMENT

 

FORM OF COLLATERAL ASSIGNMENT OF CONSTRUCTION CONTRACT

 

This Collateral Assignment of Construction Contract (this “Assignment”) is made as of                     , 2004, by PNK (LAKE CHARLES), L.L.C., a Louisiana limited liability company (“Assignor”), to and for the benefit of LEHMAN COMMERCIAL PAPER INC., in its capacity as administrative agent (“Administrative Agent”) for the lenders (collectively, “Lenders”) from time to time party to that certain Amended and Restated Credit Agreement executed as of                     , 2004 (the “Credit Agreement”) among Pinnacle Entertainment, Inc., a Delaware corporation (“Borrower”), Lenders and Administrative Agent. Except as otherwise provided in this Assignment, capitalized terms herein shall have the meanings set forth in the Credit Agreement.

 

A. Assignor has entered into that certain Amended and Restated Subsidiary Guaranty dated as of                     , 2004 (“Subsidiary Guaranty”), whereby Assignor, among other things, guaranteed and promised to pay and perform on demand the obligations of Borrower owed to Administrative Agent and the Lenders under the Loan Documents.

 

B. Borrower and Assignor intend to construct the Lake Charles Project, as defined and described in the Credit Agreement, in Lake Charles, Louisiana on the real property described in Exhibit A attached hereto (the “Land”) .

 

C. Pursuant to the Credit Agreement, the Lenders have agreed to provide financing for the construction of the Lake Charles Project on the terms and conditions set forth therein. Pursuant to the Credit Agreement, Assignor is required to execute and deliver this Assignment to the Administrative Agent as security for the performance of Assignor’s obligations under the Subsidiary Guaranty.

 

NOW THEREFORE, Assignor hereby agrees as follows:

 

1. Assignor hereby assigns, conveys and transfers to Administrative Agent, and grants a security interest to Administrative Agent in and to, as security for Assignor’s obligations under the Subsidiary Guaranty, all of Assignor’s right, title, interest, privilege, benefit and remedies in, to and under the following:

 

(a) the prime construction contract for the Lake Charles Project dated August 29, 2003, entered into between Manhattan Construction Company (the “Contractor”) and the Assignor, as amended by First Amendment to Standard Form of Agreement Between Owner and Contractor on September 18, 2003, (the “Construction Contract”); and

 

(b) any and all present and future amendments, modifications, supplements, change orders and addenda to the Construction Contract.

 

A complete copy of the Construction Contract is attached hereto as Exhibit B.

 


2. (a) Assignor agrees to obtain and deliver to Administrative Agent, concurrently with its delivery of this Assignment, a Consent to Assignment substantially in the form of Exhibit C hereto (“Consent”) from the Contractor.

 

(b) This Assignment and the Consent hereto do not relieve Assignor of its obligations under the Construction Contract. Administrative Agent does not hereby assume any of Assignor’s obligations or duties concerning the Construction Contract, including, without limitation, any obligation to pay for the work done pursuant thereto.

 

3. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, Administrative Agent may, at its option, upon written notice to the Contractor, exercise any or all of the rights and remedies granted to Assignor under the Construction Contract as if Administrative Agent had been an original party to the Construction Contract, to the extent permitted by and subject to the Contractor’s Consent attached hereto. Administrative Agent may elect to assume all of the obligations of Assignor under the Construction Contract by giving notice to that effect to the Contractor; provided, however, that Administrative Agent shall cure all defaults of Assignor under the Construction Contract occurring prior to the time Administrative Agent gives such notice to the Contractor, (it being understood that Administrative Agent shall thereafter be responsible for all obligations of Assignor under the Construction Contract).

 

4. Assignor hereby irrevocably constitutes and appoints Administrative Agent as its attorney-in-fact, which power is coupled with an interest, so that Administrative Agent shall have the right upon the occurrence and during the continuance of an Event of Default under the Credit Agreement to demand, receive and enforce Assignor’s rights with respect to the Construction Contract, to give appropriate receipts, releases and satisfactions for and on behalf of Assignor with regard to the Construction Contract and to do any and all acts in the name of Assignor or in the name of Administrative Agent with regard to the Construction Contract with the same force and effect as Assignor could have done.

 

5. Assignor hereby represents and warrants to Administrative Agent that its previous assignment, dated as of December 17, 2003, of the Construction Contract to Bank of America, N.A., in its capacity as an administrative agent for the lenders from time to time party to that certain Amended and Restated Credit Agreement executed as of December 17, 2003 among Pinnacle Entertainment, Inc., a Delaware corporation, lenders and Lehman Commercial Paper Inc., in its capacity as administrative agent, has been terminated and no other assignment has been made, and Assignor agrees not to assign, sell, pledge, transfer or otherwise encumber its interest in the Construction Contract so long as this Assignment is in effect, except as otherwise not prohibited in the Credit Agreement. Assignor represents and warrants that the copy of the Construction Contract provided by Assignor to Administrative Agent is the complete and entire agreement between the parties thereto respecting the construction of the Lake Charles project as of the date of the execution thereof. Assignor agrees not to materially modify the Construction Contract without Administrative Agent’s written consent, except to the extent otherwise permitted in the Credit Agreement.

 

6. If any provision of this Assignment shall be invalid, illegal or unenforceable, it shall not affect or impair the validity, legality and enforceability of the other provisions of this Assignment. This Assignment may not be amended, modified or changed, nor shall any

 

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waiver of any provision hereof be effective, except by a written instrument signed by the party against whom enforcement of the waiver, amendment, change, or modification is sought.

 

7. Assignor shall indemnify and hold harmless Administrative Agent against any liabilities, claims, costs or expenses, including reasonable Attorneys’ Costs, incurred by Administrative Agent as a result of this Assignment or Administrative Agent’s exercise of its rights hereunder, except for liabilities, claims, costs or expenses caused by the gross negligence or willful misconduct of Administrative Agent.

 

8. This Assignment shall be binding upon Assignor and its successors and assigns, and shall inure to the benefit of Administrative Agent and its successors and assigns. Administrative Agent may assign all or any portion of its interest in the Construction Contract or its rights created hereunder and, in such event, Assignor, at its sole expense, shall promptly execute, acknowledge and deliver such additional documents, instruments and agreements as may be reasonably required by Administrative Agent in connection with any such assignment.

 

9. Upon the satisfaction of all obligations of Borrower to Administrative Agent and the Lenders under the Credit Agreement, this Assignment shall automatically terminate.

 

10. This Assignment shall be governed by and construed in accordance with the laws of the State of New York.

 

IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed as of the date first set forth above.

 

Assignor:

PNK (LAKE CHARLES), L.L.C.,

a Louisiana limited liability company

By:  

Pinnacle Entertainment, Inc.,

its sole member and manager

    By:    
    Name:    
    Title:    

 

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EXHIBIT A

DESCRIPTION OF THE LAND

 

PARCEL 1 DESCRIPTION:

 

That certain tract or parcel of land lying in Section Eleven (11), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, and being all of Lot Ten (10) and a portion of Lots Six (6), Seven (7), Eight (8), Nine (9), Eleven (11), Fourteen (14), Fifteen (15), and Sixteen (16) of said Section Eleven (11), being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 161.29 feet, the Point of Beginning and Southeast corner of herein described tract;

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 1884.95 feet to a point 396.82 feet West of the East line of Lot Fourteen (14) of said Section Eleven (11), the Southwest corner of herein described tract;

 

Thence North 00° 53’ 19” East, parallel with and 396.82 feet West of said East line of Lot Fourteen (14) and the West line of Lot Ten (10), for a distance of 1671.72 feet to a point lying 463.74 feet North of the South line of Lot Eleven (11) of said Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with the South line of the aforesaid Section Eleven (11), for a distance of 200.00 feet to a point lying 596.82 feet West of the East line of Lot Eleven (11) of said Section Eleven (11);

 

Thence North 00° 53’ 19” East, parallel with and 596.82 feet Westerly of the East line of said Lot Eleven (11), for a distance of 553.77 feet;

 

Thence North 49° 09’ 02” West for a distance of 948.23 feet, to a point on the left descending bank of the Calcasieu River, the Northwest corner of herein described tract;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 57° 18’ 13” East, for a distance of 325.84 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 51° 38’ 18” East, for a distance of 330.17 feet;

 

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Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 56° 19’ 43” East, for a distance of 441.64 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 43° 18’ 27” East, for a distance of 350.17 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 41° 45’ 57” East, for a distance of 271.08 feet to a point lying 600.0 feet South of and parallel with the face of the existing fender system at Berth Nine of the Port of Lake Charles Facility;

 

Thence South 70° 45’ 08” East, 600.0 feet South of and parallel with the face of said fender system, for a distance of 2682.96 feet to the West right of way line of the proposed Nelson Road extension project, the Northeast corner of herein described tract;

 

Thence South 14° 17’ 53” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 630.95 feet;

 

Thence North 75° 42’ 07” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 40.00 feet;

 

Thence South 14° 17’ 53” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 389.36 feet to the Point of Curvature of a tangent curve to the left having a radius of 1054.93 feet and a central angle of 35° 29’ 11”;

 

Thence Southerly, along said tangent curve to the left and West right of way line, through an angle of 29° 41’ 56” for an arc length distance of 546.81 feet, said curve having a chord of South 00° 33’ 05” East 540.71 feet, to a point on the West line of Section Thirty-eight (38), said point also being on the West line of hereon described Parcel 3.;

 

Thence South 22° 21’ 49” West, along the West line of said Section Thirty-eight (38) and contiguous with the West line of said Parcel 3, for a distance of 553.70 to a point lying in a curve to the right having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

Thence Westerly, along said curve to the right, through an angle of 21° 39’ 01” for an arc length distance of 151.15 feet to a point lying 150.00 feet West of the West line of said Section Thirty-eight (38), said curve having a chord of North 70° 56’ 46” West 150.25 feet;

 

Thence South 22° 21’ 49” West, 150.00 feet West of and parallel with the West line of said Section Thirty-eight (38), for a distance of 1179.15 feet to the Point of Beginning.

 

Herein described tract containing 224.08 acres, more or less.

 

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PARCEL 2 DESCRIPTION:

 

That certain tract or parcel of land lying in the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of Section Fourteen (14), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being more particularly described as follows to-wit:

 

Beginning at an existing 1” rod marking the Northwest corner of the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of Section Fourteen (14), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, said point being the Northwest corner of herein described tract;

 

Thence South 89%%d 12’ 01” East, along the North line of said Section Fourteen (14), for a distance of 263.29 feet, to the West line of Irregular Section Thirty Eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, the Northeast corner of herein described tract;

 

Thence South 22%%d 21’ 49” West, along the said West line of Irregular Section Thirty Eight (38), for a distance of 190.49 feet to the North Right-of-Way line of Cagle Lane, the Southeast corner of herein described tract;

 

Thence North 88%%d 15’ 23” West, along said North Right-of-Way line of Cagle Lane, for a distance of 193.65 feet to the West line of the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of said Section Fourteen (14), the Southwest corner of herein described tract;

 

Thence North 00%%d 54’ 47” East, along said West line of Section Fourteen (14), for a distance of 173.97 feet to the Point of Beginning.

 

Herein described tract containing 0.92 acres, more or less.

 

PARCEL 3 DESCRIPTION:

 

That certain tract or parcel of land lying in Lots Nine (9) and Sixteen (16) of Section Eleven (11) and the West Half (W/2) of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 161.29 feet;

 

Thence North 22° 21’ 49” East, 150.0 feet West of and parallel with the West line of said Section Thirty Eight (38), for a distance of 1179.15 feet to a point lying in a tangent curve to the left having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

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Thence Easterly, along said tangent curve to the left through an angle of 21° 39’ 01” for an arc length distance of 151.15 feet to a point lying on the West line of said Section Thirty-eight (38) said curve having a chord of North 70° 56’ 46” West 150.25 feet, the Point of Beginning of herein described tract

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty-eight (38), for a distance of 533.70 feet to a point lying in a tangent curve to the left having a radius of 1054.93 feet and a central angle of 35° 29’ 11”, said point also being on the West right of way line of the proposed Nelson Road Extension;

 

Thence Southerly, along said tangent curve to the left and West right of way line, through an angle of 05° 47’ 15” for an arc length distance of 106.56 feet to the Point of Tangent of said curve;

 

Thence South 21° 11’ 18” East, along said West right of way line, for a distance of 398.53 feet;

 

Thence North 65° 51’ 57” West for a distance of 71.11 feet;

 

Thence South 69° 27’ 24” West for a distance of 134.18 feet to the Point of Curvature of a tangent curve to the right having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

Thence Westerly, along said tangent curve to the right, through an angle of 28° 46’ 20” for an arc length distance of 200.87 feet to the Point of Beginning of herein described tract.

 

Herein described tract containing 2.11 acres, more or less.

 

100’ CONSTRUCTION SERVITUDE

 

That certain tract or parcel of land lying in Section Eleven (11), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being a portion of Lots Eleven (11) and Fourteen (14) of said Section Eleven (11), and being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 2046.24 feet to a point 396.82 feet West of the East line of Lot Fourteen (14) of said Section Eleven (11), the Point of Beginning and Southeast corner of herein described tract, said point also being the Southwest corner of Parcel 1 of Pinnacle Entertainment Properties;

 

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Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 100.00 feet;

 

Thence North 00° 53’ 19” East, parallel with and 100.0 feet West of the West line of Parcel 1 of Pinnacle Entertainment Properties, for a distance of 1671.72 feet to the Intersection with Parcel 1 of Pinnacle Entertainment Properties;

 

Thence South 89° 11’ 50” East, contiguous with the Westerly property line of Parcel 1 of said Pinnacle Entertainment Properties, for a distance of 100.00 feet;

 

Thence South 00° 53’ 19” West, contiguous with the said West property line of Parcel 1, for a distance of 1671.72 feet to the Point of Beginning.

 

Herein described tract containing 3.84 acres, more or less.

 

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EXHIBIT B

CONSTRUCTION CONTRACT

 

- 9 -


EXHIBIT C

 

FORM OF CONSENT

 

The undersigned hereby consents to the foregoing Collateral Assignment of Construction Contract (the “Assignment”), and agrees to perform pursuant to the terms and conditions of the Construction Contract. If requested by Administrative Agent (or any successor to the Administrative Agent) in the exercise of its rights under the Assignment, the undersigned shall continue to perform its obligations under the Construction Contract for which the undersigned shall be compensated in accordance with the Construction Contract, for all amounts owed and which may become owing in the future. The undersigned agrees that, upon request by Administrative Agent, the undersigned shall provide a complete list of all of its subcontractors in connection with work for or on the Land and shall cooperate to provide and permit access to Administrative Agent or its agents for inspection of the Land and the work in process. The undersigned also agrees that, in the event of a breach by Assignor of any of the terms and conditions of said Construction Contract, the undersigned will give prompt written notice of such breach to Administrative Agent at Administrative Agent’s address set forth below. Administrative Agent shall have thirty days from the receipt of such notice of default to remedy or cure said default; provided, however, that neither the Assignment nor this Consent shall require Administrative Agent to cure said default, but Administrative Agent shall, in its sole discretion, have the option to do so. The undersigned acknowledges that the Lenders are relying on this Consent and the assurances herein in making the Loans to Borrower and this Consent shall also be for the benefit of any assignees or successors of Administrative Agent and the undersigned. All capitalized terms used in this Consent shall have the same meaning as in the Assignment. The Construction Contract between Assignor and the undersigned is currently in full force and effect without any further amendment or supplement. The accurate and complete copy of the Construction Contract is attached to the Collateral Assignment of Construction Contract as Exhibit B. To the best knowledge of the undersigned, there is no uncured default or event of non-compliance (or uncured event which with the giving of notice or passage of time or both would constitute a default or non-compliance) under the Construction Contract.

 

Dated as of                 , 2004.

 

Contractor’s Address:

     

CONTRACTOR:

       

Manhattan Construction Company

       

By:

   
       

Name:

   
           

Title:

   

 

Administrative Agent’s Address:

Lehman Commercial Paper Inc.

745 Seventh Avenue

New York, New York 10019

Attn.:

  _________________
    Administrative Agent

 

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EXHIBIT B TO CREDIT AGREEMENT

 

FORM OF COLLATERAL ASSIGNMENT OF VESSEL

CONSTRUCTION AGREEMENT

 

This Collateral Assignment of Vessel Construction Agreement (this “Assignment”) is made as of                     , 2004, by PNK (LAKE CHARLES), L.L.C., a Louisiana limited liability company (“Assignor”), to and for the benefit of LEHMAN COMMERCIAL PAPER INC., in its capacity as administrative agent (“Administrative Agent”) for the lenders (collectively, “Lenders”) from time to time party to that certain Amended and Restated Credit Agreement executed as of                     , 2004 (the “Credit Agreement”) among Pinnacle Entertainment, Inc., a Delaware corporation (“Borrower”), Lenders and Administrative Agent. Except as otherwise provided in this Assignment, capitalized terms herein shall have the meanings set forth in the Credit Agreement.

 

A. Assignor has entered into that certain Amended and Restated Subsidiary Guaranty dated as of                     , 2004 (“Subsidiary Guaranty”), whereby Assignor, among other things, guaranteed and promised to pay and perform on demand the obligations of Borrower owed to Administrative Agent and the Lenders under the Loan Documents.

 

B. Borrower and Assignor intend to construct the Lake Charles Project, as defined and described in the Credit Agreement, in Lake Charles, Louisiana.

 

C. Pursuant to the Credit Agreement, the Lenders have agreed to provide financing for the construction of the Lake Charles Project, including, without limitation, the vessel (the “Vessel”) described in the Vessel Construction Agreement (defined below) on the terms and conditions set forth therein. Pursuant to the Credit Agreement, Assignor is required to execute and deliver this Assignment to the Administrative Agent as security for the performance of Assignor’s obligations under the Subsidiary Guaranty.

 

NOW THEREFORE, Assignor hereby agrees as follows:

 

1. Assignor hereby assigns, conveys and transfers to Administrative Agent, and grants a security interest to Administrative Agent in and to, as security for Assignor’s obligations under the Subsidiary Guaranty, all of Assignor’s right, title, interest, privilege, benefit and remedies in, to and under the following:

 

(a) the Vessel Construction Agreement, dated August 27, 2003, entered into between LEEVAC Industries, LLC (the “Builder”) and the Assignor, as may be amended, (the “Vessel Construction Agreement”); and

 

(b) any and all present and future amendments, modifications, supplements, change orders and addenda to the Vessel Construction Agreement.

 

A complete copy of the Vessel Construction Agreement is attached hereto as Exhibit A.

 


2. (a) Assignor agrees to obtain and deliver to Administrative Agent, concurrently with its delivery of this Assignment, a Consent to Assignment substantially in the form of Exhibit B hereto (“Consent”) from the Builder.

 

(b) This Assignment and the Consent hereto do not relieve Assignor of its obligations under the Vessel Construction Agreement. Administrative Agent does not hereby assume any of Assignor’s obligations or duties concerning the Vessel Construction Agreement, including, without limitation, any obligation to pay for the work done pursuant thereto.

 

3. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, Administrative Agent may, at its option, upon written notice to the Builder, exercise any or all of the rights and remedies granted to Assignor under the Vessel Construction Agreement as if Administrative Agent had been an original party to the Vessel Construction Agreement, to the extent permitted by and subject to the Builder’s Consent attached hereto. Administrative Agent may elect to assume all of the obligations of Assignor under the Vessel Construction Agreement by giving notice to that effect to the Builder; provided, however, that Administrative Agent shall cure all defaults of Assignor under the Vessel Construction Agreement occurring prior to the time Administrative Agent gives such notice to the Builder, (it being understood that Administrative Agent shall thereafter be responsible for all obligations of Assignor under the Vessel Construction Agreement).

 

4. Assignor hereby irrevocably constitutes and appoints Administrative Agent as its attorney-in-fact, which power is coupled with an interest, so that Administrative Agent shall have the right upon the occurrence and during the continuance of an Event of Default under the Credit Agreement to demand, receive and enforce Assignor’s rights with respect to the Vessel Construction Agreement, to give appropriate receipts, releases and satisfactions for and on behalf of Assignor with regard to the Vessel Construction Agreement and to do any and all acts in the name of Assignor or in the name of Administrative Agent with regard to the Vessel Construction Agreement with the same force and effect as Assignor could have done.

 

5. Assignor hereby represents and warrants to Administrative Agent that its previous assignment, dated as of December 17, 2004, of the Vessel Construction Agreement to Lehman Commercial Paper Inc., in its capacity as an administrative agent for the lenders from time to time party to that certain Credit Agreement executed as of December 17, 2003 among Pinnacle Entertainment, Inc., a Delaware corporation, lenders and Lehman Commercial Paper Inc., in its capacity as administrative agent, has been terminated and no other assignment has been made that has not been heretofore terminated, and Assignor agrees not to assign, sell, pledge, transfer or otherwise encumber its interest in the Vessel Construction Agreement so long as this Assignment is in effect, except as otherwise not prohibited in the Credit Agreement. Assignor represents and warrants that the copy of the Vessel Construction Agreement attached hereto as Exhibit A is the complete and entire agreement between the parties thereto respecting the construction of the vessel as of the date of the execution thereof. Assignor agrees not to materially modify the Vessel Construction Agreement without Administrative Agent’s written consent, except to the extent otherwise permitted in the Credit Agreement.

 

- 2 -


6. If any provision of this Assignment shall be invalid, illegal or unenforceable, it shall not affect or impair the validity, legality and enforceability of the other provisions of this Assignment. This Assignment may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except by a written instrument signed by the party against whom enforcement of the waiver, amendment, change, or modification is sought.

 

7. Assignor shall indemnify and hold harmless Administrative Agent against any liabilities, claims, costs or expenses, including reasonable Attorneys’ Costs, incurred by Administrative Agent as a result of this Assignment or Administrative Agent’s exercise of its rights hereunder, except for liabilities, claims, costs or expenses caused by the gross negligence or willful misconduct of Administrative Agent.

 

8. This Assignment shall be binding upon Assignor and its successors and assigns, and shall inure to the benefit of Administrative Agent and its successors and assigns. Administrative Agent may assign all or any portion of its interest in the Vessel Construction Agreement or its rights created hereunder and, in such event, Assignor, at its sole expense, shall promptly execute, acknowledge and deliver such additional documents, instruments and agreements as may be reasonably required by Administrative Agent in connection with any such assignment.

 

9. Upon the satisfaction of all obligations of Borrower to Administrative Agent and the Lenders under the Credit Agreement, this Assignment shall automatically terminate.

 

10. This Assignment shall be governed by and construed in accordance with the laws of the State of New York.

 

IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed as of the date first set forth above.

 

Assignor:

PNK (LAKE CHARLES), L.L.C.,

a Louisiana limited liability company

By:  

Pinnacle Entertainment, Inc.,

its sole member and manager

   

By:

   
   

Name:

   
   

Title:

   

 

- 3 -


EXHIBIT A

VESSEL CONSTRUCTION AGREEMENT

 

- 4 -


EXHIBIT B

FORM OF CONSENT

 

The undersigned hereby consents to the foregoing Collateral Assignment of Vessel Construction Agreement (the “Assignment”), and agrees to perform pursuant to the terms and conditions of the Vessel Construction Agreement. If requested by Administrative Agent (or any successor to the Administrative Agent) in the exercise of its rights under the Assignment, the undersigned shall continue to perform its obligations under the Vessel Construction Agreement for which the undersigned shall be compensated in accordance with the Vessel Construction Agreement. The undersigned agrees that, upon request by Administrative Agent, the undersigned shall provide a complete list of all of its subcontractors in connection with work for or on the Vessel (as defined in the Vessel Construction Agreement) and shall cooperate to provide and permit access to Administrative Agent or its agents for inspection of the Vessel and the work in process. The undersigned also agrees that, in the event of a breach by Assignor of any of the terms and conditions of said Vessel Construction Agreement, the undersigned will give prompt written notice of such breach to Administrative Agent at Administrative Agent’s address set forth below. Administrative Agent shall have thirty days from the receipt of such notice of default to remedy or cure said default; provided, however, that neither the Assignment nor this Consent shall require Administrative Agent to cure said default, but Administrative Agent shall, in its sole discretion, have the option to do so. The undersigned acknowledges that the Lenders are relying on this Consent and the assurances herein in making the Loans to Borrower and this Consent shall also be for the benefit of any assignees or successors of Administrative Agent and the undersigned. All capitalized terms used in this Consent shall have the same meaning as in the Assignment. The Vessel Construction Agreement between Assignor and the undersigned is currently in full force and effect without any further amendment or supplement. The accurate and complete copy of the Vessel Construction Agreement is attached as Exhibit A to the Collateral Assignment of Vessel Construction Agreement. To the best knowledge of the undersigned, there is no uncured default or event of non-compliance (or uncured event which with the giving of notice or passage of time or both would constitute a default or non-compliance) under the Vessel Construction Agreement.

 

Dated as of                     , 2004

 

Builder’s Address:

     

BUILDER:

       

LEEVAC Industries, LLC.

           

By:

   
           

Name:

   
           

Title:

   

 

Administrative Agent’s Address:

Lehman Commercial Paper Inc.

745 Seventh Avenue, 7th Floor

New York, New York 10019

Attn: Frank Turner

Administrative Agent

 

Reference:  Pinnacle Entertainment

 

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EXHIBIT C TO CREDIT AGREEMENT

 

FORM OF COLLATERAL ASSIGNMENT OF COOPERATIVE ENDEAVOR

DEVELOPMENT AGREEMENT

 

THIS COLLATERAL ASSIGNMENT OF COOPERATIVE ENDEAVOR DEVELOPMENT AGREEMENT (“Assignment”) is made as of the                     , 2004 by and among PNK (LAKE CHARLES), L.L.C., a Louisiana limited liability company (“Assignor”), Lehman Commercial Paper Inc. (in its capacity as administrative agent (“Administrative Agent”) for the lenders (collectively, the “Lenders”) from time to time parties to that certain Credit Agreement executed as of                     , 2004 (as amended from time to time, “Credit Agreement”) by and among Pinnacle Entertainment, Inc., a Delaware corporation (“Borrower”), the Lenders and Administrative Agent, the LAKE CHARLES HARBOR & TERMINAL DISTRICT, a political subdivision of the State of Louisiana (“District”), the CALCASIEU PARISH POLICE JURY, a governmental entity and the governing authority for the Parish of Calcasieu (“Parish”) and the CITY OF LAKE CHARLES, LOUISIANA (“City”) (the District, the Parish and the City being sometimes collectively referred to herein as the “Governmental Parties”) with reference to the following facts:

 

RECITALS

 

A. In connection with the development of certain real property located in the City Of Lake Charles, Louisiana, as described on Exhibit A attached hereto and incorporated herein by this reference (the “Property”), Borrower (under its former name Hollywood Park, Inc.), the District, the Parish and the City have entered into that certain Cooperative Endeavor Development Agreement, dated as of November 8, 1999, as amended by an Amendment thereto dated as of April 22, 2003, (as further may be amended, the “Cooperative Agreement”).

 

B. Assignor currently holds a ground leasehold interest in the Property (collectively with certain options to acquire additional leaseholds in the Property, the “Leasehold”), and pursuant to that certain Assignment dated as of August 20, 2003 made by the Borrower in favor of the Assignor, Borrower has assigned all of its rights and powers under the Cooperative Agreement and all related documents to Assignor.

 

C. The Cooperative Agreement, together with any other documents and instruments executed by the Governmental Parties, the Borrower and/or the Assignor pursuant to the Cooperative Agreement, including, without limitation, that certain Head Tax Agreement, dated December     , 2003 shall be referred to herein collectively as the “Cooperative Agreement Related Documents.”

 

D.

On December 17, 2003, Lehman Commercial Paper Inc., as administrative agent for certain lenders, such lenders and the Borrower entered into a Credit Agreement (“Original Credit Agreement”) pursuant to which such lenders made certain advances to the Borrower. The Borrower’s obligations under the Original Credit Agreement were secured, among other things, by that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Collateral Assignment of Proceeds

 


 

made by Assignor as of December 17, 2003 in favor of Lehman Commercial Paper Inc. (the “Original Mortgage”), which was recorded against the Leasehold. As a condition to the lenders making the credit facilities available under the Original Credit Agreement, Assignor assigned all of its rights under the Cooperative Agreement Related Documents to Lehman Commercial Paper Inc.

 

E. Pursuant to the Credit Agreement, the Lenders have agreed to make certain credit facilities available to the Borrower, for the purpose of, among other things, the refinancing of the Original Credit Agreement and development of the Property.

 

F. The Borrower’s obligations under the Credit Agreement will be secured, among other things, by that certain Amended Mortgage, Assignment of Lease and rents, Security Agreement and Collateral Assignment of Proceeds which will amend the Original Mortgage (as may hereafter be amended, modified, supplemented or replaced from time to time, the “Mortgage”), which will be recorded against the Leasehold. The Credit Agreement and the Mortgage and all other documents signed in connection therewith or defined in the Credit Agreement, as a “Loan Document”, and any and all other present or future amendments, modifications, and supplements thereto or replacements thereof, shall be referred to herein, collectively, as the “Loan Documents.”

 

G. As a condition to the Lenders making the credit facilities available under the Credit Agreement, Administrative Agent has required a collateral assignment from Assignor of all of its rights under the Cooperative Agreement Related Documents.

 

NOW, THEREFORE, the parties agree as follows:

 

1. ASSIGNMENT. As additional collateral for the Borrower’s obligations under the Loan Documents, Assignor hereby assigns to Administrative Agent all of the rights and powers of Assignor, and its successors and assigns, under the Cooperative Agreement Related Documents, it being understood that the rights of the Administrative Agent or any designee thereof shall be no greater than those of the Assignor under the Cooperative Agreement Related Documents.

 

2. CERTAIN AGREEMENTS OF ASSIGNOR. Assignor shall perform and observe in a timely manner all conditions and obligations on the part of Assignor to be performed or observed under the Cooperative Agreement Related Documents. Assignor will not enter into any modification of any of the Cooperative Agreement Related Documents without the Administrative Agent’s prior written consent, and will promptly notify Administrative Agent in writing of any consents or other approvals which it receives from any of the Governmental Parties under the Cooperative Agreement Related Documents. Assignor will immediately notify Administrative Agent if it receives a notice of non-compliance or notice of default under any of the Cooperative Agreement Related Documents from any of the Governmental Parties. Assignor authorizes Administrative Agent to cure any event of non-compliance or default, to the same extent as Assignor may cure such event of non-compliance or default, specified in any notice of non-compliance or notice of default which Assignor may receive under any of the cooperative Agreement Related Documents.

 

- 2 -


3. ESTOPPEL. The Assignor, the District, the Parish and the City each hereby certifies to Administrative Agent as follows:

 

a. The Cooperative Agreement is currently in full force and effect without any further amendment or supplement, accurate and complete copies of the Cooperative Agreement and the other Cooperative Agreement Related Documents are attached as Exhibit 1 to an unrecorded copy of this Assignment delivered by the parties hereto to the Administrative Agent, and neither Assignor, District, Parish nor City has previously assigned any of their respective rights, title or interests under the Cooperative Agreement Related Documents; and

 

b. To the best of their knowledge, there is no uncured default or event of non-compliance (or uncured event which with the giving of notice or passage of time or both would constitute a default or non-compliance) under the Cooperative Agreement or the other Cooperative Agreement Related Documents, and neither Assignor, District, Parish nor City has given any notice of non-compliance or notice of default under the Cooperative Agreement or any other Cooperative Agreement Related Documents.

 

4. AGREEMENTS AND APPROVALS BY THE GOVERNMENTAL PARTIES. Notwithstanding anything to the contrary contained in the Cooperative Agreement or other Cooperative Agreement Related Documents, District, Parish and City each agree to the following provisions:

 

a. Each of the Governmental Parties hereby acknowledges the assignment by Assignor of all of its rights, title and interests under the Cooperative Agreement and the other Cooperative Agreement Related Documents to Administrative Agent as additional collateral for the Borrower’s obligations under the Loan Documents and, to the extent such consent is required under the terms of the Cooperative Agreement Related Documents and applicable law, consents thereto.

 

b. Each of the Governmental Parties hereby approves of and consents to in advance a transfer of all or any portion of the Property to Administrative Agent or Administrative Agent’s successors, assigns or nominees (herein, a “Permitted Transferee”) pursuant to the exercise of the rights granted to Administrative Agent under the Loan Documents, including, without limitation, to the successful bidder at any foreclosure or sale held to foreclose the Mortgage, or to any other transferee by reason of a deed or assignment in lieu of foreclosure, or otherwise pursuant to the rights granted under any such instruments. Notwithstanding anything herein to the contrary, the Administrative Agent has no obligation or liability for any of the obligations and liabilities of Borrower or Assignor under the Cooperative Agreement Related Documents, and shall have no such obligation or liability, unless and until the Administrative Agent acquires title to the Leasehold or the Property through foreclosure or similar proceedings, provided that any Permitted Transferee of the Administrative Agent shall assume, by documents reasonably acceptable to the Governmental Parties, the obligations of the Assignor under the Cooperative Agreement Related Documents concurrently with its acquisition of the interests of the Assignor under the Leasehold.

 

- 3 -


c. Each of the Governmental Parties agrees to deliver any notice or demand with respect to any event of default or other event of breach or non-compliance by Assignor under any of the Cooperative Agreement Related Documents to Administrative Agent in accordance with the notice provisions set forth below at the same time such notice or demand is delivered to Assignor. The Governmental Parties acknowledge that the Assignor is not permitted to enter into any modification of any of the Cooperative Agreement Related Documents without Administrative Agent’s prior written consent, and agree that they will endeavor to Administrative Agent a copy of each consent and other approval which each of the Governmental Parties gives to Assignor under any of the Cooperative Agreement Related Documents (but will not incur any liability for any inadvertent failure to do so).

 

d. Each of the Governmental Parties agrees that the Administrative Agent (insofar as the right’s of Governmental Parties are concerned) shall have the right, at its option, within a reasonable period of time, but not in excess of twenty business days in the case of any failure to pay money, after its receipt of any notice or demand with respect to any event of default or other event of breach of non-compliance by Assignor under any of the Cooperative Agreement Related Documents, to cure or remedy or commence to cure or remedy any default and to add the cost there of to the lien of the Mortgage. If such default shall be of a nature or type which can only be reasonably remedied or cured by Administrative Agent upon obtaining possession of the Property, or applicable portion thereof, and Administrative Agent seeks to obtain possession with diligence, through appointment of a receiver or otherwise, Administrative Agent shall have such a reasonable period of time after so obtaining possession to cure such default; provided further, that so long as Administrative Agent commences the cure or remedy of such default within a reasonable period of time and thereafter diligently and with reasonable continuity prosecutes such cure or remedy to completion as soon as reasonably practicable, Administrative Agent shall have the right to continue to prosecute any cure or remedy.

 

e. The Governmental Parties agree that if Administrative Agent or any Permitted Transferee acquires title to the Property or any portion thereof pursuant to the exercise of the rights granted to Administrative Agent pursuant to the Loan Documents, including, without limitation, to the successful bidder at any foreclosure or sale held to foreclose under the Mortgage, or to any other transferee by reason of a deed or assignment in lieu of foreclosure, or otherwise pursuant to the rights granted under any such instruments, Administrative Agent or such transferee shall not be liable for any prior defaults by Assignor or any of the obligations and liabilities of Assignor (including, without limitation, indemnity and defense obligations) in connection with the Property or under any of the Cooperative Agreement Related Documents, and not be obligated to construct, alter, repair, replace, operate or maintain any improvements or assume any obligation or liability under any of the Cooperative Agreement Related Documents; and only be liable to the extent of its interest in the portion of the Property owned by it, and not be liable after it conveys the portion of the Property owned by it to another person or entity.

 

- 4 -


f. Nothing contained herein or in the Cooperative Agreement Related Documents shall (i) impair the exercise by Administrative Agent at any time of any and all remedies under the Loan Documents, including, without limitation, commencement, prosecution and completion of foreclosure proceedings or acceptance of a deed or assignment in lieu of foreclosure, or (ii) impair, defeat or render invalid the lien of the Mortgage.

 

5. NOTICES. All notices or other communications required or permitted to be given pursuant to the provisions of this Assignment shall be in writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective upon receipt at the addresses set forth below. For purposes of notice, the addresses of the parties shall be:

 

If to Assignor:

   PNK (Lake Charles), L.L.C.
     Suite 1800
     3800 Howard Hughes Parkway
     Las Vegas, Nevada 89109

If to Administrative Agent:

   Lehman Commercial Paper Inc.
     745 Seventh Avenue, 7th Floor
     New York, New York 10019
     Attention: Frank Turner
     Telecopier:                     

If to the Parish:

   Calcasieu Parish Police Jury
     1015 Pithon Street
     Lake Charles, Louisiana 70601
     Attention: President
     Telecopier: (337) 437-3399

by Mail:

   Calcasieu Parish Police Jury
     P.O. Drawer 1583
     Lake Charles, Louisiana 70602
     Attention: President

with a copy to:

   Parish Administrator
     Calcasieu Parish Police Jury
     1015 Pithon Street
     Lake Charles, Louisiana 70601
     Telecopier: (337) 437-3399

by Mail:

   Parish Administrator
     Calcasieu Parish Police Jury
     P.O. Drawer 1583
     Lake Charles, Louisiana 70602

If to the District:

   Lake Charles Harbor & Terminal District
     150 Marine Street

 

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     Lake Charles, Louisiana 70601
     Attention: President
     Telecopier: (337) 493-3523

by Mail:

   Lake Charles Harbor & Terminal District
     P.O. Box 3753
     Lake Charles, Louisiana 70602
     Attention: President

with a copy to:

   Port Director
     Lake Charles Harbor & Terminal District
     150 Marine Street
     Lake Charles, Louisiana 70601
     Telecopier: (337) 493-3523

by Mail:

   Port Director
     Lake Charles Harbor & Terminal District
     P.O. Box 3753
     Lake Charles, Louisiana 70602

If to the City:

   City Of Lake Charles
     326 Pujo Street
     Lake Charles, Louisiana 70601
     Attention: Mayor
     Telecopier: (337) 491-1206

by Mail:

   City of Lake Charles
     P.O. Box 900
     Lake Charles, Louisiana 70602
     Attention: Mayor

with a copy to:

   President, Lake Charles City Council
     326 Pujo Street
     Lake Charles, Louisiana 70601
     Telecopier: (337) 491-1463

by Mail:

   President, Lake Charles City Council
     P.O. Box 1178
     Lake Charles, Louisiana 70602

 

Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other parties in the manner set forth above.

 

6. ASSIGNMENT BY ADMINISTRATIVE AGENT. The Governmental Parties and Assignor acknowledge and agree that Administrative Agent shall have the right to transfer its interest in and rights under this Assignment to any party which Administrative Agent may elect to nominate to acquire, subject to the approval of the Governmental Parties (which approval shall not be unreasonably withheld, conditioned or delayed) and hold title

 

- 6 -


on Administrative Agent’s behalf, or to the successful bidder at any foreclosure sale held to foreclose the Mortgage, or to any other transferee by reason of a deed or assignment in lieu of foreclosure, provided, however, that any such transferee which intends to operate the Improvements shall hold an appropriate gaming license issued by the Louisiana Gaming Control Board.

 

7. LIMITATION. This Assignment shall not cause Administrative Agent to be a mortgagee in possession or in any manner responsible for the performance of any acts or failure to act on the part of Assignor, or its successors or assigns.

 

8. DEFAULT. As between Assignor and Administrative Agent, this Assignment shall constitute one of the Loan Documents, any event of default under the Loan Documents shall constitute an event of default hereunder, and any event of default hereunder shall constitute an event of default under the Loan Documents.

 

9. GOVERNING LAW. The validity of this Assignment, its construction, interpretation and enforcement, and the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the laws of the State of Louisiana.

 

10. SEVERABILITY. Any provision in this Assignment that is held to be inoperative, unenforceable or invalid as to any party or circumstance or in any jurisdiction shall, as to that party or circumstance or jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions or the operation, enforceability or validity of that provision as to any other party or circumstance or in any other jurisdiction, and to this end the provisions of this Assignment are declared to be severable.

 

11. ATTORNEY’S FEES. In the event it becomes necessary for either Administrative Agent or any Of the Governmental Parties to commence any proceedings or actions to enforce, interpret or declare rights under the provisions of this Assignment, the court or body in such actions or proceedings may award to the prevailing party all costs and expenses thereof, including, but not limited to reasonable attorney’s fees, the usual and customary and lawfully recoverable court costs, and all other expenses in connection therewith.

 

12. SUCCESSORS AND ASSIGNS. This Assignment shall be binding upon, and inure to the benefit of, the heirs, executors, administrators, receivers, trustees (including trustees under section 11 of the United States Code), successors and assigns of Assignor, Administrative Agent and each of the Governmental Parties.

 

13. FURTHER ASSURANCES. Each party hereto shall execute, acknowledge and deliver to each other party all documents, and shall take all actions, reasonably required by such other party from time to time to confirm or effect the matters set forth herein, or otherwise to carry out the purposes of this Assignment.

 

14. TERMINATION. This Assignment, and the rights of Administrative Agent hereunder, will terminate upon payment in full of the obligations under the Credit Agreement and the full release and reconveyance of the Mortgage as to all of the Property. The Administrative Agent shall promptly reply to any inquiry from the other parties hereto as to whether this Assignment has been so terminated.

 

- 7 -


15. COUNTERPARTS. This Assignment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute and be construed as one and the same instrument.

 

16. NONLIABILITY OF OFFICERS. No officer, official, member, employee, agent, or representative of each of the Governmental Parties shall be personally liable to Administrative Agent or Assignor, or any successor in interest, in the event of any default or breach by any of the Governmental Entities for any amount which may become due to Assignor or Administrative Agent or successor pursuant to the Cooperative Agreement Related Documents under the terms of this Assignment.

 

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first above written.

 

“Assignor”       “Administrative Agent”

PNK (LAKE CHARLES), L.L.C.

a Louisiana limited liability company

      Lehman Commercial Paper Inc.
By:  

Pinnacle Entertainment, Inc.,

its sole member and manager

      By:    
           

Name: 

   
           

Title:

 

Administrative Agent

 

By:    

Name:

   

Its:

   

 

“District”       “Parish”

LAKE CHARLES HARBOR &

TERMINAL DISTRICT

      CALCASIEU PARISH POLICE JURY
By:           By:    

Name:

         

Name:

   

Its:

         

Its:

   

By:

         

By:

   

Name:

         

Name:

   

Its:

         

Its:

   

 

- 8 -


“City”
CITY AKE CHARLES, LOUISIANA
By:    

Name:

   

Its:

   

By:

   

Name:

   

Its:

   

 

- 9 -


ACKNOWLEDGEMENT

 

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

 

BEFORE ME, the undersigned Notary Public, duly commissioned and qualified in and for said County and State, personally came and appeared                                         , to me known, who declared and acknowledged to me, Notary, and the undersigned competent witnesses that he is the                      of the                                         , that as such duly authorized officer, by and with the authority of the Board of Directors of said Corporation he signed and executed the foregoing instrument, as the free and voluntary act and deed of said corporation, for and on behalf of said corporation and for the objects and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the said appear and the said witnesses have hereunto affixed their signatures this the              day of                     , 2004.

 

WITNESSES:

       
           
           

 

 

NOTARY PUBLIC

 

- 10 -


ACKNOWLEDGEMENT

 

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

 

BEFORE ME, the undersigned Notary Public, duly commissioned and qualified in and for said County and State, personally came and appeared                                         , to me known, who declared and acknowledged to me, Notary, and the undersigned competent witnesses that he is the                      of the                                         , that as such duly authorized officer, by and with the authority of the Board of Directors of said Corporation he signed and executed the foregoing instrument, as the free and voluntary act and deed of said corporation, for and on behalf of said corporation and for the objects and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the said appear and the said witnesses have hereunto affixed their signatures this the              day of                     , 2004.

 

WITNESSES:

       
           
           

 

 

NOTARY PUBLIC

 

- 11 -


ACKNOWLEDGEMENT

 

STATE OF LOUISIANA

PARISH OF CALCASIEU

 

BEFORE ME, the undersigned Notary Public, duly commissioned and qualified in and for said Parish and State, personally came and appeared                                         , to me known, who declared and acknowledged to me, Notary, and the undersigned competent witnesses that he is the                      of the                                         , that as such duly authorized officer, by and with the authority of the Board of Directors of said Corporation he signed and executed the foregoing instrument, as the free and voluntary act and deed of said corporation, for and on behalf of said corporation and for the objects and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the said appear and the said witnesses have hereunto affixed their signatures this the              day of                     , 2004.

 

WITNESSES:

       
           
           

 

 

NOTARY PUBLIC

 

- 12 -


ACKNOWLEDGEMENT

 

STATE OF LOUISIANA

PARISH OF CALCASIEU

 

BEFORE ME, the undersigned Notary Public, duly commissioned and qualified in and for said Parish and State, personally came and appeared                                         , to me known, who declared and acknowledged to me, Notary, and the undersigned competent witnesses that he is the                      of the                                         , that as such duly authorized officer, by and with the authority of the Board of Directors of said Corporation he signed and executed the foregoing instrument, as the free and voluntary act and deed of said corporation, for and on behalf of said corporation and for the objects and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the said appear and the said witnesses have hereunto affixed their signatures this the              day of                     , 2004.

 

WITNESSES:

       
           
           

 

 

NOTARY PUBLIC

 

- 13 -


ACKNOWLEDGEMENT

 

STATE OF LOUISIANA

PARISH OF CALCASIEU

 

BEFORE ME, the undersigned Notary Public, duly commissioned and qualified in and for said Parish and State, personally came and appeared                                         , to me known, who declared and acknowledged to me, Notary, and the undersigned competent witnesses that he is the                      of the                                         , that as such duly authorized officer, by and with the authority of the Board of Directors of said Corporation he signed and executed the foregoing instrument, as the free and voluntary act and deed of said corporation, for and on behalf of said corporation and for the objects and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the said appear and the said witnesses have hereunto affixed their signatures this the              day of                     , 2004.

 

WITNESSES:

       
           
           

 

 

NOTARY PUBLIC

 

- 14 -


EXHIBIT D TO CREDIT AGREEMENT

 

FORM OF COLLATERAL ASSIGNMENT OF ARCHITECT’S CONTRACT

 

This Collateral Assignment of Architect’s Contract (this “Assignment”) is made as of                         , 2004, by Pinnacle Entertainment, Inc., a Delaware corporation, and PNK (LAKE CHARLES), L.L.C., a Louisiana limited liability company (collectively, “Assignor”), to and for the benefit of Lehman Commercial Paper Inc., in its capacity as administrative agent (“Administrative Agent”) for the several lenders (collectively, “Lenders”) from time to time parties to that certain Amended and Restated Credit Agreement executed as of                     , 2004 (the “Credit Agreement”) among Pinnacle Entertainment, Inc., a Delaware corporation (“Borrower”), lenders and Administrative Agent. Except as otherwise provided in this Assignment, capitalized terms herein shall have the meanings set forth in the Credit Agreement.

 

A. Assignor has entered into that certain Amended and Restated Subsidiary Guaranty dated as of an even date herewith (“Subsidiary Guaranty”), whereby Assignor, among other things, guaranteed and promised to pay and perform on demand the obligations of Borrower owed to Administrative Agent and the Lenders under the Loan Documents.

 

B. Borrower and Assignor intend to construct the Lake Charles Project, as defined and described in the Credit Agreement, in Lake Charles, Louisiana on the real property described in Exhibit A attached hereto (the “Land”).

 

C. Pursuant to the Credit Agreement, the Lenders have agreed to provide financing for the construction of the Lake Charles Project on the terms and conditions set forth therein. Pursuant to the Credit Agreement, Assignor is required to execute and deliver this Assignment to the Administrative Agent as security for the performance of Assignor’s obligations under the Subsidiary Guaranty.

 

NOW THEREFORE, Assignor hereby agrees as follows:

 

1. Assignor hereby assigns, conveys and transfers to Administrative Agent, and grants a security interest to Administrative Agent in and to, as security for Assignor’s obligations under the Subsidiary Guaranty, all of Assignor’s right, title, interest, privilege, benefit and remedies in, to and under the following:

 

(a) the prime architectural contract (A1A Document B151-1997) for the Lake Charles Project entered into between Bergman, Walls and Associates, Ltd. (the “Architect”) and the Assignor, as may be amended, (the “Architectural Contract”);

 

(b) all plans, specifications and drawings with respect to the Land (the “Project Plans”), which shall include, without limitation, the plans, specifications and drawings for any and all improvements, streets, sewers, water and drainage and all tentative and final tract maps pertaining to the Land;

 

(c) any and all present and future amendments, modifications, supplements, change orders and addenda to the Architectural Contract or the Project Plans.

 

153


A complete copy of the Project Plans shall be provided to Administrative Agent concurrently with delivery of this Assignment. A complete copy of the Architectural Contract is attached hereto as Exhibit B.

 

2. Assignor agrees to obtain and deliver to Administrative Agent, concurrently with its delivery of this Assignment, a Consent to Assignment substantially in the form of Exhibit C hereto (“Consent”) from the Architect.

 

(b) This Assignment and the Consent hereto do not relieve Assignor of its obligations under the Architectural Contract and the Project Plans. Administrative Agent does not hereby assume any of Assignor’s obligations or duties concerning the Architectural Contract or the Project Plans, including, without limitation, any obligation to pay for the work done pursuant thereto.

 

3. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, Administrative Agent may, at its option, upon written notice to the Architect, exercise any or all of the rights and remedies granted to Assignor under the Architectural Contract or Project Plans as if Administrative Agent had been an original party to the Architectural Contract or Project Plans, to the extent permitted by and subject to the Architect’s Consent attached hereto. Administrative Agent may elect to assume all of the obligations of Assignor under the Architectural Contract and Project Plans by giving notice to that effect to the Architect; provided, however, that Administrative Agent shall cure all defaults of Assignor under the Architectural Contract or Project Plans occurring prior to the time Administrative Agent gives such notice to the Architect, (it being understood that Administrative Agent shall thereafter be responsible for all obligations of Assignor under the Architectural Contract).

 

4. Assignor hereby irrevocably constitutes and appoints Administrative Agent as its attorney-in-fact, which power is coupled with an interest, so that Administrative Agent shall have the right upon the occurrence and during the continuance of an Event of Default under the Credit Agreement to demand, receive and enforce Assignor’s rights with respect to the Architectural Contract and Project Plans, to give appropriate receipts, releases and satisfactions for and on behalf of Assignor with regard to the Architectural Contract or Project Plans and to do any and all acts in the name of Assignor or in the name of Administrative Agent with regard to the Architectural Contract or Project Plans with the same force and effect as Assignor could have done.

 

5. Assignor hereby represents and warrants to Administrative Agent that its previous assignment, dated as of December 17, 2003, of the Architectural Contract or Project Plans to Lehman Commercial Paper Inc., in its capacity as administrative agent for the lenders from time to time party to that certain Credit Agreement executed as of December 17, 2003 among Pinnacle Entertainment, Inc., a Delaware corporation, lenders and the Lehman Commercial Paper Inc., in its capacity as administrative agent, has been terminated and no other assignment has been made that has not been heretofore terminated, and Assignor agrees not to assign, sell, pledge, transfer or otherwise encumber its interest in the Architectural Contract or Project Plans so long as this Assignment is in effect, except as otherwise not prohibited in the Credit Agreement. Assignor represents and warrants that the copy of the Architectural Contract attached hereto as Exhibit B is the complete and entire

 

- 2 -


agreement between the parties thereto respecting the architectural plans for the Lake Charles Project as of the date of the execution thereof. Assignor agrees not to materially modify the Architectural Contract or the Project Plans without Administrative Agent’s written consent, except to the extent otherwise not prohibited in the Credit Agreement.

 

6. If any provision of this Assignment shall be invalid, illegal or unenforceable, it shall not affect or impair the validity, legality and enforceability of the other provisions of this Assignment. This Assignment may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except by a written instrument signed by the party against whom enforcement of the waiver, amendment, change, or modification is sought.

 

7. Assignor shall indemnify and hold harmless Administrative Agent against any liabilities, claims, costs or expenses, including reasonable Attorneys’ Costs, incurred by Administrative Agent as a result of this Assignment or Administrative Agent’s exercise of its rights hereunder, except for liabilities, claims, costs or expenses caused by the gross negligence or willful misconduct of Administrative Agent.

 

8. This Assignment shall be binding upon Assignor and its successors and assigns, and shall inure to the benefit of Administrative Agent and its successors and assigns. Administrative Agent may assign all or any portion of its interest in the Architectural Contract or Project Plans or its rights created hereunder and, in such event, Assignor, at its sole expense, shall promptly execute, acknowledge and deliver such additional documents, instruments and agreements as may be reasonably required by Administrative Agent in connection with any such assignment.

 

9. Upon the satisfaction of all obligations of Borrower to Administrative Agent and the Lenders under the Credit Agreement, this Assignment shall automatically terminate.

 

10. This Assignment shall be governed by and construed in accordance with the laws of the State of New York.

 

IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed as of the date first set forth above.

 

Assignor:

PNK (LAKE CHARLES), L.L.C.,

a Louisiana limited liability company

By:  

Pinnacle Entertainment, Inc.,

its sole member and manager

   

By:

   
   

Name:

   
   

Title:

   

 

- 3 -


EXHIBIT A

DESCRIPTION OF THE LAND

 

PARCEL 1 DESCRIPTION:

 

That certain tract or parcel of land lying in Section Eleven (11), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, and being all of Lot Ten (10) and a portion of Lots Six (6), Seven (7), Eight (8), Nine (9), Eleven (11), Fourteen (14), Fifteen (15), and Sixteen (16) of said Section Eleven (11), being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 161.29 feet, the Point of Beginning and Southeast corner of herein described tract;

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 1884.95 feet to a point 396.82 feet West of the East line of Lot Fourteen (14) of said Section Eleven (11), the Southwest corner of herein described tract;

 

Thence North 00° 53’ 19” East, parallel with and 396.82 feet West of said East line of Lot Fourteen (14) and the West line of Lot Ten (10), for a distance of 1671.72 feet to a point lying 463.74 feet North of the South line of Lot Eleven (11) of said Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with the South line of the aforesaid Section Eleven (11), for a distance of 200.00 feet to a point lying 596.82 feet West of the East line of Lot Eleven (11) of said Section Eleven (11);

 

Thence North 00° 53’ 19” East, parallel with and 596.82 feet Westerly of the East line of said Lot Eleven (11), for a distance of 553.77 feet;

 

Thence North 49° 09’ 02” West for a distance of 948.23 feet, to a point on the left descending bank of the Calcasieu River, the Northwest corner of herein described tract;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 57° 18’ 13” East, for a distance of 325.84 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 51° 38’ 18” East, for a distance of 330.17 feet;

 

- 4 -


Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 56° 19’ 43” East, for a distance of 441.64 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 43° 18’ 27” East, for a distance of 350.17 feet;

 

Thence meandering along said left descending bank of the Calcasieu River, in a general direction of North 41° 45’ 57” East, for a distance of 271.08 feet to a point lying 600.0 feet South of and parallel with the face of the existing fender system at Berth Nine of the Port of Lake Charles Facility;

 

Thence South 70° 45’ 08” East, 600.0 feet South of and parallel with the face of said fender system, for a distance of 2682.96 feet to the West right of way line of the proposed Nelson Road extension project, the Northeast corner of herein described tract;

 

Thence South 14° 17’ 53” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 630.95 feet;

 

Thence North 75° 42’ 07” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 40.00 feet;

 

Thence South 14° 17’ 53” West, along the West right of way line of said proposed Nelson Road extension project, for a distance of 389.36 feet to the Point of Curvature of a tangent curve to the left having a radius of 1054.93 feet and a central angle of 35° 29’ 11”;

 

Thence Southerly, along said tangent curve to the left and West right of way line, through an angle of 29° 41’ 56” for an arc length distance of 546.81 feet, said curve having a chord of South 00° 33’ 05” East 540.71 feet, to a point on the West line of Section Thirty-eight (38), said point also being on the West line of hereon described Parcel 3.;

 

Thence South 22° 21’ 49” West, along the West line of said Section Thirty-eight (38) and contiguous with the West line of said Parcel 3, for a distance of 553.70 to a point lying in a curve to the right having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

Thence Westerly, along said curve to the right, through an angle of 21° 39’ 01” for an arc length distance of 151.15 feet to a point lying 150.00 feet West of the West line of said Section Thirty-eight (38), said curve having a chord of North 70° 56’ 46” West 150.25 feet;

 

Thence South 22° 21’ 49” West, 150.00 feet West of and parallel with the West line of said Section Thirty-eight (38), for a distance of 1179.15 feet to the Point of Beginning.

 

Herein described tract containing 224.08 acres, more or less.

 

- 5 -


PARCEL 2 DESCRIPTION:

 

That certain tract or parcel of land lying in the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of Section Fourteen (14), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being more particularly described as follows to-wit:

 

Beginning at an existing 1” rod marking the Northwest corner of the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of Section Fourteen (14), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, said point being the Northwest corner of herein described tract;

 

Thence South 89%%d 12’ 01” East, along the North line of said Section Fourteen (14), for a distance of 263.29 feet, to the West line of Irregular Section Thirty Eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, the Northeast corner of herein described tract;

 

Thence South 22%%d 21’ 49” West, along the said West line of Irregular Section Thirty Eight (38), for a distance of 190.49 feet to the North Right-of-Way line of Cagle Lane, the Southeast corner of herein described tract;

 

Thence North 88%%d 15’ 23” West, along said North Right-of-Way line of Cagle Lane, for a distance of 193.65 feet to the West line of the Northeast Quarter of the Northeast Quarter (NE/4 - NE/4) of said Section Fourteen (14), the Southwest corner of herein described tract;

 

Thence North 00%%d 54’ 47” East, along said West line of Section Fourteen (14), for a distance of 173.97 feet to the Point of Beginning.

 

Herein described tract containing 0.92 acres, more or less.

 

PARCEL 3 DESCRIPTION:

 

That certain tract or parcel of land lying in Lots Nine (9) and Sixteen (16) of Section Eleven (11) and the West Half (W/2) of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 161.29 feet;

 

Thence North 22° 21’ 49” East, 150.0 feet West of and parallel with the West line of said Section Thirty Eight (38), for a distance of 1179.15 feet to a point lying in a tangent curve to the left having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

- 6 -


Thence Easterly, along said tangent curve to the left through an angle of 21° 39’ 01” for an arc length distance of 151.15 feet to a point lying on the West line of said Section Thirty-eight (38) said curve having a chord of North 70° 56’ 46” West 150.25 feet, the Point of Beginning of herein described tract

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty-eight (38), for a distance of 533.70 feet to a point lying in a tangent curve to the left having a radius of 1054.93 feet and a central angle of 35° 29’ 11”, said point also being on the West right of way line of the proposed Nelson Road Extension;

 

Thence Southerly, along said tangent curve to the left and West right of way line, through an angle of 05° 47’ 15” for an arc length distance of 106.56 feet to the Point of Tangent of said curve;

 

Thence South 21° 11’ 18” East, along said West right of way line, for a distance of 398.53 feet;

 

Thence North 65° 51’ 57” West for a distance of 71.11 feet;

 

Thence South 69° 27’ 24” West for a distance of 134.18 feet to the Point of Curvature of a tangent curve to the right having a radius of 400.00 feet and a central angle of 50° 25’ 21”;

 

Thence Westerly, along said tangent curve to the right, through an angle of 28° 46’ 20” for an arc length distance of 200.87 feet to the Point of Beginning of herein described tract.

 

Herein described tract containing 2.11 acres, more or less.

 

100’ CONSTRUCTION SERVITUDE

 

That certain tract or parcel of land lying in Section Eleven (11), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana, being a portion of Lots Eleven (11) and Fourteen (14) of said Section Eleven (11), and being more particularly described as follows to-wit:

 

Commencing at the Southwest corner of the Barthelemew Lebleu Claim of Irregular Section Thirty-eight (38), Township Ten (10) South, Range Nine (9) West, Calcasieu Parish, Louisiana;

 

Thence North 22° 21’ 49” East, along the West line of said Section Thirty Eight (38), for a distance of 383.63 feet to a point lying 120.0 feet North of the South line of the aforesaid Section Eleven (11);

 

Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 2046.24 feet to a point 396.82 feet West of the East line of Lot Fourteen (14) of said Section Eleven (11), the Point of Beginning and Southeast corner of herein described tract, said point also being the Southwest corner of Parcel 1 of Pinnacle Entertainment Properties;

 

- 7 -


Thence North 89° 11’ 50” West, parallel with and 120.0 feet North of the South line of said Section Eleven (11), for a distance of 100.00 feet;

 

Thence North 00° 53’ 19” East, parallel with and 100.0 feet West of the West line of Parcel 1 of Pinnacle Entertainment Properties, for a distance of 1671.72 feet to the Intersection with Parcel 1 of Pinnacle Entertainment Properties;

 

Thence South 89° 11’ 50” East, contiguous with the Westerly property line of Parcel 1 of said Pinnacle Entertainment Properties, for a distance of 100.00 feet;

 

Thence South 00° 53’ 19” West, contiguous with the said West property line of Parcel 1, for a distance of 1671.72 feet to the Point of Beginning.

 

Herein described tract containing 3.84 acres, more or less.

 

- 8 -


EXHIBIT B

ARCHITECTURAL CONTRACT

 

- 9 -


EXHIBIT C

FORM OF CONSENT

 

The undersigned hereby consents to the foregoing Collateral Assignment of Architect’s Contract (the “Assignment”), and agrees to perform pursuant to the terms and conditions of the Architectural Contract and the Project Plans. If requested by Administrative Agent (or any successor to the Administrative Agent) in the exercise of its rights under the Assignment, the undersigned shall continue to perform its obligations under the Architectural Contract and the Project Plans for which the undersigned shall be compensated in accordance with the Architectural Contract. Administrative Agent and any assignee or successor of Administrative Agent, upon the exercise of its rights under the Assignment, shall be entitled to use any of the Project Plans prepared by the undersigned without additional cost. The undersigned also agrees that, in the event of a breach by Assignor of any of the terms and conditions of said Architectural Contract or Project Plans, the undersigned will give prompt written notice of such breach to Administrative Agent at Administrative Agent’s address set forth below. Administrative Agent shall have thirty days from the receipt of such notice of default to remedy or cure said default; provided, however, that neither the Assignment nor this Consent shall require Administrative Agent to cure said default, but Administrative Agent shall, in its sole discretion, have the option to do so. The undersigned acknowledges that the Lenders are relying on this Consent and the assurances herein in making the Loans to Borrower and this Consent shall also be for the benefit of any assignees or successors of Administrative Agent and the undersigned. All capitalized terms used in this Consent shall have the same meaning as in the Assignment. The Architectural Contract between Assignor and the undersigned is currently in full force and effect without any further amendment or supplement. The accurate and complete copy of the Architectural Contact is attached to the Collateral Assignment of Architect’s Contract as Exhibit B. To the best knowledge of the undersigned, there is no uncured default or event of non-compliance (or uncured event which with the giving of notice or passage of time or both would constitute a default or non-compliance) under the Architectural Contract.

 

Dated as of                         , 2004

 

Architect’s Address:

     

ARCHITECT:

2965 South Jones Boulevard, Suite C

Las Vegas, NV 89146

(702) 940-0000

     

Bergman, Walls and Associates, Ltd.

     

 

By:

   
     

Name: 

   
           

Title:

   

 

Administrative Agent’s Address:

 

Lehman Commercial Paper Inc.

745 Seventh Avenue

New York, New York 10019

Attn.:

  _________________
    Administrative Agent

 

- 10 -


EXHIBIT E TO CREDIT AGREEMENT

 

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered to you pursuant to Section 6.2(b) of the Amended and Restated Credit Agreement, dated as of August         , 2004 (as amended, restated, amended and restated, supplemented, replaced or modified from time to time, the “Credit Agreement”), among PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement, LEHMAN BROTHERS INC., and BEAR, STEARNS & CO. INC., as joint advisors, joint lead arrangers and joint book runners, BEAR STEARNS CORPORATE LENDING INC., as syndication agent and LEHMAN COMMERCIAL PAPER INC., as administrative agent. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Credit Agreement.

 

1. I am the duly elected, qualified and acting chief financial officer of the Borrower.

 

2. I have reviewed and am familiar with the contents of this Certificate.

 

3. I have reviewed the terms of the Credit Agreement and the other Loan Documents and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Borrower and its Subsidiaries during the accounting period covered by the financial statements attached hereto as Attachment 1 (the “Financial Statements”). Such review did not disclose the existence during or at the end of the accounting period covered by the Financial Statements, and I have no knowledge of the existence, as of the date of this Certificate, of any condition or event which constitutes a Default or Event of Default, except as previously disclosed to the Administrative Agent pursuant to Section 6.7(a) or as set forth below.

 

4. Attached hereto as Attachment 2 are the computations showing compliance with the covenants in the Credit Agreement identified in such attachment.

 

IN WITNESS WHEREOF, I execute this Certificate this              day of                     , 200  .

 

PINNACLE ENTERTAINMENT, INC.,

a Delaware corporation

By:    
   

Name:

   
   

Title:

   

 


ATTACHMENT 2

 

The information described herein is as of                              , 200   (the “Certification Date”), and pertains to the period from                              , 20     to                              , 20    .

 

I. FINANCIAL CONDITION COVENANTS

 

  A. Consolidated EBITDA:

 

     Quarter
Ending [____]


   Quarter
Ending [____]


   Quarter
Ending [____]


   Quarter
Ending [___]


   TOTAL

Consolidated Net Income

                        

Plus:

                        
income tax expense                         
Consolidated Interest Expense of the Borrower and its Restricted Subsidiaries, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness                         
depreciation and amortization expense                         
amortization and write-off of intangibles (including, but not limited to, goodwill) and organization costs                         
extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on                         

 


sales of assets outside of the ordinary course of business)                    
pre-opening and related promotional expenses (Current Projects and Belterra Tower Project)                    
solely with respect to the fiscal years ending on December 31, 2004 and December 31, 2005, the aggregate amount of the expenses incurred by the Borrower or its Restricted Subsidiaries during such fiscal years with respect to the initiative process related to gaming in the State of California, but not to exceed $3,500,000 in the aggregate through December 31, 2005                    
other non-cash charges                    
any charges and payments incurred or made prior to the Effective Date with respect to the expensing of an agreement for a consultant that assisted with the disposition of Borrower’s surplus land in Inglewood, but not to exceed $1,500,000 in the aggregate                    
any amounts expended after January 1, 2004 towards the development of businesses not prohibited by Section 7.14 of the Credit Agreement, in an amount not to exceed, during the term of the Credit Agreement, $7,000,000                    

 


minus:

                   
interest income                    
any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on sales of assets outside of the ordinary course of business)                    
other non-cash income                    

TOTAL CONSOLIDATED EBITDA

                   

 

  B. Annualized Adjusted EBITDA:

 

  1. Consolidated EBITDA: $                                , plus

 

  2. To the extent reflected in Consolidated EBITDA for such period, non-cash asset write-downs made during the period from the Effective Date through December 31, 2004 (but not later), in an aggregate amount not to exceed $3,000,000: $                                , plus

 

  3. To the extent deducted in arriving at Consolidated EBITDA for such period, non-cash write downs to goodwill required by Financial Accounting Standards Board Statement No. 142, and any non-cash reductions to the value of the assets of the Borrower and its Restricted Subsidiaries required by Financial Accounting Standards Board Statement No. 121: $                                , plus

 

  4. The amount of Distributed Unrestricted Subsidiary Income received by the Borrower or any Restricted Subsidiary during such period: $                                , plus

 

  5. The Argentina Receipts that were (x) received during such period by the Borrower or any Restricted Subsidiary and (y) irrevocably designated during such period as Reclassified Argentina Receipts: $                                , equals

 


Annualized Adjusted EBITDA:                         $                        

 

  C. Consolidated Leverage Ratio. Consolidated Leverage Ratio on a consolidated basis of Borrower for the consecutive four-fiscal-quarter period (or, if less, the number of full fiscal quarters subsequent to the Effective Date) from _____, ___ through _____, _____.

 

  1. Consolidated Total Debt (aggregate principal amount of all Indebtedness less the existing balance in the Completion Reserve Account):

 

  2. Annualized Adjusted EBITDA

 

  3. Consolidated Leverage Ratio (C.1. divided by C.2):                     

 

  4. Maximum permitted Consolidated Leverage Ratio:

 

Fiscal Quarter Ending


   Consolidated
Leverage Ratio


After the Effective Date and on or prior to June 30, 2005

   7.75

After June 30, 2005 and on or prior to September 30, 2005

   7.00

After September 30, 2005 and on or prior to June 30, 2006

   6.75

After June 30, 2006 and on or prior to December 31, 2006

   7.00

After December 31, 2006 and on or prior to March 31, 2007

   6.50

After March 31, 2007 and on or prior to September 30, 2007

   6.25

After September 30, 2007 and on or prior to December 31, 2007

   6.00

After December 31, 2007 and on or prior to June 30, 2008

   5.00

After June 30, 2008 and on or prior to December 31, 2008

   4.75

After December 31, 2008 and on or prior to December 31, 2009

   4.50

Thereafter

   4.25

 

  D. Consolidated Fixed Charge Coverage Ratio. Fixed Charge Coverage Ratio on a consolidated basis of Borrower for the four-fiscal-quarter period (or, if less, the number of full fiscal quarters subsequent to the Effective Date) from ________, ____ through ________, _____.

 

1.      

  Annualized Adjusted EBITDA (from Item B)    $                       

2.      

  minus the Aggregate amount paid in cash on account of Capital Expenditures1    ($                     )

3.      

  Total of 1. and 2. (for numerator)    $                       

1 Does not include Capital Expenditures permitted by Section 7.16(a) through (g).

 


4.      Over Consolidated Fixed Charges:

a.      

  Consolidated Interest Expense (net of interest income)    $                     

b.      

  plus cash income taxes paid/payable (net of tax funds received)2    $                     

c.      

  plus scheduled payments made on account of principal of Indebtedness    $                     

5.      Total Consolidated Fixed Charges (sum of 4.a. through 4.c):

   $                     

6.      Consolidated Fixed Charges Coverage Ratio (D.3. divided by D.5.)

     _________

7.      Maximum permitted Consolidated Fixed Charge Coverage Ratios:

 

Fiscal Quarter Ending


   Consolidated Fixed
Charge Coverage Ratio


After the Effective Date and on or prior to June 30, 2005

   1.00

After June 30, 2005 and on or prior to September 30, 2005

   1.25

After September 30, 2005 and on or prior to December 31, 2006

   1.40

After December 31, 2006 and on or prior to December 31, 2007

   1.50

Thereafter

   1.75

 

  E. Consolidated Senior Debt Ratio. Consolidated Senior Debt Ratio as of the last day of any four-fiscal-quarter period (or, if less, the number of full fiscal quarters subsequent to the Effective Date) from ________, ____ through _______, _____.

 

1.      Consolidated Senior Debt (Consolidated Total Debt (from Item C.1.) other than Subordinated Obligations):

   $                     

2.      Annualized Adjusted EBITDA (from Item B):

   $                     

3.      Consolidated Senior Debt Ratio (E.1. divided by E.2.):

     ________

4.      Maximum permitted Consolidated Senior Debt Ratio:

      

 

Fiscal Quarter Ending


   Consolidated
Senior Debt Ratio



2 For the fiscal periods ending on or before June 30, 2006, cash income taxes shall be reduced (but not below zero) by the amount of all tax refunds received during the fiscal year which ended on December 31, 2005.

 


Fiscal Quarter Ending


   Consolidated
Senior Debt Ratio


After the Effective Date and on or prior to June 30, 2005

   2.50

After June 30, 2005 and on or prior to December 31, 2006

   2.65

After December 31, 2006 and on or prior to June 30, 2007

   2.40

After June 30, 2007 and on or prior to December 31, 2007

   2.25

After December 31, 2007 and on or prior to December 31, 2009

   2.00

Thereafter

   1.75

 

II. INDEBTEDNESS

 

A.     Aggregate Indebtedness (including, without limitation, Capital Lease Obligations) secured by Liens permitted by Section 7.3(g) at any one time outstanding (Section 7.2(c)(i)):

   $                     

B.     Aggregate Indebtedness of any and all Persons that became a direct or indirect Subsidiary of the Borrower after the Effective Date in an acquisition (Section 7.2(c)(ii)):

   $                     

C.     Aggregate amount of Indebtedness described in II.A. and II.B:

   $                     3

D.     Aggregate Indebtedness incurred in the form of Guaranty Obligations with respect to commercial letters of credit at any time outstanding under Section 7.2(i)(x):

   $                     4

E.     Aggregate Indebtedness incurred in the form of Guaranty Obligations with respect to standby letters of credit at any time outstanding under Section 7.2(i)(y):

   $                     5

F.      Aggregate amount of Indebtedness incurred pursuant to Section 4.21.3 of the Redevelopment Agreement:

   $                     6

G.     Aggregate Indebtedness permitted under Section 7.2(m) in connection with the Condo Component:

   $                     7

3 Shall not exceed $50,000,000 at any time.

 

4 Shall not exceed $15,000,000 at any time.

 

5 Shall not exceed $4,500,000 at any time.

 

6 Shall not exceed $10,000,000 at any time.

 

7 Shall not exceed $50,000,000 at any time.

 


III. INVESTMENTS

 

A.     Aggregate amount of loans and advances to employees in the ordinary course of business permitted under Section 7.7(e):

   $                     8

B.     Aggregate amount of Investments permitted under Section 7.7(k):

   $                     9

 

IV. CAPITAL EXPENDITURES

 

A.     Maximum amount of aggregate Expenses associated with the construction and development of the Lake Charles Project permitted under Section 7.16(a):

   $ 365,000,00010

B.     Aggregate Expenses described in IV.A. then paid:

   $                     

C.     Maximum amount of aggregate Expenses associated with the construction and development of the Belterra Tower Project made after the Effective Date and permitted under Section 7.16(b):

   $ 5,000,000

D.     Aggregate Expenses described in IV.C. then paid:

   $                     

E.     Maximum amount of aggregate Expenses associated with the construction and development of the St. Louis City Project permitted under Section 7.16(c): [Prior to designation as a Current Project: $15,000,000, after designation as a Current Project: $208,000,00011]

F.      Aggregate Expenses described in IV.E. then paid:

   $                     

8 Shall not exceed $5,000,000 at any time.

 

9 Shall not exceed $10,000,000; provided that not more than $4,000,000 of such Investments shall be in Unrestricted Subsidiaries

 

10 This amount may be increased by up to $10,000,000 upon consultation with and approval of the Administrative Agent.

 

11 This amount may be increased by up to $15,000,000 upon consultation with and approval of the Administrative Agent.

 


G.     Maximum amount of aggregate Expenses associated with the construction and development of the St. Louis County Project permitted under Section 7.16(d): [Prior to designation as a Current Project: $30,000,00012, after designation as a Current Project $300,000,00013]

H.     Aggregate Expenses described in IV.G. then paid:

   $                     

I.       Maximum Expansion Capital Expenditures Amount:

   $                     14

J.      Aggregate Expansion Capital Expenditures described in IV.I. then paid:

   $                     

K.     Maximum amount of other Capital Expenditures permitted under Section 7.16(h):

   $                     

L.     Aggregate amount of other Capital Expenditures described in IV.K then made.:

   $                     

 

V. IN BALANCE TEST: As of the Certification Date, A - B

 

A. The Sum of:

      

(i) The undrawn portion of the Revolving Credit Commitment:

   $                     

(ii) The undrawn portion of the Delayed Draw Term Loan Commitment:

   $                     

(iii) The balance of the Completion Reserve Account:

   $                     

(iv) Excess Cash equal to (in each case, as of the last day of the most recent calendar month prior to the Certification Date for which an Excess Cash Certificate is required to be delivered

      

12 This amount may be increased by up to $20,000,000 upon consultation with and approval of the Administrative Agent.

 

13 This amount may be increased by up to $20,000,000 upon consultation with and approval of the Administrative Agent.

 

14 The amount equal to the lesser of (a) $125,000,000 and (b) $80,000,000 plus the Net Cash Proceeds of any Capital Stock (other than Capital Stock issued in connection with compensatory stock options for employees and consultants) issued by the Borrower after the Effective Date less the amounts required to be applied from such Net Cash Proceeds towards the repayment of Loans and deposited into the Completion Reserve Account pursuant to Section 2.13(f).

 


pursuant to Section 6.2(f)):

      

a.      Cash and Cash Equivalents

   $                     

less the sum of b + c + d:

      

b.      any restricted Cash and Cash Equivalents, and

   $                     

c.      Restricted Argentina Cash, and

   $                     

d.      the amount then being utilized for cage cash, in no event less than $42,500,000.

   $                     

Subtotal for Excess Cash: a – (b + c + d):

   $                     
As of any date of determination on or after the St. Louis City Project is designated a Current Project:       

(v)    Projected Free Cash Flow (see Schedule 1 for calculations):

   $                     

Subtotal A: (i) + (ii) + (iii) + (iv) + (v)

   $                     

MINUS

      

B.     The Sum of:

      

(i)     The Unexpended Construction Budget:

      

As of the Certification Date:

   $                     

a.      The Construction Budgets for the then Current Projects

      

less the sum of b + c + d + e, without duplication:

      

b.      the line item in such Construction Budgets for interest expense during construction, and

   $                     

c.      the cumulative construction expenditures for the then Current Projects, as reflected in the most recent Construction Progress Report delivered prior to the Certification Date, and

   $                     

d.      the aggregate amount of disbursements from the Completion Reserve Account applied to Expenses after the date of the Construction Progress Report referred to in clause (c) above and prior to the Certification Date, and

   $                     

e.      the aggregate amount of proceeds of Revolving Loans

      

 


(x) applied to Expenses prior to such date of determination and not previously reimbursed with disbursements from the Completion Reserve Account and (y) specifically identified as to be applied to Expenses in the Borrowing Notice with respect to such Revolving Loans.

   $                     

Subtotal for Unexpended Construction Budget: a – (b + c + d + e):

   $                     

(ii)    The Condo Investment Amount:

   $                     

minus, the sum of, without duplication:

      

a. the actual expenditures on the Condo Component made by Borrower and its Restricted Subsidiaries

   $                     15

and

      

b. the amount of Investments made by the Borrower and its Restricted Subsidiaries pursuant to Section 7.7(n).

   $                     

Subtotal B: (i) + [(ii) – (a + b)]

   $                     

EQUALS

      

Total: Subtotal A – Subtotal B

   $                     

15 The Condo Investment Amount shall be zero until approved by the Administrative Agent pursuant to Section 5.4 of the Credit Agreement.

 


SCHEDULE 1

 

CALCULATIONS OF PROJECTED FREE CASH FLOW

 

Projected Free Cash Flow is equal to:

 

I. THE PRODUCT OF (A) AND (B):

 

  A. Free Cash Flow

 

1.      Annualized Adjusted EBITDA for the 12-month period ending as of the most recent date prior to the Certification Date for which financial statements have been delivered16

   $                         

minus

      

2.      Consolidated Interest Expense (net of interest income) for such 12-month period

   $                         

3.      any Reclassified Argentina Receipts included in Annualized Adjusted EBITDA for such 12-month period.

   $                         

minus

      

4.      the greater of $25,000,000 and the aggregate amount of Maintenance Capital Expenditures actually spent pursuant to Section 7.16(h) for such 12-month period.

   $                         

Free Cash Flow Subtotal (a – b – c – d):

   $                         

 

and

 

  B. Fraction of (a) over (b)

 

a.      the lesser of 24 months and the number of full calendar months that are remaining between the Certification Date and the Opening Date for the St. Louis City Project17:

   __________

16 if either the Lake Charles Project or the St. Louis City Project has been in operation for less than one full fiscal quarter but has been in operation for at least two (2) full months, the amount of such Project’s Annualized Adjusted EBITDA for the number of full months it has operated shall be annualized on a straight-line basis.

 

17 provided, however, during any period in which the St. Louis County Project is designated a Current Project pursuant to Section 5.5, the numerator shall be the lesser of (x) 36 months, and (y) the number of full calendar months that are remaining between the date of determination and the Opening Date for the St. Louis County Project.

 


b.      twelve

   12
Subtotal for A    $                        

 

II. LESS THE SUM OF:

 

  A. 10,000,000 and

 

  B. the amount of scheduled principal payments on Indebtedness of the Borrower and its Restricted Subsidiaries during the months included in the numerator pursuant to item (ii)(a) above (excluding principal payments with respect to Existing Subordinated Obligations issued pursuant to the Senior Subordinated Notes Indenture 1999).
Subtotal for B:    $                         
Projected Free Cash Flow is equal to Subtotal A – Subtotal B:    $                         

 


EXHIBIT F TO CREDIT AGREEMENT

 

FORM OF LENDER ADDENDUM

 

Reference is made to the Amended and Restated Credit Agreement, dated as of August             , 2004 (as the same may be further amended, restated, amended and restated, supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”), among PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto, LEHMAN BROTHERS INC., and BEAR, STEARNS & CO. INC., as joint advisors, joint lead arrangers and joint book runners, BEAR STEARNS CORPORATE LENDING INC., as syndication agent and LEHMAN COMMERCIAL PAPER INC., as administrative agent. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Upon execution and delivery of this Lender Addendum by the parties hereto as provided in Section 10.17 of the Credit Agreement, the undersigned hereby becomes a Lender thereunder having the Commitments set forth in Schedule 1 hereto, effective as of the Closing Date.

 

THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

This Lender Addendum may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

 

[Signature page to follow]

 


IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to be duly executed and delivered by their proper and duly authorized officers as of this          day of August, 2004.

 

[                                                                                                      ]

By:

   
   

Name:

   
   

Title:

   

 

Accepted and agreed:

PINNACLE ENTERTAINMENT, INC.,

a Delaware corporation

By:

   

Name:

   

Title:

   

 

LEHMAN COMMERCIAL PAPER INC., as

Administrative Agent

By:

   

Name:

   

Title:

   

 


COMMITMENTS AND NOTICE ADDRESS

 

1.   

Name of Lender:

              
    

Notice Address:

              
                     
                     
    

Attention:

              
    

Telephone:

              
    

Facsimile:

              
2.   

Revolving Credit Commitment:

         
3.   

Term Loan Commitment:

         

 


EXHIBIT G-1 TO CREDIT AGREEMENT

 

FIRST AMENDMENT TO MORTGAGE

with Assignment of Rents, Security Agreement

and Fixture Filing

 

The parties to this First Amendment to Mortgage with Assignment of Rents, Security Agreement and Fixture Filing (“Mortgage”), dated as of August 26, 2004, are BELTERRA RESORT INDIANA, LLC, a Nevada limited liability company (“Mortgagor”), and LEHMAN COMMERCIAL PAPER INC., as “Administrative Agent” for the “Lenders”, as Mortgagee and secured party (“Mortgagee”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in that Amended and Restated Credit Agreement dated as of August 27, 2004 (as it may be amended from time to time, the “Amended and Restated Credit Agreement”), which provides for extensions of credit to the Borrower thereunder, including a Term Loan Commitment in the aggregate amount of $275,000,000, a Revolving Credit Commitment in the aggregate amount of $125,000,000, including a Swing Line Commitment of $15,000,000 and a L/C Commitment of $25,000,000, and certain hedge agreements. Appearers further declared that capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Amended and Restated Credit Agreement.

 

NOTICE: THE OBLIGATIONS SECURED HEREBY PROVIDE FOR PERIODIC INCREASES AND/OR DECREASES IN THE APPLICABLE INTEREST RATE AND ACCRUAL OF INTEREST WHICH MAY RESULT IN INCREASES IN THE PRINCIPAL BALANCE ABOVE THE FACE PRINCIPAL AMOUNT OF THE APPLICABLE NOTE(S).

 

NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING.

 

RECITALS

 

A. Trustor is a party to that certain Credit Agreement, dated as of December 17, 2003 (the “Existing Credit Agreement”), by and among the Lenders, the Beneficiary, as administrative agent for the Lenders, the Guarantor and the Borrowers (including the Trustor), under which Trustor borrowed (along with the other Borrowers) funds pursuant to a revolving credit facility and term loans as provided in the Existing Credit Agreement (each of the foregoing capitalized terms shall have the meanings ascribed to them in the Existing Credit Agreement).

 

B. The Existing Credit Agreement required, among other things, that Trustor deliver that certain Mortgage with Assignment of Rents, Security Agreement and Fixture Filing, dated as of December 17, 2003, and recorded in the Office of the Recorder of Switzerland

 


County, Indiana on January 8, 2004, in Record 166, Page 72 (the “Existing Mortgage”) as part of the security for the obligation of the Borrowers under the Existing Credit Agreement.

 

C. Effective as of the date hereof (the “Effective Date”), the Existing Credit Agreement is being amended and restated to increase the total credit facility from $300,000,000 to $400,000,000 in the Amended and Restated Credit Agreement, and provide for the possibility of an additional incremental facility of $75,000,000 (which would cause the total of the credit facilities to equal $475,000,000).

 

D. Trustor desires to execute and deliver this Amendment to ensure the lien of the Existing Mortgage secures all of the obligations of the Borrowers under the Amended and Restated Credit Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing Recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Trustor hereby agrees as follows:

 

  1. AMENDMENT

 

From and after the Effective Date, the Existing Mortgage shall be amended and/or supplemented in the following manner:

 

1.1 The total credit facility shall be increased from $300,000,000 to $400,000,000 and there is added an uncommitted incremental credit facility of up to $75,000,000, to increase the credit facilities of up to $475,000,000, which are obligations of the Trustor under the Amended and Restated Subsidiary Guaranty and are part of the Secured Obligations.

 

1.2 Section 1.2(c) is amended to read:

 

The payment and performance of all future advances and other obligations that Mortgagor or any other person may owe to Mortgagee and/or any Lenders (whether as principal, surety or guarantor), when a writing evidences Mortgagor’s and Mortgagee’s agreement that such advances or obligations be secured by this Mortgage, the total amount of which shall not exceed $475,000,000 to be secured by this Mortgage

 

1.3 Section 1.2.3 is amended to read:

 

Mortgagor hereby acknowledges and agrees that the Secured Obligations include, and that this Mortgage is given to secure, advances that may be made by Mortgagee to Borrower and obligations to Mortgagee that may be incurred by Mortgagor or Borrower after the execution of this Mortgage (“future advances”) and that this Mortgage shall secure all future advances of every kind and when occurring; provided, however, that the maximum amount of unpaid future advances outstanding at any one time shall not exceed $475,000,000, such maximum amount being stated herein pursuant to and in accordance

 

2


with Indiana Code § 32-29-1-10 and not being a commitment by Mortgagee to make future advances; and provided, further, that the maximum amount of the Secured Obligations secured by this Mortgage at any one time in all events shall not exceed $475,000,000.

 

1.4 All references to the “Credit Agreement” shall mean the “Amended and Restated Credit Agreement” (as described above).

 

1.5 All capitalized terms not defined in the Existing Mortgage shall have the meanings ascribed to them in the Amended and Restated Credit Agreement.

 

  2. MISCELLANEOUS PROVISIONS

 

2.1 Entire Amendment. Except as specifically amended hereby, the Existing Mortgage remains in full force and effect and secures all of the obligations of the Borrowers under the Amended and Restated Credit Agreement. If any provision of this Amendment conflicts with the terms of the Existing Mortgage, this Amendment shall control.

 

2.2 Governing Law. This Amendment shall be governed and construed in accordance with the laws of the State of Indiana.

 

[Signature Page to Follow]

 

3


IN WITNESS WHEREOF, this First Amendment to Mortgage has been executed as of the date first written above.

 

Mortgagor:

     

BELTERRA RESORT INDIANA, LLC,

a Nevada limited liability company

       

By:

 

Pinnacle Entertainment, Inc.,

its sole member and managing member

               
               

Name:

   
               

Title:

   

 

Acknowledged by:

Lehman Commercial Paper Inc.,

as Administrative Agent

 

Name:

   

Title:

   

 

4


STATE OF                     

 

)

    
   

) SS.

    

COUNTY OF             

 

)

    

 

Before me, a Notary Public in and for said County and State personally appeared                                     , the                      of Belterra Resort Indiana, LLC, a Nevada limited liability company, who, having been duly sworn, acknowledged the execution of the foregoing instrument for and on behalf of said limited liability company.

 

WITNESS my hand and Notarial Seal this              day of                     , 2004.

 

 

Notary Public

 

Printed

 

My Commission Expires:                                                  

 

I am a resident of                      County,                     .

 

This instrument prepared by:

 

5


EXHIBIT A

 

(Legal Description of Land)

 

EXHIBIT A to FIRST AMENDMENT TO MORTGAGE executed as of August 26, 2004, by BELTERRA RESORT INDIANA, LLC a Nevada limited liability company, as “Mortgagor”, in favor of LEHMAN COMMERCIAL PAPER INC., as Administrative Agent for the Lenders, as “Mortgagee.”

 

DESCRIPTION OF PROPERTY

 

A-1


EXHIBIT G-2 TO CREDIT AGREEMENT

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND

COLLATERAL ASSIGNMENT OF PROCEEDS

 

BY

 

PNK (LAKE CHARLES), L.L.C.,

a Louisiana limited liability company

 

IN FAVOR OF

 

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

 

BE IT KNOWN, on the dates set forth below, in the presence of the undersigned Notaries Public, duly qualified in and for the States and Parishes/Counties set forth below and in the presence of the undersigned competent witnesses,

 

PERSONALLY CAME AND APPEARED:

 

PNK (LAKE CHARLES), L.L.C., a Louisiana limited liability company, whose federal taxpayer identification number is 02-0614452, having a mailing address of c/o Pinnacle Entertainment, Inc., Suite 1800, 3800 Howard Hughes Parkway, Las Vegas, NV 89109, represented herein by and through Stephen A. Capp, its Chief Financial Officer, duly authorized hereunto by resolutions of its Board of Directors, a certified copy of which is annexed hereto (said appearer being hereinafter referred to as “Trustor”); and,

 

LEHMAN COMMERCIAL PAPER INC., in its capacity as Administrative Agent under the Credit Agreement (hereinafter defined) whose federal taxpayer identification number is 13-2501865 and whose mailing address is 745 7th Avenue, 19th Floor, New York NY 10019, represented herein by and through Frank Turner, duly authorized (said appearer being hereinafter referred to as “Beneficiary”); and,

 

who declared that Pinnacle Entertainment, Inc. (“Borrower”), Beneficiary, Bear Stearns Corporate Lending, Inc., as Syndication Agent, and various banks have entered into a certain Amended and Restated Credit Agreement dated as of August             , 2004 (as it may be amended from time to time, the “Credit Agreement”), which provides for extensions of credit to the Borrower thereunder, including a Term Loan Commitment in the aggregate amount of $275,000,000, a Revolving Credit Commitment in the aggregate amount of $125,000,000, and provide for the possibility of an additional incremental facility of $125,000,000 (which would cause the total of the credit facilities to equal $475,000,000), including a Swing Line Commitment of $15,000,000 and a L/C Commitment of $30,000,000, and certain hedge agreements. Appearers further declared that capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Credit Agreement.

 

Appearers further declared that Trustor is a Subsidiary of Borrower and that it is a condition of the Credit Agreement that Trustor execute and deliver this act.

 


In consideration of the extension of credit to Borrower pursuant to the Credit Agreement and the direct and indirect benefits to be received by Trustor as a result thereof, Appearers further declared and agreed as follows:

 

1. Mortgage and Secured Obligations.

 

1.1 Mortgage. For the purpose of securing payment and performance of the Secured Obligations defined and described in Section 1.2, Trustor does by these presents irrevocably and unconditionally specially mortgage, pledge, affect, hypothecate, transfer, assign to and grant a security interest in favor of Beneficiary all estate, right, title and interest which Trustor now has in and to the following property (all or any part of such property, or any interest in all or any part of it, as the context may require, the “Property”):

 

(a) The immovable property located in the Parish of Calcasieu (the “Parish”), State of Louisiana, as described in Exhibit A, together with all existing and future servitudes, easements and rights affording access to it (the “Land”); together with

 

(b) All buildings, structures, component parts, other constructions, and improvements now located or later to be constructed on the Land, including, without limitation, all parking areas, roads, driveways, walks, fences, walls, docks, berms, landscaping, recreation facilities, drainage facilities, lighting facilities and other site improvements (the “Improvements”); together with

 

(c) All existing and future appurtenances, privileges, servitudes, rights of use, easements, rights of way, franchises, hereditaments and tenements of the Land, including all minerals, oil, gas, other hydrocarbons and associated substances, sulphur, nitrogen, carbon dioxide, helium and other commercially valuable substances which may be in, under or produced from any part of the Land, all development rights and credits, air rights, water, water courses, water rights (whether riparian, appropriative or otherwise, and whether or not appurtenant) and water stock (together with the statutory right to file applications to change, and any and all applications to change), servitudes, easements, rights of way, rights of ingress and egress, drainage rights, gores or strips of land, any land lying in the streets, highways, ways, sidewalks, alleys, passages, roads or avenues, open or proposed, in front of or adjoining the Land and Improvements, any land in the bed of any body of water adjacent to the Land, any land adjoining the Land created by artificial means or by accretion, all air space and rights to use such air space, and all development and similar rights; together with

 

(d) Subject to Article 2, below, all existing and future leases, subleases, subtenancies, licenses (except for gaming licenses and liquor licenses that are not transferable), occupancy agreements, concessions and any other agreement leasing or letting any portion of the Property or relating to the use and enjoyment of all or any part of the Land and Improvements, and any and all guaranties and other agreements relating to or made in connection with any of the foregoing, whether written or oral and whether in existence at or upon the recordation of this Mortgage or entered into after the recordation of this Mortgage (some or all collectively, as the context may require, “Leases,” which shall not include the Ground Leases), and all rents, security deposits,

 


royalties, issues, profits, receipts, earnings, revenue, income, products and proceeds and other benefits of the Land and Improvements, whether now due, past due or to become due, including, without limitation, all prepaid rents, security deposits, fixed, additional and contingent rents, deficiency rents and liquidated damages, occupancy charges, hotel room charges, cabana charges, casino revenues, show ticket revenues, food and beverage revenues, room service revenues, merchandise sales revenues, parking, maintenance, common area, tax, insurance, utility and service charges and contributions, proceeds of sale of electricity, gas, heating, air-conditioning, cable and other utilities and services, green fees, cart rental fees, instruction fees, membership charges, restaurant, snack bar and pro shop revenues, liquidated damages, and all other rights to payments (some or all collectively, as the context may require, “Rents”); together with

 

(e) All goods, materials, supplies, chattels, furniture, fixtures, equipment, machinery and other property now or later to be attached to, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part of the Land and Improvements, whether stored on the Land or elsewhere, including all pumping plants, engines, pipes, ditches and flumes, and also all gas, electric, cooking, heating, cooling, air conditioning, lighting, refrigeration and plumbing fixtures and equipment, all water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone, cable and other utility equipment and facilities, all plumbing, lighting, heating, ventilating, air conditioning, refrigerating, incinerating, compacting, fire protection and sprinkler, surveillance and security, vacuum cleaning, public address and communications equipment and systems, all kitchen and laundry appliances, screens, awnings, floor coverings, partitions, elevators, escalators, motors, machinery, pipes, fittings and other items of equipment and property of every kind and description; together with

 

(f) All building materials, equipment, work in process or other personal property of any kind, whether stored on the Land or elsewhere, which have been or later will be acquired for the purpose of being delivered to, incorporated into or installed in or about the Land or Improvements; together with

 

(g) All rights to the payment of money, accounts, accounts receivable, reserves, deferred payments, refunds of real property and personal property taxes, refunds, cost savings, payments and deposits, whether now or later to be received from third parties (including all earnest money sales deposits) or deposited by Trustor with third parties (including all utility deposits), contract rights, general intangibles, development and use rights, governmental permits and licenses (except for gaming licenses and liquor licenses that are not transferable), authorizations, certificates, variances, consents and approvals, applications, architectural and engineering plans, specifications and drawings, as-built drawings, guaranties, warranties, management agreements, operating and/or licensing agreements, supply and service contracts for water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone, cable, and other utilities, property and title insurance policies and proceeds thereof (including without limitation the right to assert, prosecute and settle claims under such policies), chattel paper, instruments, documents, notes, certificates of deposit, deposit accounts, securities, investment property, other investments, drafts and letters of credit (other than

 


letters of credit in favor of Beneficiary), which arise from or relate to construction on the Land or to any business now or later to be conducted on it, or to the Land and Improvements generally; together with

 

(h) Subject to the Borrower’s rights to use proceeds under the Credit Agreement, all proceeds, including all rights and claims to, dividends of and demands for them, of the voluntary or involuntary conversion of any of the Land, Improvements or the other property described above into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies (whether or not such policies are required hereunder or under one of the other Loan Documents) and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Land, Improvements or the other property described above or any part of them, or breach of warranty in connection with the construction of the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact; together with

 

(i) All books and records pertaining to any and all of the property described above, including computer readable memory and any computer hardware or software necessary to access and process such memory (“Books and Records”); together with

 

(j) All proceeds of, additions and accretions to, substitutions and replacements for, changes in, and greater right, title and interest in, to and under or derived from, any of the property described above and all extensions, improvements, betterments, renewals, substitutions and replacements thereof and additions and appurtenances thereto, including all proceeds of any voluntary or involuntary disposition or claim, right and remedy respecting any such property (arising out of any judgment, condemnation or award, or otherwise arising) and all goods, documents, general intangibles, chattel paper and accounts, wherever located, acquired with cash proceeds of any of the foregoing or its proceeds.

 

All of the aforedescribed Property shall remain so specially mortgaged, affected and hypothecated or, as set forth above, collaterally assigned or pledged, unto and in favor of Beneficiary until either the (i) full and final payment, performance and observance of the Secured Obligations secured by this Mortgage or (ii) the release of the Secured Obligations secured by this Mortgage pursuant to Section 10.15 of the Credit Agreement.

 

With respect to the proceeds attributable to the insured loss of all or any part of the Property referred to in (i) above and in Section 5.5 hereof, this Mortgage is a collateral assignment thereof pursuant to La. R.S. § 9:5386 et seq., whether such proceeds or any of them now exist or arise in the future, and Trustor does hereby irrevocably make, constitute and appoint Beneficiary and the agents of Beneficiary as the true and lawful mandataries and attorneys-in-fact of Trustor to carry out and enforce all of the proceeds hereby collaterally assigned. The mandatory and attorney-in-fact designation set forth in the preceding sentence shall be coupled with an interest and may not be revoked by Trustor so long as this Mortgage

 


remains in effect. Such proceeds shall otherwise be included in the term “Property,” for all purposes of this Mortgage. The collateral assignment herein made of the aforesaid proceeds shall not be construed as imposing upon Beneficiary any obligations with respect thereto unless and until Beneficiary shall become the absolute owner thereof and Trustor shall have been wholly dispossessed thereof.

 

Trustor shall and will warrant and forever defend the Property and the quiet and peaceable possession of the Beneficiary, its successors and assigns against all and every person or persons lawfully claiming or to claim the whole or any part thereof. Trustor agrees that any greater title to the Property hereafter acquired by Trustor during the term hereof shall be subject hereto.

 

1.2 Secured Obligations.

 

1.2.1 Trustor makes the mortgage, hypothecation, pledge, grant, transfer and assignment set forth in Section 1.1 and the assignment set forth in Article 2 and grants the security interest set forth in Article 3 for the purpose of securing payment and performance of the following obligations (collectively, the “Secured Obligations”) in any order of priority that Beneficiary may choose:

 

(a) The payment and performance of all Obligations of Trustor under the Subsidiary Guaranty; and

 

(b) The payment and performance of all Obligations of Trustor under this Mortgage; and

 

(c) The payment and performance of all future advances and other obligations that Trustor, Borrower or any other person may owe to Beneficiary and/or any Lenders (whether as principal, surety or guarantor), when a writing evidences Trustor’s and Beneficiary’s agreement that such advances or obligations be secured by this Mortgage; and

 

(d) The payment and performance of all modifications, amendments, extensions and renewals, however evidenced, of any of the Secured Obligations described in clauses (a), (b) or (c), above.

 

1.2.2 All persons who may have or acquire an interest in all or any part of the Property will be considered to have notice of, and will be bound by, the terms of the Secured Obligations and each other agreement or instrument made or entered into in connection with each of the Secured Obligations. Such terms include any provisions in the Credit Agreement or the other Loan Documents which permit borrowing, repayment and reborrowing, or which provide that the interest rate on one or more of the Secured Obligations may vary from time to time.

 

1.3 This Mortgage secures the prompt payment and performance of the Secured Obligations, including, without limitation, the payment of the Notes and all amounts owing under the Credit Agreement, the Swing Line Documents and the Loan Documents and the payment and performance of all other Obligations, whether presently existing, now arising or

 


incurred hereafter, whether incurred for personal or non-business purpose, or for any other purpose related or unrelated, or similar or dissimilar, to the purpose of the Loan, whether or not such Secured Obligations are of the same type or character. Trustor and Beneficiary acknowledge and agree that this Mortgage may secure Secured Obligations that have been or will be borrowed, repaid and reborrowed from time to time, one or more, times, and that this Mortgage shall be effective, as to all future advances, as of the date of execution and recordation hereof, it being intended that this Mortgage be a mortgage to secure present and future obligations to the fullest extent permitted by La. Civ. Code art. 3298.

 

NOTWITHSTANDING ANY PROVISION OF THIS MORTGAGE TO THE CONTRARY, THE MAXIMUM PRINCIPAL AMOUNT OF THE SECURED OBLIGATIONS THAT MAY BE OUTSTANDING AT ANY TIME AND FROM TIME TO TIME THAT THIS MORTGAGE SECURES, INCLUDING, WITHOUT LIMITATION, AS A MORTGAGE AND AS A COLLATERAL ASSIGNMENT OF LEASES AND RENTS, INCLUDING ALL PRINCIPAL, INTEREST AND ANY EXPENSES OR ADDITIONAL OBLIGATIONS INCURRED BY THE BENEFICIARY AND ALL OTHER AMOUNTS INCLUDED WITHIN THE SECURED OBLIGATIONS, IS $400,000,000.00.

 

1.4 No Paraphs. Trustor and Beneficiary acknowledge that neither the Notes, any other note nor any other written evidence of indebtedness has been paraphed for identification with this Mortgage.

 

2. Assignment of Rents and Leases.

 

2.1 Assignment. Trustor hereby assigns, transfers and sets over to Beneficiary all of the right, title and interest which Trustor now has or may later acquire in and to the Rents and the Leases, and confers upon Beneficiary the right, upon the occurrence and during the continuance of an Event of Default (hereinafter defined), to collect such Rents and enforce the provisions of the Leases with or without taking possession of the Property. The assignment of Leases and Rents to Beneficiary herein is made pursuant to La. R.S. § 9:4401.

 

2.2 Prior to an Event of Default. Beneficiary shall have the right to collect and retain the Rents as they become due and payable, so long as no Event of Default, as defined in Section 6.2, shall exist and be continuing. If an Event of Default has occurred and is continuing, the assignment of Leases and Rents to Beneficiary shall become absolute as provided in La. R.S. § 9:4401.

 

2.3 Collection and Applicati