Exhibit 10.77
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CREDIT AGREEMENT
Dated as of June 12, 2000
between
PIONEER HOTEL, INC.,
as the borrower
and
STATION CASINOS, INC.,
as the lender
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Page
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS.................................................. 1
Section 1.01. Certain Defined Terms................................................... 1
Section 1.02. Accounting Terms; GAAP.................................................. 11
Section 1.03. Interpretation.......................................................... 12
ARTICLE II THE Loan........................................................................... 12
Section 2.01. Loan.................................................................... 12
Section 2.02. Borrowing............................................................... 12
Section 2.03. Request for Borrowing................................................... 12
Section 2.04. Funding of Borrowing.................................................... 13
Section 2.05. Note and Evidence of Debt............................................... 13
ARTICLE III PAYMENTS.......................................................................... 13
Section 3.01. Repayment of Loan....................................................... 13
Section 3.02. Optional Prepayment of Loan............................................. 13
Section 3.03. Mandatory Prepayments................................................... 13
Section 3.04. Interest................................................................ 14
Section 3.05. Payments Generally...................................................... 14
ARTICLE IV PROTECTION OF PAYMENTS............................................................. 15
Section 4.01. No Deduction............................................................ 15
Section 4.02. Indemnity from Taxes.................................................... 15
ARTICLE V CONDITIONS PRECEDENT................................................................ 15
Section 5.01. Effective Date.......................................................... 15
ARTICLE VI REPRESENTATIONS AND WARRANTIES..................................................... 18
Section 6.01. Organization; Powers.................................................... 18
Section 6.02. Authorization; Enforceability........................................... 18
Section 6.03. Governmental Approvals; No Conflicts.................................... 18
Section 6.04. Financial Condition; No Material Adverse Change......................... 19
Section 6.05. Properties.............................................................. 19
Section 6.06. Litigation and Environmental Matters.................................... 20
Section 6.07. Compliance with Laws and Agreements..................................... 20
Section 6.08. Investment and Holding Company Status................................... 20
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Section 6.09. Taxes................................................................... 20
Section 6.10. ERISA................................................................... 21
Section 6.11. Disclosure.............................................................. 21
Section 6.12. Solvency................................................................ 21
ARTICLE VII COVENANTS......................................................................... 21
Section 7.01. Financial Statements and Other Information.............................. 21
Section 7.02. Notices of Material Events.............................................. 23
Section 7.03. Existence; Conduct of Business.......................................... 23
Section 7.04. Payment of Obligations.................................................. 23
Section 7.05. Maintenance of Properties; Insurance.................................... 23
Section 7.06. Books and Records; Inspection Rights.................................... 24
Section 7.07. Compliance with Laws.................................................... 24
Section 7.08. Environmental Compliance................................................ 24
Section 7.09. Use of Proceeds......................................................... 24
Section 7.10. Indebtedness............................................................ 24
Section 7.11. Liens................................................................... 25
Section 7.12. Fundamental Changes..................................................... 25
Section 7.13. Investments, Loan, Advances, Guarantees and Acquisitions................ 25
Section 7.14. Hedging Agreements...................................................... 25
Section 7.15. Restricted Payments..................................................... 25
Section 7.16. Transactions with Affiliates............................................ 26
Section 7.17. Restrictive Agreements.................................................. 26
Section 7.18. Dispositions............................................................ 26
Section 7.19. Financial Tests......................................................... 26
ARTICLE VIII EVENTS OF DEFAULT................................................................ 27
Section 8.01. Events of Default....................................................... 27
ARTICLE IX MISCELLANEOUS...................................................................... 29
Section 9.01. Notices................................................................. 29
Section 9.02. Expenses, Indemnification, Etc.......................................... 29
Section 9.03. Waiver.................................................................. 30
Section 9.04. Amendments, Etc......................................................... 30
Section 9.05. Successors and Assigns.................................................. 30
Section 9.06. Assignments............................................................. 30
Section 9.07. Survival................................................................ 31
Section 9.08. Agreements Superseded................................................... 31
Section 9.09. Severability............................................................ 31
Section 9.10. Captions................................................................ 31
Section 9.11. Counterparts............................................................ 31
Section 9.12. Governing Law; Submission to Jurisdiction............................... 31
Section 9.13. Waiver of Jury Trial.................................................... 31
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ANNEXES
ANNEX 1 - Addresses for Notices
ANNEX 2 - Insurance Requirements
ANNEX 3 - Certain Closing Documents
SCHEDULES
SCHEDULE 6.06 - Disclosed Matters
SCHEDULE 7.10 - Indebtedness
SCHEDULE 7.13 - Investments
SCHEDULE 7.15 - Selected Restricted Payments
SCHEDULE 7.16 - Restrictive Agreements
EXHIBITS
EXHIBIT A - Form of Note
EXHIBIT B - Form of Guarantee and Pledge Agreement
EXHIBIT C - Form of Deed of Trust
EXHIBIT D - Form of Security Agreement
EXHIBIT E - Form of Environmental Indemnity
EXHIBIT F - Form of Lease Amendment
EXHIBIT G - Form of Opinion of Counsel to the Related Persons
This CREDIT AGREEMENT (this "Agreement") dated as of June 12, 2000, is
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made between PIONEER HOTEL, INC., a Nevada corporation (the "Company") and
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STATION CASINOS, INC., a Nevada corporation (the "Lender").
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The parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
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Section 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the respective meanings specified below:
"Affiliate" shall mean, with respect to a specified Person, another
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Person that, directly or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Bankruptcy Code" shall mean Title 11 of the United States Code.
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"Bankruptcy Court" shall mean the court having jurisdiction over the
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Company's case under Chapter 11 of the Bankruptcy Code (Case No.: BK-99-12854-
LBR).
"Basic Documents" shall mean, collectively, this Agreement, the Note,
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the Environmental Indemnity and the Security Documents.
"Borrowing" shall mean the making of the Loan.
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"Borrowing Request" shall mean a request by the Company for a
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Borrowing in accordance with Section 2.03.
"Business Day" shall mean any day on which commercial banks are not
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authorized or required to close in Las Vegas, Nevada.
"Capital Expenditures" shall mean, for any Person for any period,
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expenditures (including the aggregate amount of Lease Obligations incurred
during that period) made by that Person to acquire or to construct fixed assets,
plant and equipment (including renewals, improvements and replacements, but
excluding repairs in the ordinary course) during that period computed in
accordance with GAAP.
"Casualty Event" shall mean, with respect to any Person, any loss of
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or damage to, or any condemnation or other taking of, any Property of that
Person for which it or any of its Subsidiaries receives insurance proceeds or a
condemnation award or other compensation.
"Change in Control" shall mean (a) the acquisition of ownership,
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directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission), of shares
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representing more than fifteen percent (15%) of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Parent, the
Company or Santa Fe; (b) the occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Parent, the Company or Santa Fe
by Persons who were neither (i) nominated by the board of directors of that
Related Person nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Parent, the Company or Santa Fe
by any Person or group.
"Code" shall mean the Internal Revenue Code of 1986.
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"Company" shall have the meaning assigned to that term in the
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introductory paragraphs of this Agreement.
"Control" shall mean the possession, directly or indirectly, of the
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power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" shall have correlative meanings.
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"Debt Service" shall mean, for any period, the sum, for the Company
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(determined without duplication in accordance with GAAP), of the following:
(a) all payments of principal of Indebtedness scheduled to be made during that
period plus (b) all Interest Expense for that period.
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"Deed of Trust" shall mean a Deed of Trust, Leasehold Deed of Trust
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and Assignment of Rents and Fixture Filing in substantially the form of Exhibit
C, executed by the Company in favor of the Lender.
"Default" shall mean an Event of Default or an event that with notice
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or lapse of time or both would become an Event of Default.
"Disclosed Matters" shall mean the actions, suits and proceedings and
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the environmental matters disclosed in Schedule 6.06.
"Disposition" shall mean any sale, assignment, transfer or other
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disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Subsidiaries to any Person, excluding any sale,
assignment, transfer or other disposition in the ordinary course of business and
on ordinary business terms.
"Dollars" and "$" shall mean lawful money of the United States of
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America.
"EBITDA" shall mean, as of any date, the sum of the following
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determined without duplication in accordance with GAAP) for the period of four
consecutive fiscal quarters ending on or most recently ended prior to that date:
(a) net income for that period plus (b) to the extent deducted in determining
net income for that period (i) federal, state and local Taxes on or measured by
income, (ii) Interest Expense, (iii) non-recurring expenses which, in the case
of the Company, shall include but not be limited to those associated with the
Company's case under
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the Bankruptcy Code, consummation of the Reorganization Plan, and fees and
expenses incurred in connection with this Agreement, and (iv) depreciation and
amortization..
"Effective Date" shall mean the date on or after the Signing Date on
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which the conditions specified in Section 5.01 are satisfied (or waived in
accordance with Section 9.04).
"Environmental Claim" shall mean, with respect to any Person, any
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written or oral notice, claim, demand or other communication (a) by any
Governmental Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, (b) by
any Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to human or animal
health or safety or to the environment or (c) by any Person otherwise alleging
or asserting that Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other Property,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Hazardous Material at
any location, whether or not owned by that Person, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Indemnity" shall mean an Environmental Indemnity, in
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substantially the form of Exhibit E, executed by the Company in favor of the
Lender.
"Environmental Laws" shall mean any and all present and future
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Governmental Rules relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters. The term
"Environmental Law" shall include the terms and conditions of any Governmental
Approval issued under any Environmental Law or with respect to any Hazardous
Material.
"Environmental Liability" shall mean any liability, contingent or
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otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974.
"ERISA Affiliate" shall mean any trade or business (whether or not
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incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
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4043 of ERISA or the regulations issued under ERISA with respect to a Plan
(other than an event for
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which the 30-day notice period is waived); (b) the existence with respect to any
Plan of an "accumulated funding deficiency" (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by the Company or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
by the Company or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (f) the incurrence by the Company or any of
its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Company or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Company or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Equity Issuance" shall mean (a) any issuance or sale by the Company
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after the Effective Date of (i) any capital stock, (ii) any warrants or options
exercisable in respect of capital stock (other than any warrants or options
issued to directors, officers or employees of the Company and any capital stock
of the Company issued upon the exercise of those warrants) or (iii) any other
security or instrument representing an equity interest (or the right to obtain
any equity interest) in the issuing or selling Person or (b) the receipt by the
Company after the Effective Date of any capital contribution received (whether
or not evidenced by any equity security issued by the recipient of that
contribution).
"Event of Default" shall have the meaning assigned to that term in
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Section 8.01.
"Excluded Taxes" shall mean, with respect to the Lender, income or
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franchise taxes imposed on (or measured by) its net income by the United States
of America or by the State of Nevada.
"Financial Officer" shall mean, with respect to any Related Person,
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the chief financial officer, principal accounting officer, treasurer or
controller of that Related Person.
"Fixed Charges Ratio" shall mean, as of any date, the ratio of (a)
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EBITDA for the period of four consecutive fiscal quarters ending on or most
recently ended prior to that date to (b) the sum of (i) pro forma Debt Service,
(ii) pro forma Capital Expenditures and (iii) pro forma Restricted Payments in
each case for the period of four consecutive fiscal quarters beginning on or
most recently after that date.
"GAAP" shall mean generally accepted accounting principles in the
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United States of America.
"Governmental Approvals" shall mean any authorization, consent,
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approval, license, lease, ruling, permit, waiver, exemption, filing,
registration or notice by or with, or other action of, any Governmental
Authority.
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"Governmental Authority" shall mean any national (United States of
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America or foreign), state or local government, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, agency, body, central bank, or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative power or functions
of or pertaining to government.
"Governmental Rules" shall mean any law, rule, regulation, ordinance,
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order, code, judgment, decree, directive, guideline, policy, or any similar form
of decision of, or any interpretation or administration of any of the foregoing
by, any Governmental Authority.
"Guarantee" shall mean, as to any Person, any obligation, contingent
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or otherwise, of that Person, directly or indirectly, guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person in any manner, including any obligation of that Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)that
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for that Indebtedness or other obligation, (b)
to purchase or lease Property or services for the purpose of assuring the owner
of that Indebtedness or other obligation of payment, (c) to maintain working
capital, equity capital, liquidity or any other financial condition of that
other Person so as to enable that other Person to pay that Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support that Indebtedness or obligation other than
endorsements for collection or deposit in the ordinary course of business. The
terms "Guarantee" and "Guaranteed" used as verbs shall have correlative
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meanings.
"Guarantee and Pledge Agreement" shall mean a Guarantee and Pledge
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Agreement, in substantially the form of Exhibit B, executed by the Parent in
favor of the Lender.
"Hazardous Materials" shall mean all explosive or radioactive
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substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" shall mean any interest rate protection agreement,
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foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" shall mean, for any Person, without duplication, (a)
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all obligations of that Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of that Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of that Person
upon which interest charges are customarily paid, (d) all obligations of that
Person under conditional sale or other title retention agreements relating to
Property acquired by that Person, (e) all obligations of that Person in respect
of the deferred purchase price of Property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of that Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
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Property owned or acquired by that Person, whether or not the Indebtedness so
secured has been assumed, (g) all Guarantees by that Person of Indebtedness of
others, (h) the capitalized amount of all Lease Obligations of that Person, (i)
all obligations, contingent or other, of that Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or other, of that Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which that Person is a general partner) to the
extent that such Person is liable for that Indebtedness as a result of that
Person's ownership interest in or other relationship with that entity, except to
the extent the terms of that Indebtedness provide that such Person is not so
liable.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
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"Interest Expense" shall mean, for any period, the sum, for the
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Company (determined in accordance with GAAP), of the following: (a) all
interest in respect of Indebtedness accrued or capitalized during that period
(whether or not actually paid during that period) plus the net amounts payable
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(or minus the net amounts receivable) under Hedging Agreements accrued during
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that period (whether or not actually paid or received during that period).
"Interest Payment Date" shall mean the last day of each month and the
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Maturity Date.
"Interest Rate" shall mean a rate per annum equal to ten percent (10%)
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or, if the Purchase Agreement is terminated or, unless waived in the Lender's
discretion, when any Event of Default has occurred and is continuing, fifteen
percent (15%).
"Landlord" shall have the meaning assigned to the term "Lessor" in the
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Deed of Trust.
"Landlord's Certificate" shall mean a Landlord Estoppel Certificate,
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in substantially the form of Exhibit D to the Deed of Trust.
"Lease" shall have the meaning assigned to that term in the Deed of
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Trust.
"Lease Amendment" shall mean an amendment to the Lease, in
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substantially the form of Exhibit F, between the Landlord and the Company.
"Lease Obligations" shall mean, for any Person, all obligations of
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that Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property, whether or not those obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP.
"Lender" shall have the meaning assigned to that term in the
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introductory paragraphs of this Agreement.
"License Revocation" shall mean the revocation, involuntary failure to
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renew or suspension of, or the appointment of a receiver, supervisor or similar
official with respect to, any
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casino, gambling or gaming Governmental Approval of the Company or any other
Related Person issued by any Governmental Authority having jurisdiction over the
gaming activities or assets of the Company or any other Related Person that
continues in effect for three (3) consecutive days.
"Lien" shall mean, with respect to any Property, (a) any lien,
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mortgage, deed of trust, pledge, charge, security interest or encumbrance of any
kind in respect of that Property or any agreement to give, or notice of, any of
the foregoing, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to that asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to that securities.
"Loan" shall mean the loan made under this Agreement.
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"Management Agreement" shall mean the Management Agreement dated as of
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December 30, 1998 between the Company and the Parent.
"Material Adverse Effect" shall mean a material adverse effect on (a)
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the Property, business, operations, condition (financial or other) or prospects
of the Company, and its Subsidiaries, taken as a whole, (b) the ability of any
Related Person to perform its obligations under any of the Basic Documents, (c)
the rights, remedies, powers and privileges of the Lender under any of the Basic
Documents or (d) the timely payment of the Obligations.
"Material Indebtedness" shall mean Indebtedness (other than under the
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Basic Documents) or obligations in respect of one or more Hedging Agreements of
any Related Person or any Subsidiary of any Related Person in an aggregate
principal amount exceeding $500,000. For purposes of determining Material
Indebtedness, the "principal amount" of that Related Person or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Related Person or
such Subsidiary would be required to pay if that Hedging Agreement were
terminated at that time.
"Maturity Date" shall mean the earliest of (a) September 28, 2001, (b)
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the date on which the acquisition by the Lender of the assets of Santa Fe
pursuant to the Purchase Agreement occurs and (c) the date on which any
Indebtedness of either the Parent or Santa Fe with a principal amount in excess
of $5,000,000 is refinanced. Notwithstanding the foregoing, if the Maturity
Date would otherwise fall on a day that is not a Business Day, it shall fall on
the preceding Business Day.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
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"Multiemployer Plan" shall mean a multiemployer plan as defined in
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Section 4001(a)(3) of ERISA.
"Net Available Proceeds" shall mean:
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(a) in the case of any Disposition, the aggregate amount of all cash
payments, and the fair market value of any non-cash consideration, received by
the Company directly or indirectly in connection with that Disposition; provided
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that (i) Net Available Proceeds shall be net of (A) the amount of any reasonable
legal, title and recording tax expenses, commissions and other reasonable fees
and expenses paid by the Company in connection with that Disposition and (B) any
United States of America, state and local Taxes estimated to be payable by the
Company as a result of that Disposition (but only to the extent that those
estimated Taxes are in fact paid to the relevant Governmental Authority within
three months of the date of that Disposition) and (ii) Net Available Proceeds
shall not include any cash payment received in any fiscal year to the extent
that such cash payment, together with all cash payments with respect to
Dispositions theretofore received in that fiscal year, does not exceed $250,000;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Company in respect of that Casualty Event net of (i) reasonable expenses
incurred by the Company in connection with that Casualty Event and (ii) any
income and transfer taxes payable by the Company in respect of that Casualty
Event; and
(c) in the case of any Equity Issuance, the aggregate amount of all
cash received by the Company in respect of that Equity Issuance net of
reasonable expenses incurred by the Company in connection with that Equity
Issuance.
"Note" shall mean the Note provided for in Section 2.05.
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"Obligations" shall mean the principal of any Loan, interest, Fees and
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any other amount payable by the Company under any Basic Document.
"Other Taxes" shall mean any and all present or future stamp or
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documentary taxes or any other excise or Property taxes, charges or similar
levies arising from any payment made under any Basic Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Basic
document.
"Parent" shall mean Santa Fe Gaming Corporation, a Nevada corporation.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Permitted Encumbrances" shall mean:
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(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 7.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than thirty (30) days or
are being contested in compliance with Section 7.04;
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(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real Property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected Property or interfere with the ordinary
conduct of business of the Company or any Subsidiary; provided that the term
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"Permitted Encumbrances" shall not include any Lien securing Indebtedness.
"Permitted Investments" shall mean:
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(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any of its agencies to the extent that such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one (1) year from the date of its acquisition;
(b) investments in commercial paper maturing within two hundred
seventy (270) days from the date of its acquisition and having, at that date of
acquisition, the highest credit rating obtainable from S&P or from Moody's; and
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one hundred eighty (180) days from the date of its
acquisition issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any state that has a
combined capital and surplus and undivided profits of not less than
$500,000,000.
"Person" shall mean any individual, corporation, limited liability
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company, voluntary association, partnership, joint venture, company, trust,
unincorporated organization or Governmental Authority.
"Pioneer Finance" shall mean Pioneer Finance Corporation, a Nevada
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corporation.
"Plan" shall mean any employee pension benefit plan (other than a
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Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if that plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Post-Default Rate" shall mean, in respect of any Obligation that is
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not paid when due (whether at stated maturity, upon acceleration, on any
optional or mandatory prepayment
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date or otherwise), fifteen percent (15%) per annum during the period from and
including the due date to but excluding the date on which that amount is paid.
"Property" shall mean any right or interest in or to property of any
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kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" shall mean the Asset Purchase Agreement dated as
------------------
of June 12, 2000 between the Parent, Santa Fe and the Lender.
"Related Parties" shall mean, with respect to any specified Person,
---------------
that Person's Affiliates and the respective directors, officers, employees,
agents and advisors of that Person and that Person's Affiliates.
"Related Persons" shall mean, collectively, the Company, the Parent,
---------------
Sahara, Sahara Resorts, Pioneer Finance, Santa Fe and (for purposes of Section
8.01), ▇▇▇▇ ▇▇▇▇▇▇.
"Reorganization Plan" shall mean the Restated Fifth Amended Plan of
-------------------
Reorganization of Pioneer Finance Corp. and the Company
"Restricted Payment" shall mean any dividend or other distribution
------------------
(whether in cash, securities or other Property) with respect to any shares of
any class of capital stock of the Company or any of its Subsidiaries, or any
payment (whether in cash, securities or other Property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Company or any option, warrant or other right to acquire any such shares of
capital stock of the Company. The payment of management fees pursuant to the
Management Agreement in an amount not to exceed $85,000 per month and $1,340,000
in the aggregate until the Obligations have been paid in full and the payment in
the ordinary course of business and consistent with past practice of reasonable
out-of-pocket expenses actually incurred in accordance with Section 3.2 of the
Management Agreement (as in effect on the Signing Date) shall not constitute
Restricted Payments.
"Sahara" shall mean Sahara Las Vegas Corp., a Nevada corporation.
------
"Sahara Resorts" shall mean Sahara Resorts, a Nevada corporation.
--------------
"Santa Fe" shall mean Santa Fe Hotel, Inc., a Nevada corporation.
--------
"Security Agreement" shall mean a Security Agreement, in substantially
------------------
the form of Exhibit D, executed by the Company in favor of the Lender.
"Security Documents" shall mean, collectively, the Security Agreement,
------------------
the Guarantee and Pledge Agreement, the Deed of Trust, all Uniform Commercial
Code financing statements and all other filings or recordings with any
Governmental Authority required by each Basic Document to be filed or recorded
with respect to each of the security interests in personal Property and fixtures
created pursuant to those Basic Documents.
-10-
"Signing Date" shall mean the date on which the Company and the
------------
Lender have executed and delivered this Agreement.
"S&P" shall mean Standard & Poor's.
---
"Solvent" shall mean, as to any Person, that, as of any date of
-------
determination, (a) the aggregate value of all Properties of that Person and its
Subsidiaries at their present fair saleable value (i.e., the amount that may be
----
realized within a reasonable time, considered to be six months to one year,
either through collection or sale at the regular market value, conceiving the
latter as the amount that could be obtained for the Property in question within
that period by a capable and diligent business person from an interested buyer
who is willing to purchase under ordinary selling conditions), exceed the amount
of all debts and liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of that Person and its Subsidiaries, (b) that Person
and its Subsidiaries will not, on a consolidated basis, have any unreasonably
small capital with which to conduct their business operations as previously
conducted and (c) that Person and its Subsidiaries will have, on a consolidated
basis, sufficient cash flow to enable them to pay their debts as they mature.
"Subsidiary" shall mean, for any Person at any date, any corporation,
----------
limited liability company, partnership, association or other entity (a) the
accounts of which would be consolidated with those of that Person in
consolidated financial statements prepared in accordance with GAAP as of that
date, (b) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of that date, owned, controlled or held by that Person, or (c) that is, as of
that date, otherwise Controlled, by that Person or one or more of its
Subsidiaries of that Person or by that Person and one or more of its
Subsidiaries.
"Taxes" shall mean any and all present or future taxes, levies,
-----
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" shall mean, as of any date, the sum, for the Company
----------
(determined without duplication in accordance with GAAP), of the following: (a)
all Indebtedness and (b) all other Guarantees not constituting Indebtedness at
such time as any such Guarantee should, in accordance with GAAP, be quantified
and reflected on a balance sheet of the Company.
"Transactions" shall mean, as to any Related Person, the execution,
------------
delivery and performance by that Related Person of the Purchase Agreement, the
Basic Documents to which it is a party and, in the case of the Company, the
borrowing of Loan, the use of the proceeds of Loan and the Reorganization Plan.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
--------------------
a result of a complete or partial withdrawal from that Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Accounting Terms; GAAP. Except as otherwise expressly
----------------------
provided in this Agreement, all terms of an accounting or financial nature shall
be construed in
-11-
accordance with GAAP, as in effect from time to time; provided that, if the
--------
Company notifies the Lender that the Company requests an amendment to any
provision of any Basic Document to eliminate the effect of any change occurring
after the Signing Date in GAAP or in the application of GAAP on the operation of
that provision (or if the Lender notifies the Company that the Lender requests
an amendment to any provision of any Basic Document for that purpose),
regardless of whether any such notice is given before or after that change in
GAAP or in the application of GAAP, then that provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before that change became
effective until that notice has been withdrawn or that provision has been
amended.
Section 1.03. Interpretation. In this Agreement, unless otherwise
--------------
indicated, the singular includes the plural and plural the singular; words
importing any gender include each other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to those instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any Basic Document); and references to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Authorities, Persons succeeding to their respective
functions and capacities.
ARTICLE II
THE LOAN
--------
Section 2.01. Loan. The Lender agrees, on the terms and conditions
----
of this Agreement, to make a single Loan to the Company in Dollars in an
aggregate principal amount of not more than $36,000,000. Amounts not borrowed on
the date the Loan is made may not afterwards be borrowed. Amounts repaid or
prepaid may not be reborrowed.
Section 2.02. Borrowing. The Borrowing shall be in an aggregate
---------
amount that is a whole multiple of $1,000,000.
Section 2.03. Request for Borrowing. To request the Borrowing under
---------------------
Section 2.01, the Company must notify the Lender of that request in writing not
later than 11:00 a.m., Las Vegas time, one Business Day before the date of the
proposed Borrowing. The Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(i) the date of that Borrowing, which shall be a Business Day; and
-12-
(ii) the location and number of the Company's account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.04.
Section 2.04. Funding of Borrowing. The Lender shall make the Loan,
--------------------
subject to the terms and conditions of this Agreement, on the proposed date for
that Loan by wire transfer of immediately available funds by 12:00 noon, Las
Vegas time to one or more escrow accounts established with one or more
institutions in Las Vegas on terms satisfactory to the Lender. The funds so
transferred shall be released to the Persons designated in the Reorganization
Plan upon a final order of the Bankruptcy Court approving that release of funds.
Section 2.05. Note and Evidence of Debt.
-------------------------
(a) Loan. The Loan made by the Lender shall be evidenced by a single
----
Note of the Company in substantially the form of Exhibit A, dated the Effective
Date, payable to the Lender in a principal amount equal to the Loan and
otherwise duly completed.
(b) Exchange of Notes. The Lender shall not be entitled to have its
-----------------
Note subdivided, by exchange for promissory notes of lesser denominations or
otherwise, except in connection with a permitted assignment of all or any
portion of the Lender's Loan and Note pursuant to Section 9.06(b).
ARTICLE III
PAYMENTS
--------
Section 3.01. Repayment of Loan. The Company hereby unconditionally
-----------------
promises to pay to the Lender the then unpaid principal amount of the Loan on
the Maturity Date. In addition, if the Purchase Agreement terminates, the
Company hereby promises to pay to the Lender $500,000 in respect of the
principal of the Loan on the last day of each month, commencing with the first
such date after the Purchase Agreement terminates, with any remaining unpaid
principal amount due and payable on the Maturity Date.
Section 3.02. Optional Prepayment of Loan. The Company may at any
---------------------------
time and from time to time to prepay the Loan in whole or in part. Each partial
prepayment will be applied to the principal installments in inverse order of
maturity. Prepayments shall be accompanied by accrued interest to the extent
required by Section 3.05.
Section 3.03. Mandatory Prepayments.
---------------------
(a) If the Company receives any Net Available Proceeds of any
Casualty Event (subject to Section 1.05(b) of the Deed of Trust), any Equity
Issuance (without derogating from any effect of a Change in Control under the
Basic Documents) or Disposition (without derogating from any restriction on any
such Disposition under the terms of the Basic Documents or the Purchase
Agreement), the Company shall immediately pay to the Lender an aggregate amount
equal to the lesser of (i) the full amount of the Obligations and (ii) one
hundred percent (100%) of those Net Available Proceeds, and the Lender shall
apply that amount to the principal installments of the Loan in inverse order of
maturity.
-13-
(b) If at any time the Company receives any proceeds from the
issuance of any Indebtedness permitted by Section 7.10(d), the Company shall
immediately pay to the Lender an aggregate amount equal to the proceeds of such
issuance, which must be sufficient for the payment in full of the Obligations.
(c) If at any time a Change of Control occurs, the Company shall
immediately pay to the Lender an aggregate amount sufficient for the payment in
full of the Obligations.
Section 3.04. Interest.
--------
(a) The Loan shall bear interest at the Interest Rate.
(b) Notwithstanding the foregoing, if any Obligation is not paid when
due (whether at stated maturity, upon acceleration, on any optional or mandatory
prepayment date or otherwise) that overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to the Post-Default Rate.
(c) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for that Loan; provided that (i) interest accrued pursuant
--------
to Section 3.05(b) shall be payable on demand, and (ii) in the event of any
repayment or prepayment of any principal, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of that repayment or
prepayment.
(d) All interest under the Basic Documents shall be computed on the
basis of a year of 365 (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
Section 3.05. Payments Generally.
------------------
(a) The Company shall make each payment required to be made by it
under this Agreement prior to 12:00 noon, Las Vegas time, on the date when due,
in immediately available funds, without set-off or counterclaim. Any amounts
received after that time on any date may, in the discretion of the Lender, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest on that amount. All such payments shall be made to the
Lender at its account specified on Annex 1 (or such other account in Las Vegas
as the Lender may specify in writing to the Company). If any payment (other than
that due on the Maturity Date) is due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest on that payment shall be
payable for the period of that extension. All payments shall be made in Dollars.
(b) If at any time insufficient funds are received by and available
to the Lender to pay fully all amounts then due the Lender, those funds shall be
applied (i) first, towards payment of interest and fees then due, and (ii)
second, towards payment of principal then due.
-14-
ARTICLE IV
PROTECTION OF PAYMENTS
----------------------
Section 4.01. No Deduction. Any and all payments by or on account of
------------
any Obligation shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Company is required to
--------
deduct any Indemnified Taxes or Other Taxes from those payments, then (a) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.01) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (b) the Company shall make those
deductions and (c) the Company shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
Section 4.02. Indemnity from Taxes
--------------------
(a) The Company shall indemnify the Lender, within ten (10) days
after written demand, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Lender on or with respect to any payment by or on account of
any Obligation (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under Section 4.01 or this Section 4.02)
and any penalties, interest and reasonable expenses arising from, or with
respect to, those Indemnified Taxes or Other Taxes, whether or not those
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. To claim any amount under this Section
4.02(a), the Lender must deliver to the Company a certificate as to the amount
of that payment or liability, which certificate shall be conclusive absent
manifest error.
(b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Company to a Governmental Authority, the Company shall
deliver to the Lender the original or a certified copy of a receipt issued by
that Governmental Authority evidencing that payment, a copy of the return
reporting that payment or other evidence of that payment reasonably satisfactory
to the Lender.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
Section 5.01. Effective Date. The obligation of the Lender to make
--------------
its initial extension of credit under this Agreement shall not become effective
unless the Effective Date occurs before August 31, 2000 and until the
satisfaction (or the waiver in accordance with Section 9.04) of each of the
following conditions:
(a) Documents. The Lender has received each of the following
---------
documents, each of which shall be satisfactory to the Lender in form and
substance:
-15-
(i) Corporate Documents. The documents and certificates
-------------------
relating to the organization, existence and good standing of each Related
Person, the authorization of the Transactions and any other legal matters
relating to each Related Person, the Basic Documents or the Transactions that
are specified on Annex 3.
(ii) Officer's Certificate. A certificate of a senior officer
---------------------
of the Company, dated the Effective Date, to the effect set forth in Section
5.01(c).
(iii) Opinion of Counsel to the Related Persons. An opinion of
-----------------------------------------
▇▇▇▇▇▇ & Silver, Ltd, counsel to the Related Persons, dated the Effective Date,
in substantially the form of Exhibit G and covering such other matters as the
Lender may reasonably request (and the Company (on behalf of itself and each
other Related Person) hereby instructs that counsel to deliver that opinion to
the Lender).
(iv) Agreement. This Agreement, duly executed and delivered.
---------
(v) Note. The Note and the Environmental Indemnity, each duly
----
completed and executed.
(vi) Security Agreements. The Security Agreement and the
-------------------
Guarantee and Pledge Agreement, duly executed and delivered by the Company and
each other specified Related Person and the Lender and the certificates
representing the capital stock of Sahara Resorts accompanied by undated stock
powers executed in blank, together with evidence that each such Related Person
has taken such other action (including delivering to the Lender, for filing,
appropriately completed and duly executed copies of Uniform Commercial Code
financing statements) as any such Security Document specifies or as the Lender
requests in order to create, perfect and establish the priority (subject only to
Liens permitted by Section 7.11) of the Liens granted by such Security Document.
(vii) Deed of Trust and Title Insurance; Landlord's Certificate.
---------------------------------------------------------
(A) The Deed of Trust, duly executed and delivered (and where appropriate,
acknowledged by the Company), together with (1) evidence that the Deed of Trust
has been duly recorded in the recorder's office in ▇▇▇▇▇ County, Nevada; (2) one
or more ALTA extended coverage mortgagee policies of title insurance issued by
one or more title companies satisfactory to the Lender insuring the validity and
priority of the Liens created under the Deed of Trust for and in amounts
satisfactory to the Lender, subject only to such exceptions as are satisfactory
to the Lender and containing such endorsements and direct access reinsurance
agreements as the Lender may request and, to the extent necessary under
applicable law, evidence of the due filing in the appropriate county land
offices of Uniform Commercial Code financing statements covering fixtures; (3)
as-built surveys of recent date of each of the Properties to be covered by the
Deed of Trust, showing such matters as may be required by the Lender, certified
to the Lender and the relevant title companies, and prepared by a registered
surveyor acceptable to the Lender; and (4) evidence that the Company has paid to
the relevant title companies all expenses and premiums of those title companies
in connection with the issuance of those policies and an amount equal to the
recording and stamp taxes payable in connection with recording the Deed of Trust
in the recorder's office and (B) the Landlord's Certificate and the Lease
Amendment, each duly
-16-
executed and delivered by the Landlord and the Company and evidence of the
recordation of the Lease Amendment in the recorder's office of ▇▇▇▇▇ County,
Nevada.
(viii) Purchase Agreement. The Purchase Agreement, duly executed
------------------
and delivered by each proposed party to the Purchase Agreement.
(ix) Insurance. (A) Certificates of insurance evidencing the
---------
existence of all insurance required to be maintained by the Company pursuant to
the Basic Documents and the designation of the Lender as the loss payee and
additional insured under those policies to the extent required by the Basic
Documents in respect of all insurance covering tangible Property, those
certificates to be in such form and contain such information as is specified in
the Basic Documents; and (B) a certificate of its Financial Officer setting
forth the insurance obtained by it in accordance with the requirements of the
Basic Documents and stating that such insurance is in full force and effect and
that all premiums then due and payable with respect to that insurance have been
paid.
(x) Environmental Survey. The environmental survey and
--------------------
assessment prepared by Western Technologies Inc. dated February 16, 2000 with
respect to the existing facility operated by the Company.
(xi) Appraisal. A written appraisal of an independent,
---------
impartial and qualified appraiser, satisfactory to the Lender, setting forth, on
a date reasonably near the Effective Date, the aggregate market value of the
Property covered by the Deed of Trust.
(xii) Final Orders. A final order or orders of the Bankruptcy
------------
Court approving the Basic Documents, the Loan to be made pursuant to this
Agreement and the Liens of the Security Documents.
(b) Reorganization Plan. Except for the funding of the Loan, the
-------------------
Reorganization Plan has been effected in accordance with (and not in waiver of)
the terms and conditions of the Reorganization Plan, including the deposit into
one or more escrow accounts with one or more institutions satisfactory to the
Lender by each Related Person of all amounts called for by the Reorganization
Plan and necessary to satisfy all claims provided for in the Reorganization Plan
(other than the proceeds of the Loan). There is no action, suit or proceeding
by or before any arbitrator or Governmental Authority pending or threatened to
challenge or to prevent all or any part of the Reorganization Plan other than
the pending appeal of the Confirmation Order of the Bankruptcy Court by High
River Limited Partnership and Chelonian Corp. (which appeal will be rendered
moot upon the funding of the escrow accounts as provided above and which appeal
the Company hereby agrees to have dismissed within 60 days of the Effective
Date). There are no claims against the Company or its assets other than those
provided for in the Reorganization Plan, and all pre-petition and administrative
claims (subject, in the case of claims provided for in the Reorganization Plan,
only to the payment of the consideration specified in the Reorganization Plan)
have been discharged. The Bankruptcy Court no longer has any continuing
jurisdiction over the activities or assets of the Company except as provided in
the Reorganization Plan.
-17-
(c) No Default. After giving effect to the Loan and to the deposits
----------
to be made by the Related Persons as provided in clause (b) above and the use of
the proceeds of the Loan and those deposits in accordance with the
Reorganization Plan: (i) no Default has occurred and is continuing and (ii) the
representations and warranties made by the Company in Article VI and by each
Related Person in each of the Basic Documents to which it is a party are true
and complete on and as of the date of that extension of credit with the same
force and effect as if made on and as of that date (or, if applicable, as of any
specific date as of which that representation or warranty is expressly stated to
have been made).
(d) Purchase Agreement. The Purchase Agreement remains in full force
------------------
and effect, and the Company has not failed to perform any of its obligations
under the Purchase Agreement.
(e) Fees. The Company has paid or reimbursed the Lender for all
----
costs and expenses incurred by the Lender or any Affiliate of the Lender in
connection with the negotiation, preparation, execution and delivery of the
Basic Documents (to the extent that statements for those fees and expenses have
been delivered to the Company), including the fees and expenses of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Lender, and of ▇▇▇▇▇ ▇▇▇▇▇▇, Nevada
counsel to the Lender (not to exceed the amount set forth in Section 9.02).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Lender that:
Section 6.01. Organization; Powers. The Company is duly organized,
--------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where that qualification is required.
Section 6.02. Authorization; Enforceability. The Transactions are
-----------------------------
within the Company's corporate powers and have been duly authorized by all
necessary corporate (including, if required, stockholder) action. This Agreement
has been, and the other Basic Documents will be, duly executed and delivered by
the Company, and each Basic Document to which the Company is a party
constitutes, or when so delivered will constitute, a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally (other than the Company's current case in
the Bankruptcy Court) and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
Section 6.03. Governmental Approvals; No Conflicts. The Transactions
------------------------------------
(a) do not require any Governmental Approval of any Governmental Authority,
except as have been obtained or made and are in full force and effect or, in the
case of the Purchase Agreement, as
-18-
are provided for in the Purchase Agreement, (b) do not require any consent or
approval of any Person that has not been obtained and each such consent and
approval that has been obtained is in full force and effect, (c) will not
violate any applicable Governmental Rule or the charter, by-laws or other
organizational documents of the Company or any other Related Person, (d) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon the Company or any other Related Person or its or any
other Related Person's Property or give rise to a right under any such
indenture, agreement or other instrument to require any payment to be made by
the Company or any other Related Person and (e) will not result in the creation
or imposition of any Lien (other than a Permitted Encumbrance) on any Property
of the Company or any other Related Person.
Section 6.04. Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) The Company has furnished to the Lender its balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the
fiscal year ended September 30, 1999, as reported on by Deloitte & Touche,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended March 31, 2000, certified by one of its
Financial Officers. Those financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Company as of those dates and for those periods in accordance with GAAP
consistently applied, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) Since March 31, 2000, there has been no material adverse change
in the business, Properties, operations, prospects or condition, financial or
otherwise, of the Company or any other Related Person; provided, however, that
-------- -------
non-recurring expenses associated with the Company's case under the Bankruptcy
Code, consummation of the Reorganization Plan, and fees and expenses incurred in
connection with this Agreement, shall not be considered a material adverse
change.
Section 6.05. Properties.
----------
(a) Each of the Company and the other Related Persons has good title
to, or valid leasehold interests in, all its Property, except for minor defects
in title that do not interfere with its ability to conduct its business as
currently conducted or to utilize its Properties for their intended purposes.
(b) Each of the Company and the other Related Persons owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual Property material to its business, and the use of any such Property
by the Company and the other Related Persons does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) The Company has no Subsidiaries and does not own any of the
capital stock or other ownership interests of any other Person or any
outstanding securities convertible into the capital stock or other ownership
interests of any other Person.
-19-
Section 6.06. Litigation and Environmental Matters.
------------------------------------
(a) Except for the Company's case in the Bankruptcy Court and the
Disclosed Matters, there are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Company, threatened against or affecting the Company or any other Related Person
(i) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect or (ii) that involve
any of the Basic Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, the Company (i) has not failed
to comply with any Environmental Law or to obtain, maintain or comply with any
Governmental Approval required under any Environmental Law, (ii) has not become
subject to any Environmental Liability, (iii) has not received notice of any
claim with respect to any Environmental Liability or (iv) does not know of any
basis for any Environmental Liability.
(c) There has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially increased
the likelihood of, a Material Adverse Effect.
Section 6.07. Compliance with Laws and Agreements. Each of the
-----------------------------------
Company and the other Related Persons is in compliance with all Governmental
Rules applicable to it or its Property and has all Governmental Approvals
(including those related to its gaming activities and assets) necessary or
appropriate for the conduct of its business and the ownership of its assets,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. Except as set
forth in the Disclosed Matters, neither the Company nor any other Related Person
is in default under any indenture, agreement or other instrument binding upon
the Company or any other Related Person or its or any Related Person's Property
nor has a waiver of any such default been granted.
Section 6.08. Investment and Holding Company Status. Neither the
-------------------------------------
Company nor any other Related Person is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940, (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935 or (c) subject to any other Governmental
Rule restricting its ability to incur Indebtedness, to grant Liens or to issue
guarantees.
Section 6.09. Taxes. Each of the Company and the other Related
-----
Persons has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which the Company or any such other Related
Person, as applicable, has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
-20-
Section 6.10. ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting those amounts, exceed the
fair market value of the assets of that Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
those amounts, exceed the fair market value of the assets of all such
underfunded Plans.
Section 6.11. Disclosure. The Company has disclosed to the Lender
----------
all indentures, agreements and instruments and all corporate and other
restrictions to which it or any other Related Person is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other information furnished by or on behalf of the
Company to the Lender in connection with or under any Basic Document (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements so made, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
--------
information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
Section 6.12. Solvency. Each of the Company, the Parent and Pioneer
--------
Finance is, or in the case of the Company and Pioneer Finance will upon the
Effective Date and the funding of the Reorganization Plan be, Solvent.
ARTICLE VII
COVENANTS
---------
The Company covenants and agrees with the Lender that, until payment
in full of all Obligations:
Section 7.01. Financial Statements and Other Information. The
------------------------------------------
Company shall furnish to the Lender:
(a) within ninety (90) days after the end of each fiscal year of the
Company, its audited balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for that year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by Deloitte & Touche or other independent public accountants of
recognized national standing (without any qualification or exception as to the
scope of that audit) to the effect that such financial statements present fairly
in all material respects the financial condition and results of operations of
the Company in accordance with GAAP consistently applied;
-21-
(b) within forty-five (45) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of the Company, its balance sheet
and related statements of operations, stockholders' equity and cash flows as of
the end of and for that fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Company in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) within twenty (20) days after the end of each month of each
fiscal year of the Company, its balance sheet and related statements of
operations as of the end of and for that month and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as
of the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Company in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Company (i)
certifying as to whether or not a Default has occurred and, if a Default has
occurred, specifying the details of, and any action taken or proposed to be
taken with respect to, that Default, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Section 7.19, and (iii) stating
whether or not any change in GAAP or in the application of GAAP has occurred
since the date of the audited financial statements referred to in Section 6.04
and, if any such change has occurred, specifying the effect of that change on
the financial statements accompanying that certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on those
financial statements stating whether or not they obtained knowledge during the
course of their examination of those financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any other Related Person with the Securities and Exchange Commission
or with any national securities exchange or distributed by the Company to its
shareholders generally;
(g) promptly upon their being filed, copies of all filings with or
reports to any Governmental Authority with jurisdiction over the gaming
authorities or assets of the Company or any other Related Person.
(h) promptly following any request for the same, such other
information regarding the operations, business affairs and financial condition
of the Company, any other Related Person or any Subsidiaries of any Related
Person or compliance with the terms of the Basic Documents, as the Lender may
reasonably request.
-22-
Section 7.02. Notices of Material Events. The Company shall furnish
--------------------------
to the Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Company or any of its Affiliates that, if adversely determined, could reasonably
be expected to result in a Material Adverse Effect or the receipt of a written
communication from any Governmental Authority as to any claimed failure by the
Company or any other Related Person to have complied with any Governmental Rule
relating to the gaming activities or assets of the Company or any other Related
Person;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate amount
exceeding $100,000;
(d) any Casualty Event involving Property having a fair market value
in excess of $100,000; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 7.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the Company
setting forth the details of the event or development requiring that notice and
any action taken or proposed to be taken with respect to that event or
development.
Section 7.03. Existence; Conduct of Business. The Company shall do
------------------------------
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the Governmental Approvals material to
the conduct of its business; provided, that this Section 7.03 shall not be
--------
construed to prohibit any transaction permitted by Section 7.12.
Section 7.04. Payment of Obligations. The Company shall pay its
----------------------
obligations, including for Taxes, that, if not paid, could result in a Material
Adverse Effect before the same become delinquent or in default, except any such
obligation (a) the validity or amount of which is being contested in good faith
by appropriate proceedings, (b) with respect of which the Company has set aside
on its books adequate reserves in accordance with GAAP and (c) the failure to
pay which pending that contest could not reasonably be expected to result in a
Material Adverse Effect. The Company shall in any event assure that all
obligations to be paid pursuant to the Reorganization Plan will be paid in full
in accordance with the Reorganization Plan.
Section 7.05. Maintenance of Properties; Insurance. The Company
------------------------------------
shall (a) keep and maintain all Property material to the conduct of its business
in good working order and condition, ordinary wear and tear excepted, and (b)
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are
-23-
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The Company shall also maintain the
insurance specified in Annex 2.
Section 7.06. Books and Records; Inspection Rights. The Company
------------------------------------
shall keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. The Company shall permit any representatives designated by the
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
Section 7.07. Compliance with Laws. The Company shall comply with
--------------------
all Governmental Rules applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 7.08. Environmental Compliance. The Company shall comply with
------------------------
all Environmental Laws and shall obtain, or cause to be obtained, and maintained
in full force and effect, all Governmental Approvals required under the
Environmental Laws.
Section 7.09. Use of Proceeds. The proceeds of the Loan will be used
---------------
solely to fund the obligations of the Company under the Reorganization Plan. No
part of the proceeds of the Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any of Regulations U and X of the
Board of Governors of the Federal Reserve System.
Section 7.10. Indebtedness. The Company shall not create, incur,
------------
assume or permit to exist any Indebtedness, except:
(a) Indebtedness created under the Basic Documents;
(b) Indebtedness of the Company incurred to finance the acquisition,
construction or improvement of any fixed or capital assets (including Lease
Obligations constituting a capital lease under GAAP and any Indebtedness assumed
in connection with the acquisition of any such assets or secured by a Lien on
any such assets prior to that acquisition) and extensions, renewals and
replacements of any such Indebtedness that do not increase its outstanding
principal amount; provided that (i) such Indebtedness is incurred prior to or
concurrently with that acquisition or the completion of that construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (b) shall not exceed $500,000 at any time outstanding;
(c) Indebtedness of the Company as an account party in respect of
trade letters of credit; and
(d) other Indebtedness; provided that the aggregate principal amount
--------
of that Indebtedness is sufficient to, and the proceeds of that Indebtedness are
in fact used to, repay in full the Obligations.
-24-
Section 7.11. Liens. The Company shall not create, incur, assume or
-----
permit to exist any Lien on any Property, except:
(a) Permitted Encumbrances;
(b) the rights of the Landlord under the Lease;
(c) Liens on fixed or capital assets acquired, constructed or
improved by the Company or any of its Subsidiaries; provided that (i) such Liens
--------
secure Indebtedness permitted by Section 7.10(b), (ii) such Liens and the
Indebtedness they secure are incurred prior to or concurrently with such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured by those Liens does not exceed eighty percent (80%) of the
cost of acquiring, constructing or improving those fixed or capital assets and
(iv) such Lien shall not apply to any other Property of the Company; and
(d) the Liens of the Basic Documents.
Section 7.12. Fundamental Changes.
-------------------
(a) The Company shall not merge or consolidate with any other Person,
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or substantially all of its Property.
(b) The Company shall not engage to any material extent in any
business other than businesses of the type conducted by the Company on the
Signing Date and reasonably related activities.
Section 7.13. Investments, Loan, Advances, Guarantees and
-------------------------------------------
Acquisitions. The Company shall not hold or acquire the capital stock,
------------
partnership or other ownership interests, Indebtedness or other securities of
any other Person, make any deposit with, or, loan or make any other extension of
credit to, any other Person, enter into any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
or acquire (in one transaction or a series of transactions) any Property of any
other Person constituting a business unit, except:
(a) Permitted Investments; and
(b) investments by the Company existing on the Signing Date and
disclosed in Schedule 7.13.
Section 7.14. Hedging Agreements. The Company shall not enter into
------------------
any Hedging Agreement.
Section 7.15. Restricted Payments. The Company shall not declare or
-------------------
make or agree to pay or make, directly or indirectly, any Restricted Payment,
except (a) dividends by the Company with respect to its capital stock payable
solely in additional shares of its common stock
-25-
and (b) so long as no Default has occurred and is continuing, Restricted
Payments at the times and in no greater than the amount specified for that time
on Schedule 7.15.
Section 7.16. Transactions with Affiliates. The Company shall not
----------------------------
sell, lease or otherwise transfer any Property to, purchase, lease or otherwise
acquire any Property from, or otherwise engage in any other transactions with,
any of its Affiliates, except (a) in the ordinary course of business at prices
and on terms and conditions not less favorable to the Company than could be
obtained on an arm's-length basis from unrelated third parties and (b) any
Restricted Payment permitted by Section 7.15.
Section 7.17. Restrictive Agreements. The Company shall not enter
----------------------
into, incur or permit to exist any agreement or other arrangement that, directly
or indirectly, prohibits, restricts or imposes any condition upon the ability of
the Company to create, incur or permit to exist any Lien upon any of its
Property of the Company other than (i) restrictions and conditions imposed by
law or by this Agreement, (ii) restrictions and conditions existing on the
Signing Date and identified on Schedule 7.17 (but not any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if those
restrictions or conditions apply only to the Property securing that Indebtedness
and (iv) customary provisions in leases and other contracts restricting the
assignment of those leases or contracts.
Section 7.18. Dispositions. The Company shall not make any
------------
Dispositions of all or any part of its or their Property, except (a)
Dispositions in the ordinary course of business if the value (determined on the
basis of its fair market value) of the Property subject to such Dispositions
does not exceed $250,000 in any period of twelve (12) consecutive months, (b)
Dispositions of Property that is obsolete or otherwise no longer useful in the
business of the Company or any such Subsidiary if the value (determined on the
basis of its fair market value) of the Property subject to such Dispositions
does not exceed $250,000 in any period of twelve (12) consecutive months, `and
(c) other Dispositions of Property if the value (determined on the basis of its
fair market value) of the Property subject to such Dispositions does not exceed
$250,000 in any period of twelve (12) consecutive months.
Section 7.19. Financial Tests.
---------------
(a) Leverage Ratio. The Company shall not permit the ratio of Total
--------------
Debt to EBITDA as of the end of any fiscal quarter to exceed 5.0 to 1.
(b) Fixed Charges Ratio. The Company shall not permit the Fixed
-------------------
Charges Ratio as of the end of any fiscal quarter to be less than 1.1 to 1.
(c) Capital Expenditures. The Company shall not permit the aggregate
--------------------
amount of Capital Expenditures by the Company to exceed One Million Five Hundred
Thousand Dollars ($1,500,000) in any fiscal year, and the Company shall not
incur less than Five Hundred Thousand Dollars ($500,000) in Capital Expenditures
in any fiscal year for the purpose of maintaining, repairing or refurbishing its
hotel and casino properties.
-26-
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
Section 8.01. Events of Default. If one or more of the following
-----------------
events ("Events of Default") occurs:
-----------------
(a) The Company (i) fails to pay any principal of the Loan when due
(whether at its stated maturity or on any mandatory or optional prepayment date)
or (ii) fails to pay any interest on any Loan or any other Obligation when due
and that failure continues unremedied for two (2) or more days;
(b) Any representation, warranty or certification made or deemed made
in any Basic Document by any Related Person or any certificate furnished to the
Lender pursuant to the provisions of any Basic Document proves in any material
respect to have been false or misleading when made or furnished or deemed made
or furnished;
(c) The Company fails to perform any of its obligations under any of
Section 7.01 7.02, 7.09, 7.10, 7.11, 7.12, 7.13, ,7.14, 7.15, 7.16, 7.17, 7.18,
or 7.19, the Parent fails to perform its obligations under Section 5.08, 5.09,
5.11 or 5.13 of the Guarantee and Pledge Agreement; or any Related Person fails
to perform any of its other obligations under any Basic Document and that
failure continues unremedied for thirty (30) days;
(d) Any Related Person or any Subsidiary of any Related Person fails
to make any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, after any applicable period of grace;
(e) Any event or condition occurs that results in any Material
Indebtedness of any Related Person or any Subsidiary of any Related Person
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness of any Related Person or any Subsidiary of any
Related Person or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance of any Material Indebtedness of any Related Person or
any Subsidiary of any Related Person, prior to its scheduled maturity; provided
--------
that this Section 8.01(e) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the Property securing that
Indebtedness;
(f) Any Related Person or any Subsidiary of any Related Person admits
in writing its inability to, or is generally unable to, pay its debts as those
debts become due;
(g) Any Related Person or any Subsidiary of any Related Person (i)
applies for, or consents to the appointment of, or the taking of possession by,
a receiver, a custodian, a trustee, an examiner or a liquidator of itself or of
all or a substantial part of its Property, (ii) makes a general assignment for
the benefit of its creditors, (iii) commences a voluntary case under the
Bankruptcy Code, (iv) files a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or
-27-
composition or readjustment of debts, (v) fails to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or (vi) takes any corporate action
to authorize any of the foregoing;
(h) A proceeding or case is commenced, in any court of competent
jurisdiction, seeking (i) composition or readjustment of the debts of any
Related Person or any Subsidiary of any Related Person, (ii) the appointment of
a receiver, custodian, trustee, examiner, liquidator or the like of any Related
Person or any Subsidiary of any Related Person or of all or any substantial part
of its or any such Subsidiary's property or (iii) similar relief in respect of
any Related Person or any Subsidiary or any Related Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, in each case without the application or consent of the
Company, the affected Related Person or the affected Subsidiary of any Related
Person, and that proceeding or case continues undismissed, or an order, judgment
or decree approving or ordering any of the foregoing is entered and continues
unstayed and in effect, for a period of sixty (60) or more days; or an order for
relief against any Related Person or any Subsidiary of any Related Person is
entered in an involuntary case under the Bankruptcy Code;
(i) A final judgment or judgments for the payment of more than
$250,000 in the aggregate (exclusive of judgment amounts fully covered by
insurance where the insurer has admitted liability in respect of that judgment)
or $500,000 in the aggregate (regardless of insurance coverage) are rendered by
one or more Governmental Authorities having jurisdiction against any Related
Person or any Subsidiary of any Related Person, and that Related Person or
Subsidiary fails, within thirty (30) days of the entry of each such judgment,
either (A) to discharge (or to cause or provide for that discharge) each such
judgment or (B) both to procure stay of execution of each such judgment and,
within that thirty (30)-day period (or such longer period during which execution
of the that judgment has been stayed) to appeal from, and during that appeal to
procure the continued stay of execution for, each such judgment;
(j) An ERISA Event occurs that, in the opinion of the Lender, when
taken together with all other ERISA Events that have occurred, could reasonably
be expected to result in liability of the Company in an aggregate amount
exceeding (i) $100,000 in any year or (ii) $250,000 for all periods;
(k) A reasonable basis shall exist for the assertion against any
Related Person or any Subsidiary of any Related Person of (or there shall have
been asserted against any Related Person or any Subsidiary of any Related
Person) any Environmental Claims or Liabilities that, in the judgment of the
Lender, are reasonably likely to be determined adversely to any Related Person
or any Subsidiary of any Related Person and, individually or in the aggregate,
likely to have a Material Adverse Effect;
(l) Except for the expiration in accordance with its terms, any
Security Document terminates or ceases to be in full force and effect for
whatever reason or any Related Person shall revoke or seek or purport to revoke
its obligations under any Security Document; or
(m) A License Revocation occurs; or
-28-
(n) SunAmerica Life Insurance Company gives any written notice of
sale as to all or any part of the capital stock of the Company or Pioneer
Finance, gives any written notice proposing to retain all or any part of the
capital stock of the Company or Pioneer Finance in satisfaction of any
obligation secured by any such capital stock or otherwise exercises any rights
or remedies with respect to all or any part of the capital stock of the Company
or Pioneer Finance;
then: (i) in the case of an Event of Default other than one referred to in
Section 8.01(g) or (h) with respect to the Company, the Lender may, by notice to
the Company, (A) terminate its commitment to make the Loan under this Agreement,
and it will thereupon terminate and (B) declare all or any of the Obligations
(including any amounts payable under Article IV) to be forthwith due and
payable, whereupon those amounts will be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company; and (2) in the case of the occurrence of
an Event of Default referred to in Section 8.01(g) or (h) with respect to the
Company, the commitment of the Lender to make the Loan under this Agreement
shall automatically terminate and all Obligations (including any amounts payable
under Article IV) shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
For the avoidance of doubt, any event specified in clauses (a)(ii), (c), (d),
(h) and (i) of this Section 8.01 will not constitute an Event of Default until
the expiration of the time period referred to in the relevant clause as to that
event.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01. Notices. Except where telephonic notice is expressly
-------
permitted, all notices, requests and other communications provided for in this
Agreement (and under the Basic Documents) that make reference to this Section
9.01 shall be given or made in writing and delivered by hand or courier service,
mailed by certified or registered mail or sent by telecopy to the intended
recipient as specified below its name on Annex 1 or, as to any party, at such
other address as is designated by that party in a notice to each other party.
Except as otherwise provided in any Basic Document, all such communications
shall be deemed to have been duly given or made upon receipt.
Section 9.02. Expenses, Indemnification, Etc.
------------------------------
(a) The Company shall pay: (i) all reasonable out-of-pocket expenses
of the Lender, in connection with (A) the negotiation, preparation, execution
and delivery of the Basic Documents and the extension of credit under this
Agreement (including the reasonable fees and expenses of Milbank, Tweed, ▇▇▇▇▇▇
& ▇▇▇▇▇▇ LLP, counsel to the Lender, and of ▇▇▇▇▇ ▇▇▇▇▇▇, Nevada counsel to the
Lender, in an aggregate amount not to exceed $150,000) and (B) any modification,
supplement or waiver of any of the terms of any Basic Document and (ii) all out-
of-pocket expenses of the Lender (including counsels' fees and expenses) in
connection with (A) any Default and any enforcement or collection proceedings
(including any bankruptcy,
-29-
reorganization, workout or other similar proceeding) resulting from that Default
or in connection with the negotiation of any restructuring or "work-out"
(whether or not consummated) of the obligations of the Company under the Basic
Documents and (B) the enforcement of this Section 9.02.
(b) The Company shall indemnify the Lender and each of Related
Parties from, and hold each of them harmless against, any and all judgments,
losses, liabilities, damages or expenses incurred by any of them in connection
with or by reason of (i) the execution and delivery of the Basic Documents or
any related agreement, instrument or document, or the performance by any Person
of its obligations under the Basic Documents, (ii) the Transactions, (iii) the
making of the Loan or the use of the proceeds of the Loan, (iv) any actual or
claimed presence or release of Hazardous Materials on or from any Property
owned, leased or operated by the Company or other Related Person or (v) any
actual or prospective claim, litigation, investigation or proceeding related to
any of the foregoing, whether based on contract, tort or any other theory (but
excluding any such losses, liabilities, damages or expenses incurred by reason
of the gross negligence or willful misconduct of the Person to be indemnified).
It shall not be a condition to any such indemnification that the Lender be a
party to any such investigation, litigation or other proceeding.
(c) To the extent permitted by applicable law, the Company shall not
assert, and hereby waives, any claim against the Lender or its Related Parties,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages).
(d) All amounts due under this Section 9.02 shall be payable not
later than two (2) days after written demand.
Section 9.03. Waiver. No failure on the part of the Lender to
------
exercise and no delay in exercising, and no course of dealing with respect to,
any right, remedy, power or privilege under this Agreement or the Note shall
operate as a waiver of that right, remedy, power or privilege, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
or the Note preclude any other or further exercise of any such right, remedy,
power or privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided in this
Agreement and the Note are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
Section 9.04. Amendments, Etc. No provision of this Agreement may be
---------------
waived, modified or supplemented except by a written instrument signed by the
Company and the Lender.
Section 9.05. Successors and Assigns. This Agreement shall be
----------------------
binding upon and inure to the benefit of its parties and their respective
successors and permitted assigns.
Section 9.06. Assignments.
-----------
(a) The Company may not assign any of its rights or obligations under
this Agreement or under the Note without the prior written consent of the
Lender.
-30-
(b) The Lender may assign all or any part of its Obligations and its
Note, together with, in any such case, its related rights, remedies, powers and
privileges under the Basic Documents; provided that each such assignment shall
--------
be made in a whole multiple of $1,000,000. Each such assignee shall have all of
the rights, remedies, powers and privileges of the lender under the Basic
Documents, and the Company shall, upon the request of the Lender, issue a new
Note (or new notes in the same form as the Note) as will reflect any such
assignment.
Section 9.07. Survival. The obligations of the Company under Article
--------
IV and Section 9.02 shall survive the repayment of the Obligations. In addition,
each representation and warranty made, or deemed to be made by a notice of any
extension of credit, in or pursuant to any Basic Document shall survive the
making or deemed making of that representation and warranty, and the Lender
shall not be deemed to have waived, by reason of making any extension of credit,
any Default that may arise by reason of that representation or warranty proving
to have been false or misleading, notwithstanding that the Lender may have had
notice or knowledge or reason to believe that such representation or warranty
was false or misleading at the time that extension of credit was made.
Section 9.08. Agreements Superseded. This Agreement supersedes all
---------------------
prior agreements and understandings, written or oral, between the parties with
respect to the subject matter of this Agreement.
Section 9.09. Severability. Any provision of this Agreement or the
------------
Note that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of that prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or the Note, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable that provision in any other
jurisdiction.
Section 9.10. Captions. The table of contents, captions and section
--------
headings appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
Section 9.11. Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties to this Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to the Agreement by hand or by telecopy shall be as
effective as the delivery of a fully executed counterpart of this Agreement.
Section 9.12. Governing Law; Submission to Jurisdiction. THIS
-----------------------------------------
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF
NEVADA.
Section 9.13. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY
--------------------
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
-31-
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
-32-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
PIONEER HOTEL, INC.,
By: /s/
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
STATION CASINOS, INC.,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Name:
Title: EVP/CFO/CAO
-33-
Annex 1
Addresses for Notices
Pioneer Hotel, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & Silver, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
-34-
Annex 2
Insurance Requirements
----------------------
See Schedule 2.18 to Purchase Agreement
ANNEX 3
Certain Closing Documents
1. Certificates of Good Standing from the Secretary of State of Nevada with
respect to the Company, the Parent and Sahara Resorts.
2. Certificate of the Secretary of the Company attaching the Articles of
Incorporation of the Company, the corporate bylaws of the Company and any
board or shareholders' resolutions required to authorize the execution,
delivery and performance of the Basic Documents to which the Company is a
party.
3. Certificate of the Secretary of the Parent attaching the Articles of
Incorporation of the Parent, the corporate bylaws of the Parent and any
board or shareholders' resolutions required to authorize the execution,
delivery and performance of the Basic Documents to which the Parent is a
party.
4. Certificate of the Secretary of Sahara Resorts attaching the Articles of
Incorporation of Sahara Resorts and the corporate bylaws of Sahara Resorts.
5. Certificates of Incumbency from each of the Company and the Parent.
SCHEDULE 6.06
Disclosed Matters
-----------------
[See Sections 6.06 and 6.07]
Section 6.06(a)
---------------
1. See Schedule 2.10(a) to the Purchase Agreement.
2. Chelonian Corp. v. Santa Fe Gaming Corporation
Supreme Court of the State of New York Index No. 00/601852
On or about May 1, 2000, Chelonian Corp. (an affiliate of High River) filed
an action styled Motion For Summary Judgment In Lieu of Complaint against Santa
Fe Gaming Corp in Supreme Court of the State of New York. The complaint seeks to
compel Santa Fe Gaming Corp. to pay $5,106,000 plus accrued interest, together
with costs and disbursements in its capacity as guarantor on the 1988 Bonds.
3. High River Limited Partnership v. Santa Fe Gaming Corporation
Supreme Court of the State of New York Index No. 00/602093
On or about May 1, 2000, Chelonian Corp. (an affiliate of High River) filed
an action styled Complaint styled Complaint against Santa Fe Gaming Corp in
Supreme Court of the State of New York. The complaint seeks declaratory relief
that: (1) Santa Fe Gaming Corp. lacks standing to enforce a forbearance
provision contained in the Consent Solicitation against High River; and (2)
Santa Fe Gaming Corporation breached its duties under the Consent Solicitation
thereby relieving High River of any obligations it may have remaining under the
terms of the Consent Solicitation.
Section 6.06(b)
---------------
Disclosed in the Environmental Survey referred to in Section 5.01(a)(x).
Section 6.07
------------
Pioneer Finance is in default under the 1988 Bonds (as defined in the
Reorganization Plan) and the Company is in default under its obligations to
Pioneer Finance which have been assigned as security for the 1988 Bonds. These
defaults have occasioned defaults under certain other obligations of other
Subsidiaries of the Parent to SunAmerica Life Insurance Company by virtue of
cross-default provisions. All of these defaults will be cured by the payment in
full of the 1988 Bonds and the assigned obligations upon the Effective Date.
SCHEDULE 7.13
Investments
-----------
[See Section 7.13]
The Company owns 100% of the issued and outstanding shares of Santa Fe Valley,
Inc., a Nevada corporation, which has no assets.
SCHEDULE 7.15
Permitted Restricted Payments
-----------------------------
[See Section 7.15]
Tax Allocation Agremeent dated as of January 31, 1999.
SCHEDULE 7.16
Restrictive Agreements
----------------------
[See Section 7.16]
None, except in connection with the 1988 Bonds which will be paid off upon the
Effective Date (see Schedule 6.06).
EXHIBIT A
Form of Note
PROMISSORY NOTE
[ ] [ ]
Las Vegas. Nevada
FOR VALUE RECEIVED, Pioneer Hotel, Inc., a Nevada corporation (the
"Company"), hereby promises to pay to Station Casinos, Inc. (the "Lender"), at
-------- ------
the office of [ ], located at [ ], the
principal sum of [ ] Dollars in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of the Loan, at that office, in like money and funds,
for the period commencing on the date of the Loan until the Loan is paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
This Note is the Note referred to in the Credit Agreement dated as of
[ ], 2000 (as modified and supplemented and in effect from time
to time, the "Credit Agreement") between the Company and the Lender, and
----------------
evidences the Loan made by the Lender under the Credit Agreement. Capitalized
terms used but not defined in this Note have the respective meanings assigned to
them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loan upon
the terms and conditions specified in the Credit Agreement. This Note is
secured by and entitled to the benefits of the Security Documents.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEVADA.
PIONEER HOTEL, INC.
By: _______________________
Name:
Title:
EXHIBIT B
Form of Guarantee and Pledge Agreement
(Attached)
EXHIBIT C
Form of Deed of Trust
(Attached)
EXHIBIT D
Form of Security Agreement
(Attached)
EXHIBIT E
Form of Environmental Indemnity
(Attached)
EXHIBIT F
Form of Lease Amendment
(Attached)
EXHIBIT G
Form of Opinion of Counsel to the Related Persons
(Attached)
Exhibit B
GUARANTEE AND PLEDGE AGREEMENT
Dated as of June 12, 2000
between
SANTA FE GAMING CORPORATION
and
STATION CASINOS, INC.
*****************************************************************
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS............................................................... 1
Section 1.01 Certain Defined Terms.......................................... 1
Section 1.02 Interpretation................................................. 2
ARTICLE II COLLATERAL............................................................... 2
Section 2.01 Grant.......................................................... 2
Section 2.02 Perfection..................................................... 3
Section 2.03 Preservation and Protection of Security Interests.............. 3
Section 2.04 Attorney-in-Fact............................................... 3
Section 2.05 Special Provisions Relating to Stock Collateral................ 4
Section 2.06 Rights and Obligations......................................... 4
Section 2.07 Termination.................................................... 5
Section 2.08 Collateral Account............................................. 5
Section 2.09 Investment of Balance in Collateral Account.................... 5
ARTICLE III GUARANTEE............................................................... 5
Section 3.01 Guarantee...................................................... 5
Section 3.02 Acknowledgments, Waivers and Consents.......................... 6
Section 3.03 Understanding With Respect to Waivers and Consents............. 10
Section 3.04 Subrogation.................................................... 10
Section 3.05 Reinstatement.................................................. 11
Section 3.06 Remedies....................................................... 11
Section 3.07 Separate Action................................................ 11
Section 3.08 Subordination of Indebtedness of the Company; Security Interest 12
Section 3.09 Revocation..................................................... 12
ARTICLE IV REPRESENTATIONS.......................................................... 12
Section 4.01 Organization; Powers........................................... 12
Section 4.02 Authorization; Enforceability.................................. 12
Section 4.03 Governmental Approvals; No Conflicts........................... 13
Section 4.04 Financial Condition; No Material Adverse Change................ 13
Section 4.05 Properties..................................................... 13
Section 4.06 Title.......................................................... 13
Section 4.07 Pledged Stock.................................................. 14
Section 4.08 Litigation and Environmental Matters........................... 14
Section 4.09 Compliance with Laws and Agreements............................ 14
Section 4.10 Investment and Holding Company Status.......................... 14
Section 4.11 Taxes.......................................................... 15
Section 4.12 ERISA.......................................................... 15
Section 4.13 Disclosure..................................................... 15
i
ARTICLE V COVENANTS................................................................. 15
Section 5.01 Financial Statements and Other Information..................... 15
Section 5.02 Notices of Material Events..................................... 17
Section 5.03 Existence; Conduct of Business................................. 17
Section 5.04 Payment of Obligations......................................... 17
Section 5.05 Maintenance of Properties; Insurance........................... 17
Section 5.06 Books and Records; Inspection Rights........................... 17
Section 5.07 Compliance with Laws........................................... 18
Section 5.08 Liens; Indebtedness............................................ 18
Section 5.09 Fundamental Changes............................................ 19
Section 5.10 Removals, Etc.................................................. 20
Section 5.11 Sales.......................................................... 20
Section 5.12 Stock Collateral............................................... 20
Section 5.13 Certain Future Actions......................................... 20
Section 5.14 Management Agreement........................................... 20
Section 5.15 Further Assurances............................................. 21
ARTICLE VI REMEDIES................................................................. 21
Section 6.01 Events of Default, Etc......................................... 21
Section 6.02 Deficiency..................................................... 22
Section 6.03 Private Sale................................................... 22
Section 6.04 Application of Proceeds........................................ 22
ARTICLE VII MISCELLANEOUS........................................................... 23
Section 7.01 Notices........................................................ 23
Section 7.02 Expenses, Etc.................................................. 23
Section 7.03 Waiver......................................................... 23
Section 7.04 Amendments, Etc................................................ 24
Section 7.05 Successors and Assigns......................................... 24
Section 7.06 Survival....................................................... 24
Section 7.07 Agreements Superseded.......................................... 24
Section 7.08 Severability................................................... 24
Section 7.09 Captions....................................................... 24
Section 7.10 Counterparts................................................... 24
Section 7.11 Governing Law; Submission to Jurisdiction...................... 24
Section 7.12 Waiver of Jury Trial........................................... 25
ANNEX 1 - Pledged Stock
ii
GUARANTEE AND PLEDGE AGREEMENT
This GUARANTEE AND PLEDGE AGREEMENT (this "Agreement") dated as of
---------
June 12, 2000 is made between SANTA FE GAMING CORPORATION, a Nevada corporation
(the "Obligor") and STATION CASINOS, INC. (the "Secured Party").
------- -------------
The Credit Agreement dated as of June 12, 2000 (the "Credit
------
Agreement") between Pioneer Hotel, Inc., a Nevada corporation (the "Company")
--------- -------
and the Secured Party provides, subject to its terms and conditions, for an
extension of credit to the Company. It is a condition to the obligations of the
Secured Party under the Credit Agreement that the Obligor executes and delivers,
and grants the Liens provided for, in this Agreement.
To induce the Secured Party to enter into, and to extend credit under,
the Credit Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Obligor agrees to pledge
and grant a security interest in the Collateral as security for the Secured
Obligations. Accordingly, the Obligor agrees with the Secured Party as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01 Certain Defined Terms. Unless otherwise defined, all
---------------------
capitalized terms used in this Agreement that are defined in the Credit
Agreement (including those terms incorporated by reference) shall have the
respective meanings assigned to them in the Credit Agreement. In addition, the
following terms shall have the following meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in Section
----------
2.01.
"Collateral Account" shall have the meaning assigned to that term in
------------------
Section 3.01.
"Issuer" shall mean Sahara Resorts, a Nevada corporation.
------
"Pledged Stock" shall have the meaning assigned to that term in
-------------
Section 2.01(a).
"Santa ▇▇ ▇▇▇▇▇" shall mean the 11% First Mortgage Notes of Santa Fe
--------------
due 2000.
"Secured Obligations" shall mean (a) any and all Obligations and (b)
-------------------
any and all obligations of the Obligor for the performance of its agreements,
covenants and undertakings under or in respect of the Basic Documents.
"Stock Collateral" shall have the meaning assigned to that term in
----------------
Section 2.01(a).
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect in the State of Nevada from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
Section 1.02 Interpretation. In this Agreement, unless otherwise
--------------
indicated, the singular shall include the plural and plural the singular; words
importing any gender shall include the other gender; references to statutes or
regulations shall be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" shall include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to those instruments
(without, however, limiting any prohibition on any such amendments, extensions
or modifications by the terms of the Basic Documents); and references to Persons
shall include their respective successors and permitted assigns and, in the case
of Governmental Authorities, Persons succeeding to their respective functions
and capacities.
ARTICLE II
COLLATERAL
----------
Section 2.01 Grant. As collateral security for the prompt payment in
-----
full when due (whether at stated maturity, upon acceleration, on any optional or
mandatory prepayment date or otherwise) and performance of the Secured
Obligations, the Obligor hereby pledges and grants to the Secured Party a
security interest in all of the Obligor's right, title and interest in and to
the following property, whether now owned or in the future acquired by the
Obligor and whether now existing or hereafter coming into existence
(collectively, the "Collateral");
----------
(a) (i) all of the shares of capital stock of the Issuer
represented by the respective certificates identified in Annex 1 and all other
shares of capital stock of whatever class of the Issuer, together with in each
case the certificates representing the same (collectively, the "Pledged Stock");
-------------
(ii) all shares, securities, moneys or property representing a
dividend on, or a distribution or return of capital in respect of any of the
Pledged Stock, resulting from a split-up, revision, reclassification or other
like change of any of the Pledged Stock or otherwise received in exchange for
any of the Pledged Stock and all rights issued to the holders of, or otherwise
in respect of, any of the Pledged Stock; and
(iii) without affecting the obligations of the Obligor under any
provision prohibiting that action under any Basic Document, in the event of any
consolidation or merger in which the Issuer is not the surviving corporation,
all shares of each class of the capital stock of the successor corporation
(unless that successor corporation is the Obligor itself) formed by or resulting
from that consolidation or merger (collectively, and together with the property
described in clauses (i) and (ii) above, the "Stock Collateral");
----------------
2
(b) to the extent related to all or any part of the other Collateral,
all books, correspondence, credit files, records, invoices, tapes, cards,
computer runs and other papers and documents in the possession or under the
control of the Obligor or any computer bureau or service company from time to
time acting for the Obligor;
(c) the balance from time to time in the Collateral Account; and
(d) all proceeds and products in whatever form of all or any part of
the other Collateral.
Section 2.02 Perfection. The Obligor shall (a) concurrently with the
----------
execution and delivery of this Agreement, deliver to the Secured Party all
certificates representing the capital stock of the Issuer identified in Annex 1,
accompanied by undated stock powers duly executed in blank and (b) take all such
other actions as is necessary or as the Secured Party may request to create,
perfect and establish the priority (subject only to Liens permitted under
Section 5.08) of the Liens granted by this Agreement.
Section 2.03 Preservation and Protection of Security Interests. The
-------------------------------------------------
Obligor will:
(a) upon the acquisition after the Signing Date by the Obligor of any
Stock Collateral, promptly either (i) transfer and deliver to the Secured Party
all such Stock Collateral (together with the certificates representing that
Stock Collateral duly endorsed in blank or accompanied by undated stock powers
duly executed in blank) or (ii) take such other action as the Secured Party
deems necessary or appropriate to create, perfect and establish the priority
(subject only to Liens permitted under Section 5.08) of, the Liens granted by
this Agreement in that Stock Collateral; and
(b) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any and
all Governmental Approvals and take any and all steps that may be necessary or
as the Secured Party may request to create, perfect, establish the priority
(subject only to Liens permitted under Section 5.08) of, or to preserve the
validity, perfection or priority (subject only to those permitted Liens) of, the
Liens granted by this Agreement or to enable the Secured Party to exercise and
enforce its rights, remedies, powers and privileges under this Agreement with
respect to those Liens, including causing any or all of the Stock Collateral to
be transferred of record into the name of the Secured Party or its nominee (and
the Secured Party agrees that if any Stock Collateral is transferred into its
name or the name of its nominee, the Secured Party shall thereafter promptly
give to the Obligor copies of any notices and communications received by it with
respect to the Stock Collateral pledged by the Obligor).
Section 2.04 Attorney-in-Fact. Subject to the rights of the Obligor
----------------
under Section 2.05, the Obligor hereby appoints the Secured Party its attorney-
in-fact for the purposes of carrying out the provisions of this Agreement and
taking any action and executing any instruments that the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, to preserve
the validity, perfection and priority (subject only to Liens permitted under
Section 5.08) of the Liens granted by this Agreement and, following any
3
Default, to exercise its rights, remedies, powers and privileges under this
Agreement. This appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, the Secured Party
shall be entitled under this Agreement upon the occurrence and continuation of
any Event of Default (i) to ask, demand, collect, ▇▇▇ for, recover, receive and
give receipt and discharge for amounts due and to become due under and in
respect of all or any part of the Collateral; (ii) to receive, endorse and
collect any drafts, instruments, documents and chattel paper in connection with
clause (i) above; (iii) to file any claims or take any action or proceeding that
the Secured Party may deem necessary or advisable for the collection of all or
any part of the Collateral; and (iv) to execute, in connection with any sale or
disposition of the collateral under Section 6.01, any endorsements, assignments,
bills of sale or other instruments of conveyance or transfer with respect to all
or any part of the Collateral.
Section 2.05 Special Provisions Relating to Stock Collateral.
-----------------------------------------------
(a) So long as no Event of Default has occurred and is continuing, the
Obligor shall have the right to exercise all voting, consensual and other powers
of ownership pertaining to the Stock Collateral for all purposes not
inconsistent with the terms of any Basic Document, provided that the Obligor
--------
shall not vote the Stock Collateral in any manner that is inconsistent with the
terms of any Basic Document; and the Secured Party will, at the Obligor's
expense, execute and deliver to the Obligor or cause to be executed and
delivered to the Obligor all such proxies, powers of attorney, dividend and
other orders and other instruments, without recourse, as the Obligor may
reasonably request for the purpose of enabling the Obligor to exercise the
rights and powers that it is entitled to exercise pursuant to this Section
2.05(a).
(b) So long as no Event of Default has occurred and is continuing, the
Obligor shall be entitled to receive and retain any dividends on the Stock
Collateral paid in cash out of earned surplus.
(c) If any Event of Default has occurred and is continuing, and
whether or not the Secured Party exercises any available right to declare any
Secured Obligation due and payable or seeks or pursues any other right, remedy,
power or privilege available to it under applicable law, this Agreement or any
other Basic Document, all dividends and other distributions on the Stock
Collateral shall be paid directly to the Secured Party and retained by it in the
Collateral Account as part of the Stock Collateral, subject to the terms of this
Agreement, and, if the Secured Party so requests, the Obligor shall execute and
deliver to the Secured Party appropriate additional dividend, distribution and
other orders and instruments to that end, provided that if that Event of Default
--------
is cured, any such dividend or distribution paid to the Secured Party
prior to that cure shall, upon request of the Obligor (except to the extent
applied to the Secured Obligations), be returned by the Secured Party to the
Obligor.
Section 2.06 Rights and Obligations.
----------------------
(a) No reference in this Agreement to proceeds or to the sale or other
disposition of Collateral shall authorize the Obligor to sell or otherwise
dispose of any part of the Collateral except to the extent otherwise expressly
permitted by the terms of any Basic Document.
4
(b) The Secured Party shall not be required to take steps necessary to
preserve any rights against prior parties to any part of the Collateral.
Section 2.07 Termination. When all Secured Obligations have been
-----------
paid in full, this Agreement shall terminate (subject to Section 3.05), and the
Secured Party shall forthwith cause to be assigned, transferred and delivered,
against receipt but without any recourse, warranty or representation whatsoever,
any remaining Collateral and money received in respect of the Collateral, to or
on the order of the Obligor.
Section 2.08 Collateral Account. In the event there are at any time
------------------
cash proceeds of any of the Collateral required to be delivered to the Secured
Party pursuant to this Agreement or any additional amounts that the Obligor
wishes to pledge to the Secured Party as additional collateral security under
this Agreement, there shall be established with an institution satisfactory to
the Secured Party a cash collateral account (the "Collateral Account") in the
------------------
name and under the sole control of the Secured Party into which there shall be
deposited from time to time such proceeds and amounts. The balance from time to
time in the Collateral Account shall constitute part of the Collateral and shall
not constitute payment of the Secured Obligations until applied as provided in
this Agreement. Where so required by the terms of any other Basic Document, but
subject to the next sentence, the Secured Party shall remit the collected
balance outstanding to the credit of the Collateral Account to or upon the order
of the Obligor as it instructs. If any Event of Default has occurred and is
continuing, the Secured Party may in its discretion apply or cause to be applied
(subject to collection) the balance from time to time outstanding to the credit
of the Collateral Account to the payment of the Secured Obligations in the
manner specified in Section 6.04. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided in this
Agreement.
Section 2.09 Investment of Balance in Collateral Account. Amounts on
-------------------------------------------
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Obligor (or, if any Default has occurred and is
continuing, the Secured Party) determines. All such Permitted Investments shall
be held in the name and be under the control of the Secured Party. At any time
after the occurrence and during the continuance of an Event of Default, the
Secured Party may in its discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds of that action to the payment of the Secured Obligations in the manner
specified in Section 6.04.
ARTICLE III
GUARANTEE
---------
Section 3.01 Guarantee. The Obligor hereby guarantees to the Secured
---------
Party the timely payment in full when due (whether at stated maturity, by
acceleration or otherwise) and performance of the Secured Obligations in each
case strictly in accordance with their terms. The guarantee under this Section
3.01 is irrevocable and unconditional in nature and is made with respect to any
Secured Obligations now existing or in the future arising. The Obligor's
liability under this Section 3.01 shall continue until full satisfaction of all
Secured Obligations. The guarantee under this Section 3.01 is a guarantee of due
and punctual payment and performance and is not merely a guarantee of
collection.
5
Section 3.02 Acknowledgments, Waivers and Consents. The Obligor
-------------------------------------
acknowledges that the obligations undertaken by it under this Agreement involve
the guarantee of obligations of Persons other than itself and that such
obligations are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, the
Obligor agrees that:
(a) Without affecting the enforceability or effectiveness of this
Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of the Obligor, or the
rights, remedies, powers and privileges of the Secured Party under this
Agreement, the Secured Party may, at any time and from time to time and without
notice or demand of any kind or nature whatsoever:
(i) amend, supplement, modify, extend, renew, waive,
accelerate or otherwise change the time for payment or performance of, or the
terms of, all or any part of the Secured Obligations (including any increase or
decrease in the rate or rates of interest on all or any part of the Secured
Obligations);
(ii) amend, supplement, modify, extend, renew, waive or
otherwise change, or enter into or give, any Basic Document or any agreement,
security document, guarantee, letter of credit, approval, consent or other
instrument with respect to all or any part of the Secured Obligations, any Basic
Document or any such other instrument or any term or provision of the foregoing;
(iii) accept or enter into new or additional agreements,
security documents, guarantees, letters of credit or other instruments in
addition to, in exchange for or relative to any Basic Document, all or any part
of the Secured Obligations or any collateral now or in the future serving as
security for the Secured Obligations;
(iv) accept or receive partial payments or performance on the
Secured Obligations (whether as a result of the exercise of any right, remedy,
power or privilege or otherwise);
(v) accept, receive and hold any additional collateral for
all or any part of the Secured Obligations;
(vi) release, reconvey, terminate, waive, abandon, allow to
lapse or expire, fail to perfect, subordinate, exchange, substitute, transfer,
foreclose upon or enforce any collateral, security documents, guarantees or
letters of credit for or relative to all or any part of the Secured Obligations;
(vii) apply any collateral or the proceeds of any collateral,
guarantee or letter of credit to all or any part of the Secured Obligations in
such manner and extent as the Secured Party may in its discretion determine;
(viii) release any Person from any personal liability with
respect to all or any part of the Secured Obligations;
6
(ix) settle, compromise, release, liquidate or enforce upon such terms
and in such manner as the Secured Party may determine or as applicable law may
dictate all or any part of the Secured Obligations or any collateral, guarantee
or letter of credit for or relative to all or any part of the Secured
Obligations;
(x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Company or any other Person;
(xi) proceed against the Company, the Obligor or any other Person or
against any collateral, any other guarantee or any letter of credit provided by
any Person for or relative to all or any part of the Secured Obligations and
exercise the rights, remedies, powers and privileges of the Secured Party under
the Basic Documents or otherwise in such order and such manner as the Secured
Party may in its discretion determine, without any necessity first to proceed
against any other Person or any collateral or to enforce any right, remedy,
power or privilege as to any other Person or collateral before commencing to
proceed against or otherwise to enforce this Agreement as to the Obligor;
(xii) foreclose upon any deed of trust, mortgage or other instrument
creating or granting Liens on any interest in real property by judicial or
nonjudicial sale or by deed in lieu of foreclosure, bid any amount or make no
bid in any foreclosure sale or make any other election of remedies with respect
to those Liens or exercise any right of set-off;
(xiii) obtain the appointment of a receiver with respect to any
collateral for all or any part of the Secured Obligations and apply the proceeds
of that receivership as the Secured Party may in its discretion determine (it
being agreed that nothing in this clause (xiii) shall be deemed to make the
Secured Party a party in possession in contemplation of law, except at its
option);
(xiv) enter into such other transactions or business dealings with
the Company, any Subsidiary or Affiliate of the Company or any other Person as
the Secured Party may desire; and
(xv) do all or any combination of the actions set forth in this
Section 3.02(a).
(b) The enforceability and effectiveness of this Agreement and the
liability of the Obligor, and the rights, remedies, powers and privileges of the
Secured Party, under this Agreement shall not be affected, limited, reduced,
discharged or terminated, and the Obligor hereby expressly waives to the fullest
extent permitted by law any defense now or in the future arising, by reason of:
(i) the illegality, invalidity or unenforceability of all or any part
of the Secured Obligations, any Basic Document or any agreement, security
document, guarantee, letter of credit or other instrument for or relative to all
or any part of the Secured Obligations;
(ii) any disability or other defense with respect to all of any part of
the Secured Obligations of the Company, any other guarantor, any issuer of any
letter of credit or
7
any other Person, including the effect of any statute of limitations that may
bar the enforcement of all or any part of the Secured Obligations or the
obligations of any such other Person;
(iii) the illegality, invalidity or unenforceability of any security
document, guarantee, letter of credit or other instrument for or relative to all
or any part of the Secured Obligations or the lack of perfection or continuing
perfection or failure of the priority of any Lien on any collateral for all or
any part of the Secured Obligations;
(iv) the cessation, for any cause whatsoever, of the liability of
the Company, any other guarantor, any issuer of any letter of credit or any
other Person for all or any part of the Secured Obligations (other than, subject
to Section 3.05, by reason of the full payment and performance of all Secured
Obligations);
(v) any failure of the Secured Party to marshal assets in favor of
the Company or any other Person, to exhaust any collateral for all or any part
of the Secured Obligations, to pursue or exhaust any right, remedy, power or
privilege it may have against the Company, any other guarantor, any issuer of
any letter of credit or any other Person with respect to all or any part of the
Secured Obligations or to take any action whatsoever to mitigate or reduce the
Obligor's liability under this Agreement, the Secured Party being under no
obligation to take any such action notwithstanding the fact that all or any part
of the Secured Obligations may be due and payable and that the Company may be in
default of its obligations under any Basic Document;
(vi) any failure of the Secured Party to give notice of sale or
other disposition of any collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral) for all or any part of the Secured Obligations to the Company, the
Obligor or any other Person or any defect in, or any failure by the Obligor or
any other Person to receive, any notice that may be given in connection with any
sale or disposition of any collateral;
(vii) any failure of the Secured Party to comply with applicable laws
in connection with the sale or other disposition of any collateral for all or
any part of the Secured Obligations;
(viii) any judicial or nonjudicial foreclosure or sale of, or other
election of remedies with respect to, any interest in real property or other
collateral serving as security for all or any part of the Secured Obligations,
even though that foreclosure, sale or election of remedies may or will impair
the subrogation rights of the Obligor or may or will preclude the Obligor from
obtaining reimbursement, contribution, indemnification or other recovery from
the Company, any other guarantor, any issuer of any letter of credit or any
other Person and even though the Company may or will not, as a result of that
foreclosure, sale or election of remedies, be liable for any deficiency;
(ix) any benefits the Company, any other guarantor, any issuer of
any letter of credit or any other Person may or would otherwise derive from NRS
40.430 or any other laws relating to judicial or non-judicial foreclosure with
respect to real estate collateral or the election
8
of remedies, or the availability of a deficiency, with respect to real estate
collateral or any comparable provisions of the laws of any jurisdiction;
(x) any act or omission of the Secured Party or any other Person
that directly or indirectly results in or aids the discharge or release of the
Company, any other guarantor, any issuer of any letter of credit or any other
Person of or from all or any part of the Secured Obligations or of any
collateral, security agreement, guarantee, letter of credit or other instrument
for all or any part of the Secured Obligations by operation of law or otherwise;
(xi) any law that provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or that reduces a surety's or guarantor's obligation
in proportion to the principal obligation;
(xii) the possibility that the obligations of the Company to the
Secured Party may at any time and from time to time exceed the aggregate
liability of the Obligor under this Agreement;
(xiii) any counterclaim, set-off or other claim that the Company,
any other guarantor, any issuer of any letter of credit or any other Person has
or alleges to have with respect to all or any part of the Secured Obligations;
(xiv) any failure of the Secured Party to file or enforce a claim
in any bankruptcy or other proceeding with respect to any Person;
(xv) the election by the Secured Party, in any bankruptcy
proceeding of any Person, of the application or non-application of Section
1111(b)(2) of the Federal Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 364 of the Federal Bankruptcy Code;
(xvii) any use of cash collateral under Section 363 of the Federal
Bankruptcy Code;
(xviii) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any Lien in favor of the Secured Party for
any reason;
(xx) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, including any discharge of, or bar or stay against
collecting, all or any part of the Secured Obligations (or any interest on all
or any part of the Secured Obligations) in or as a result of any such
proceeding;
(xxi) any action taken by the Secured Party that is authorized by
this Section 3.02 or otherwise in this Agreement or by any other provision of
any Basic Document or any omission to take any such action; or
9
(xxii) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
(c) The Obligor expressly waives, for the benefit of the Secured Party,
all set-offs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Secured Obligations, and all notices of
acceptance of this Agreement or of the existence, creation, incurring or
assumption of new or additional Secured Obligations. The Obligor further
expressly waives the benefit of any and all statutes of limitation and any and
all laws providing for the exemption of Property from execution or for valuation
and appraisal upon foreclosure, to the maximum extent permitted by applicable
law.
(d) The Obligor represents and warrants to the Secured Party that it has
established adequate means of obtaining financial and other information
pertaining to the business, operations and condition (financial and otherwise)
of the Company and its properties on a continuing basis and that it is now and
will in the future remain fully familiar with the business, operations and
condition (financial and otherwise) of the Company and its properties. The
Obligor further represents and warrants that it has reviewed and approved each
of the Basic Documents and is fully familiar with the transaction contemplated
by the Basic Documents and that it will in the future remain fully familiar with
that transaction and with any new Basic Documents and the transactions
contemplated by those Basic Documents. The Obligor hereby expressly waives and
relinquishes any duty on the part of the Secured Party (should any such duty
exist) to disclose to the Obligor any matter of fact or other information
related to the business, operations or condition (financial or otherwise) of the
Company or its properties or to any Basic Document or the transactions
undertaken pursuant to, or contemplated by, any such Basic Document, whether now
or in the future known by the Secured Party.
(e) The Obligor intends that its rights and obligations shall be those
expressly set forth in this Agreement and that its obligations shall not be
affected, limited, reduced, discharged or terminated by reason of any principles
or provisions of law that conflict with the terms of this Agreement.
Section 3.03 Understanding With Respect to Waivers and Consents. The
--------------------------------------------------
Obligor warrants and agrees that each of the waivers and consents set forth in
this Agreement is made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of its significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights that the
Obligor otherwise may have against the Company, the Secured Party or any other
Person or against any collateral. If, notwithstanding the intent of the parties
that the terms of this Agreement shall control in any and all circumstances, any
such waivers or consents are determined to be unenforceable under applicable
law, those waivers and consents shall be effective to the maximum extent
permitted by law.
Section 3.04 Subrogation. The Obligor hereby waives, until the payment
-----------
and satisfaction in full of all of the Secured Obligations and the expiration
and termination of the Commitments, under the Credit Agreement, any right,
remedy, power or privilege, such as any
10
right of subrogation, contribution or indemnity or related remedy, power or
privilege, arising (whether by contract or operation of law, including under the
Federal Bankruptcy Code) against the Company, any other guarantor, any issuer of
any letter of credit or any other Person or any collateral by reason of any
payment or other performance pursuant to the provisions of this Agreement and,
if any amount is paid to the Obligor on account of those rights, remedies,
powers or privileges, it shall hold that amount in trust for the benefit of, and
pay the same over to, the Secured Party on account of the Secured Obligations.
The Obligor understands that the exercise by the Secured Party of any right,
remedy, power or privilege that it may have under the Basic Documents, security
agreement, guarantee, letter of credit or other instrument for or relative to
all or any part of the Secured Obligations or otherwise may affect or eliminate
the Obligor's right of subrogation or similar recovery against the Company, any
other guarantor, any issuer of any letter of credit or any other Person or
against any collateral and that the Obligor may therefore incur partially or
totally nonreimbursable liability under this Agreement. Nevertheless, the
Obligor hereby authorizes and empowers the Secured Party to exercise, in its or
their sole discretion, any combination of those rights, remedies, powers and
privileges.
Section 3.05 Reinstatement. The obligations of the Obligor under this
-------------
Agreement shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Company, any other guarantor, any
issuer of any letter of credit or any other Person or any other application of
funds (including the proceeds of any collateral for all or any part of the
Secured Obligations) in respect of all or any part of the Secured Obligations is
rescinded or must be otherwise restored by any holder of those Secured
Obligations, whether as a result of any proceedings in bankruptcy,
reorganization or otherwise and the Obligor shall indemnify the Secured Party on
demand for all reasonable costs and expenses (including fees and expenses of
counsel) incurred by the Secured Party in connection with that rescission or
restoration.
Section 3.06 Remedies. The Obligor hereby agrees that, between it and
--------
the Secured Party, the obligations of the Company under the Credit Agreement and
the other Basic Documents may be declared to be forthwith (or may become
automatically) due and payable as provided in Section 8.01 of the Credit
Agreement for purposes of Section 3.01 notwithstanding any stay, injunction or
other prohibition preventing that declaration (or those obligations becoming due
and payable as against the Company) and that, in the event of that declaration
(or that obligation being deemed due and payable), those obligations (whether or
not due and payable by the Company) shall forthwith become due and payable for
purposes of Section 3.01.
Section 3.07 Separate Action. The Secured Party may bring and prosecute
---------------
a separate action or actions against the Obligor whether or not the Company, any
other guarantor, any issuer of any letter of credit or any other Person is
joined in any such action or a separate action or actions are brought against
the Company, any other guarantor, any issuer of any letter of credit or any
other Person or any collateral for all or any part of the Secured Obligations.
The obligations of the Obligor under, and the effectiveness of, this Agreement
are not conditioned upon the existence or continuation of any other guarantee or
any letter of credit for or relative to all or any part of the Secured
Obligations.
11
Section 3.08 Subordination of Indebtedness of the Company; Security
------------------------------------------------------
Interest.
--------
(a) The Obligor agrees that any indebtedness now or in the future owed
to it by the Company is hereby subordinated to the Secured Obligations. Subject
to Section 3.08(c), if the Secured Party so requests, any such indebtedness
shall be collected, enforced and received by the Obligor as trustee for the
Secured Party and shall be paid over to the Secured Party in kind on account of
the Secured Obligations. If, after the Secured Party's request, the Obligor
fails to collect or enforce any such indebtedness or to pay the proceeds of that
indebtedness to the Secured Party, the Secured Party as the Obligor's attorney-
in-fact may do such acts and sign such documents in the Obligor's name and on
the Obligor's behalf as the Secured Party considers necessary or desirable to
effect that collection, enforcement or payment and the Secured Party is hereby
appointed the Obligor's attorney-in-fact for that purpose.
(b) The Obligor hereby grants to the Secured Party a security interest
in any indebtedness referred to in Section 3.08(a) and in any personal property
of the Company in which the Obligor now has or in the future acquires any right,
title or interest. The Obligor agrees that such security interest shall be
additional security for the Secured Obligations and shall be superior to any
right of the Obligor in that Property until the Secured Obligations have been
fully satisfied and performed.
(c) So long as no Default exists, the Company may make and the Obligor
may receive payments under the Management Agreement to the extent permitted
under the Credit Agreement.
Section 3.09 Revocation. To the fullest extent permitted by law, the
----------
Obligor hereby waives all rights it may have to revoke its obligations under
Section 3.01 with respect to all or any part of the Secured Obligations.
ARTICLE IV
REPRESENTATIONS
---------------
As of the Signing Date and as of the date of each extension of credit by
the Secured Party, the Obligor represents and warrants to the Secured Party as
follows:
Section 4.01 Organization; Powers. The Obligor and each of its
--------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where that qualification is
required.
Section 4.02 Authorization; Enforceability. The Transactions are within
-----------------------------
the Obligor's corporate powers and have been duly authorized by all necessary
corporate (including, if required, stockholder) action. This Agreement has been
duly executed and delivered by the Obligor and constitutes a legal, valid and
binding obligation of the Obligor, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
12
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
Section 4.03 Governmental Approvals; No Conflicts. The Transactions (a)
------------------------------------
do not require any Governmental Approvals, except as have been obtained or made
and are in full force and effect or, in the case of the Purchase Agreement, as
are provided for in the Purchase Agreement, (b) will not violate any applicable
Governmental Rule or the charter, by-laws or other organizational documents of
the Obligor or any of its Subsidiaries, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Obligor or any of its Subsidiaries or its or any such Subsidiary's Property or
give rise to a right under any such indenture, agreement or other instrument to
require any payment to be made by the Obligor or any of its Subsidiaries and (d)
will not result in the creation or imposition of any Lien on any Property of the
Obligor or any of its Subsidiaries.
Section 4.04 Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) The Obligor has furnished to the Secured Party its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended September 30, 1999, as reported on by
Deloitte & Touche, independent public accountants, and (ii) as of and for the
fiscal quarter and the portion of the fiscal year ended March 31, 2000,
certified by one of its Financial Officers. Those financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Obligor and its consolidated Subsidiaries as of
those dates and for those periods in accordance with GAAP consistently applied,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
(b) Since March 31, 2000, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Obligor and its Subsidiaries, taken as a whole.
Section 4.05 Properties.
----------
(a) The Obligor and each of its Subsidiaries has good title to, or valid
leasehold interests in, all its Property, except for minor defects in title that
do not interfere with its ability to conduct its business as currently conducted
or to utilize any such Properties for their intended purposes.
(b) The Obligor and each of its Subsidiaries owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
Property material to its business, and the use of any such Property by the
Obligor and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.06 Title. The Obligor is the sole beneficial owner of the
-----
Collateral, and the Collateral is free and clear of all Liens, except for Liens
permitted under Section 5.08. The Liens granted by this Agreement in favor of
the Secured Party for the benefit of the Secured Party have attached and
constitute a perfected security interest in all of the Collateral prior to all
other Liens (except those permitted Liens).
13
Section 4.07 Pledged Stock.
-------------
(a) The Pledged Stock evidenced by the certificates identified in Annex 1
is duly authorized, validly existing, fully paid and nonassessable, and none of
that Pledged Stock is subject to any contractual restriction, or any restriction
under the charter or by-laws of the Issuer, upon the transfer of that Pledged
Stock (except for any such restriction contained in any Basic Document).
(b) The Pledged Stock evidenced by the certificates identified in Annex 1
constitutes all of the issued and outstanding shares of capital stock of any
class of the Issuer beneficially owned by the Obligor on the Signing Date
(whether or not registered in the name of the Obligor), and Annex 1 correctly
identifies, as at the Signing Date, the respective class and par value of the
shares comprising that Pledged Stock and the respective number (and registered
owners) of the shares evidenced by each such certificate.
Section 4.08 Litigation and Environmental Matters.
------------------------------------
(a) Except for the Disclosed Matters, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Obligor, threatened against or affecting the
Obligor or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any of the Basic Documents or the
Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Obligor nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any Governmental Approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the Signing Date, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.
Section 4.09 Compliance with Laws and Agreements. The Obligor and each
-----------------------------------
of its Subsidiaries is in compliance with all Governmental Rules applicable to
it or its Property and all indentures, agreements and other instruments binding
upon it or its Property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
Section 4.10 Investment and Holding Company Status. Neither the Obligor
-------------------------------------
nor any of its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940, (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935 or (c) subject to any other Governmental Rule
restricting its ability to incur Indebtedness, to grant Liens or to issue
guarantees.
14
Section 4.11 Taxes. The Obligor and each of its Subsidiaries has
-----
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Obligor or that Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.12 ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting those amounts, exceed the
fair market value of the assets of that Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
those amounts, exceed the fair market value of the assets of all such
underfunded Plans.
Section 4.13 Disclosure. The Obligor has disclosed to the Secured
----------
Party all indentures agreements and other instruments and all corporate and
other restrictions to which it or any of its Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of the Obligor to the Secured Party in connection with the negotiation
of this Agreement or delivered under any Basic Document (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements so made, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Obligor represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
ARTICLE V
COVENANTS
---------
Section 5.01 Financial Statements and Other Information. The Obligor
------------------------------------------
shall furnish to the Secured Party:
(a) within 90 days after the end of each fiscal year of the Obligor,
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for that year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by Deloitte & Touche or other independent public accountants of
recognized national standing (without any qualification or exception as to the
scope of that audit) to the effect that such consolidated financial statements
present fairly in all
15
material respects the financial condition and results of operations of the
Obligor and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Obligor, its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for that fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Obligor and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) within 20 days after the end of each month of each fiscal year of
the Obligor, its consolidated balance sheet and related statements of
operations, as of the end of and for that month and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as
of the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Obligor and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Obligor (i)
certifying as to whether or not a Default has occurred and, if a Default has
occurred, specifying the details of, and any action taken or proposed to be
taken with respect to, that Default and (ii) stating whether or not any change
in GAAP or in the application of GAAP has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of that change on the financial statements
accompanying that certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on those
financial statements stating whether or not they obtained knowledge during the
course of their examination of those financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Obligor or any Subsidiary with the Securities and Exchange Commission or with
any national securities exchange or distributed by the Obligor to its
shareholders generally;
(g) promptly upon their being filed, copies of all filings with or
reports to any Governmental Authority having jurisdiction over the gaming
activities and assets of the Obligor and its Subsidiaries made by the Obligor or
any of its Subsidiaries; and
16
(h) promptly following any such request, such other information
regarding the operations, business affairs and financial condition of the
Obligor or any of its Subsidiaries, or compliance with the terms of this
Agreement, as any Lender Party may reasonably request.
Section 5.02 Notices of Material Events. The Obligor shall furnish
--------------------------
to the Secured Party prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Obligor or any of its Affiliates that, if adversely determined, could reasonably
be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Obligor and its Subsidiaries in an aggregate amount
exceeding $100,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 4.02 must be accompanied by a statement
of a Financial Officer or other executive officer of the Obligor setting forth
the details of the event or development requiring that notice and any action
taken or proposed to be taken with respect to that event or development.
Section 5.03 Existence; Conduct of Business. The Obligor shall, and
------------------------------
shall cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the Governmental Approvals material to the conduct of its
business.
Section 5.04 Payment of Obligations. The Obligor shall, and shall
----------------------
cause each of its Subsidiaries to, pay its obligations, including for Taxes,
that, if not paid, could result in a Material Adverse Effect before any such
obligation shall become delinquent or in default, except any such obligation (a)
the validity or amount of which obligation is being contested in good faith by
appropriate proceedings, (b) with respect to which the Obligor or that
Subsidiary has set aside on its books adequate reserves in accordance with GAAP
and (c) the failure to pay which pending that contest could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.05 Maintenance of Properties; Insurance. The Obligor
------------------------------------
shall, and shall cause each of its Subsidiaries to, (a) keep and maintain all
Property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
Section 5.06 Books and Records; Inspection Rights. The Obligor
------------------------------------
shall, and shall cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and
17
activities. The Obligor shall, and shall cause each of its Subsidiaries to,
permit any representatives designated by the Secured Party, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested.
Section 5.07 Compliance with Laws. The Obligor shall, and shall
--------------------
cause each of its Subsidiaries to, comply with all Governmental Rules applicable
to it or its Property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.08 Liens; Indebtedness.
-------------------
(a) The Obligor shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
Property, except:
(i) Permitted Encumbrances;
(ii) Liens on the capital stock of the Company, Pioneer Finance,
Santa Fe and Sahara granted or to be granted by Obligor in favor of SunAmerica
Life Insurance Company ("SunAmerica") in connection with consummation of the
----------
Reorganization Plan as provided in a certain Third Amendment to Second Amended
and Restated Note Purchase Agreement dated as of December 16, 1999 between the
Obligor, SunAmerica and certain other parties (the "SunAmerica Obligations"),
----------------------
but not any extension, renewal or replacement of any such Lien (other than in
connection with any extension or waiver of the maturity date of the Indebtedness
secured by such Liens, but in each case only if there are no other changes to
the terms of that Indebtedness);
(iii) Liens (in the case of the Company) permitted by Section
7.11 of the Credit Agreement and Liens (in the case of Santa Fe) disclosed in
connection with or permitted by the Purchase Agreement;
(iv) Liens on the Property of Sahara securing the SunAmerica
Obligations, but not any extension, renewal or replacement of any such Lien;
(v) Liens on Property in which Hacienda Hotel, Inc. has an
interest pursuant to a contract of sale securing Indebtedness not exceeding
$400,000;
(vi) Liens on fixed or capital assets acquired, constructed or
improved by the Obligor or any of its Subsidiaries; provided that (i) such Liens
--------
secure Indebtedness permitted by Section 5.08(b)(vi), (ii) such Liens and the
Indebtedness they secure are incurred prior to or concurrently with such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured by those Liens does not exceed eighty percent (80%) of the
cost of acquiring, constructing or improving those fixed or capital assets and
(iv) such Lien shall not apply to any other Property of the Obligor; and
(vii) the Liens of the Basic Documents.
18
(b) The Obligor shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
except:
(i) Indebtedness consisting of the SunAmerica Obligations, but
not the extension, renewal, replacement or refinancing of that Indebtedness
(other than extensions or waivers of the maturity date of that Indebtedness, but
in each case only if there are no other changes to the terms of that
Indebtedness), so long as the principal amount of that Indebtedness does not
exceed $50,000,000 (less any principal payments on that Indebtedness made on or
after the Signing Date);
(ii) Indebtedness (in the case of the Company) permitted by
Section 7.10 of the Credit Agreement and Indebtedness (in the case of Santa Fe)
disclosed in connection with or permitted by the Purchase Agreement;
(iii) Indebtedness of Obligor to Sierra Construction Corp.
evidenced by a certain Amended and Restated Promissory Note dated as of October
1, 1998 and any extension, renewal, replacement or refinancing of that
Indebtedness so long as the principal amount of that Indebtedness does not
exceed 5,000,000 at any one time outstanding;
(iv) guarantees by the Obligor of the Indebtedness of Santa Fe
and Sahara permitted by Section 5.08(b)(i);
(v) the Indebtedness referred to in Section 5.08(a)(v), but
not any extension, renewal, replacement or refinancing of that Indebtedness;
(vi) Indebtedness of the Obligor and its Subsidiaries incurred
to finance the acquisition, construction or improvement of any fixed or capital
assets (including Lease Obligations constituting a capital lease under GAAP and
any Indebtedness assumed in connection with the acquisition of any such assets
or secured by a Lien on any such assets prior to that acquisition) and
extensions, renewals and replacements of any such Indebtedness that do not
increase its outstanding principal amount; provided that (x) such Indebtedness
is incurred prior to or concurrently with that acquisition or the completion of
that construction or improvement and (y) the aggregate principal amount of any
Indebtedness of the type permitted under this clause (iv) and (in the case of
the Company) Section 7.10(b) of the Credit Agreement, as to the Company, the
Obligor and its Subsidiaries shall not exceed $500,000 at any time outstanding;
(vii) Indebtedness of the Obligor in the amount of $3,000,000 to
▇▇▇▇ ▇▇▇▇▇▇ or any of his Affiliates (other than the Obligor or its
Subsidiaries); provided that the proceeds of such Indebtedness shall be used
--------
solely for either or both of the following purposes: (x) to be contributed,
directly or indirectly, or lent to Sahara to pay the Indebtedness of Sahara to
SunAmerica or (y) to be contributed, directly or indirectly, or lent to the
Company or to Pioneer Finance to be used in connection with the funding of the
Reorganization Plan; and
(viii) the Indebtedness of the Basic Documents.
Section 5.09 Fundamental Changes. The Obligor shall not, and shall
-------------------
not permit any of its Subsidiaries to, merge or consolidate with any other
Person, sell, transfer, lease or
19
otherwise dispose of (in one transaction or in a series of transactions) all or
substantially all of its Property. The Obligor shall not, and shall not permit
any of its Subsidiaries engage to any material extent in any business other than
businesses of the type conducted by the Company on the Signing Date and
reasonably related activities.
Section 5.10 Removals, Etc. Without at least 30 days' prior written
-------------
notice to the Secured Party, the Obligor shall not (a) maintain any of its books
and records with respect to the Collateral at any office or maintain its
principal place of business at any place, other than at the address initially
indicated for notices to it under Section 7.02 or (b) change its corporate name,
or the name under which it does business, from the name shown on the signature
pages to this Agreement.
Section 5.11 Sales. The Obligor shall not sell, transfer, assign or
-----
otherwise dispose of all or any part of the Collateral.
Section 5.12 Stock Collateral. The Obligor shall cause the Stock
----------------
Collateral to constitute at all times 100% of the total number of shares of each
class of capital stock of the Issuer then outstanding. The Obligor shall cause
all such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any restriction
under the charter or bylaws of the Issuer, upon the transfer of that Stock
Collateral (except for any such restriction contained in any Basic Document).
Section 5.13 Certain Future Actions. The Obligor shall:
----------------------
(a) as promptly as possible upon the repayment of the Indebtedness
permitted by Section 5.08(b)(i), cause to be granted to the Secured Party in a
manner satisfactory to the Secured Party and pursuant to documents in form and
substance satisfactory to the Secured Party, a Lien on (i) all of the assets
(including any real Property) of Sahara and (ii) all of the outstanding capital
stock of the Company, Pioneer Finance, Sahara and Santa Fe and take, or cause to
be taken, such other actions as is necessary or as the Secured Party may request
to perfect and establish the priority (subject only to Liens permitted under
Section 5.08) of the Liens required to be granted by this Section 5.13(a); and
(b) upon the receipt by the Obligor or any of its Subsidiaries of the
proceeds of any Santa ▇▇ ▇▇▇▇▇ (including upon their maturity) or of real
property owned by Sahara on the Signing Date, and to the extent not required to
be paid to or pledged in favor of SunAmerica, cause such proceeds to be
deposited into the Collateral Account.
Section 5.14 Management Agreement. The Obligor hereby consents to
--------------------
the inclusion as collateral security under the Security Agreement of the
Company's right, title and interest in the Management Agreement and further
consents to the limitation on payments permitted to be made by the Company under
Section 7.15 of the Credit Agreement. The Obligor agrees that it shall not
terminate or permit the termination of the Management Agreement without the
prior written consent of the Secured Party. The Obligor further agrees that it
shall, if so requested by the Secured Party following an Event of Default, grant
to the Secured Party, its designee or any transferees of either or of a prior
transferee, a non-exclusive license to the same effect as is provided in Section
2 of the Management Agreement, without fee or other
20
compensation and whether or not the Management Agreement remains in effect;
provided that any such license may be used by the Secured Party, its designee or
any such transferees only in connection with the operation of the Premises (as
defined in the Deed of Trust).
Section 5.15 Further Assurances. The Obligor shall, from time to
------------------
time upon the written request of the Secured Party, execute and deliver such
further documents and do such other acts and things as the Secured Party may
reasonably request in order fully to effect the purposes of this Agreement.
ARTICLE VI
REMEDIES
--------
Section 6.01 Events of Default, Etc. If any Event of Default has
----------------------
occurred and is continuing:
(a) The Secured Party in its discretion may, in its name or in the
name of the Obligor or otherwise, demand, ▇▇▇ for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
all or any part of the Collateral, but shall be under no obligation to do so;
(b) the Secured Party in its discretion may, upon 5 business days'
prior written notice to the Obligor of the time and place, sell, lease or
otherwise dispose of all or any part of the Collateral that then is or
subsequently comes into the possession, custody or control of the Secured Party
or any of their respective agents, at such place or places as the Secured Party
deems best, for cash, for credit or for future delivery (without thereby
assuming any credit risk) and at public or private sale, without demand of
performance or notice of intention to effect any such disposition or of the time
or place of any such sale (except such notice as is required above or by
applicable statute and cannot be waived), and any other Person may be the
purchaser, lessee or recipient of all or any part of the Collateral so disposed
of at any public sale (or, to the extent permitted by law, at any private sale)
and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Obligor, and the Obligor hereby waives and releases any such
demand, notice and right or equity. The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and that sale may be made at any time or place to which the sale may be so
adjourned; and
(c) the Secured Party shall have, and in its discretion may exercise,
all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where any such
rights, remedies, powers and privileges are asserted) and such additional
rights, remedies, powers and privileges to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights, remedies, powers
and privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to
21
the Collateral as if the Secured Party were the sole and absolute owner of the
Collateral (and the Obligor shall take all such action as may be appropriate to
give effect to that right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 6.01 shall be applied in accordance with
Section 6.04.
Section 6.02 Deficiency. If the proceeds of, or other realization
----------
upon, the Collateral by virtue of the exercise of remedies under Section 6.01
are insufficient to cover the costs and expenses of that exercise and the
payment in full of the other Secured Obligations, the Obligor shall remain
liable for any deficiency.
Section 6.03 Private Sale.
------------
(a) The Secured Party shall not incur any liability as a result of
the sale, lease or other disposition of all or any part of the Collateral at any
private sale pursuant to Section 6.01 conducted in a commercially reasonable
manner. The Obligor hereby waives any claims against the Secured Party that may
arise by reason of the fact that the price at which the Collateral may have been
sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Secured Party accepts the first offer received and does
not offer the Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933 and applicable state securities laws,
the Secured Party may be compelled to limit purchasers of all or any part of the
Collateral to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to
distribution or resale. The Obligor acknowledges that any such private sales
may be at prices and on terms less favorable to the Secured Party than those
obtainable through a public sale without those restrictions, and,
notwithstanding those circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the Issuer to register it for public sale.
Section 6.04 Application of Proceeds. Except as otherwise expressly
-----------------------
provided in this Agreement, the proceeds of, or other realization upon, all or
any part of the Collateral by virtue of the exercise of remedies under Section
6.01 and any other cash at the time held by the Secured Party under Section 3.01
or Section 6.01 shall be applied by the Secured Party:
First, to the payment of the costs and expenses of that exercise of
-----
remedies, including reasonable out-of-pocket costs and expenses of the Secured
Party, the fees and expenses of its agents and counsel and all other expenses
incurred and advances made by the Secured Party in that connection;
Next, to the payment in full of the remaining Secured Obligations then
----
due and owing or as the Secured Party may otherwise agree; and
22
Finally, subject to the rights of the other holder of any Lien in the
-------
relevant Collateral, to the payment to the Obligor or as a court of competent
jurisdiction may direct, of any surplus then remaining.
As used in this Article VI, "proceeds" of Collateral shall mean cash,
--------
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01 Notices. All notices, requests and other communications
-------
provided for in this Agreement shall be given or made in writing and delivered
by hand or courier service, mailed by certified or registered mail or sent by
telecopy to the intended recipient as specified below or, as to any party, at
such other address as is designated by that party in a notice to each other
party. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given or made upon receipt.
To the Obligor: Santa Fe Gaming Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To the Secured Party: Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (702) 221 -6620
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Section 7.02 Expenses, Etc. The Obligor shall pay all out-of-pocket
-------------
expenses (including reasonable counsels' fees and expenses) of the Secured Party
in connection with any enforcement or collection proceeding (including any
bankruptcy, reorganization, restructuring, "work out" or other similar
proceeding) as to any of the obligations of the Obligor under this Agreement,
the negotiation of any restructuring or "work out" ( whether or not consummated)
or the enforcement of this Section 7.02. All amounts due under this Agreement
not paid when due shall bear interest until paid at a rate per annum equal to
the Post-Default Rate.
Section 7.03 Waiver. No failure or delay by the Secured Party in
------
exercising any remedy, right, power or privilege under this Agreement or any
other Basic Document shall operate as a waiver of that remedy, right, power or
privilege, nor shall any single or partial exercise of that remedy, right, power
or privilege preclude any other or further exercise of that remedy, right, power
or privilege or the exercise of any other remedy, right, power or privilege.
23
The remedies, rights, powers and privileges provided by this Agreement are
cumulative and not exclusive of any remedies, rights, powers or privileges
provided by the other Basic Documents or by law.
Section 7.04 Amendments, Etc. No provision of this Agreement may be
---------------
waived, modified or supplemented except by an instrument in writing signed by
the Obligor and the Secured Party. Any modification, supplement or waiver shall
be for such period and subject to such conditions as shall be specified in the
written instrument effecting the same and shall be binding upon the Secured
Party and the Obligor, and any such waiver shall be effective only in the
specific instance and for the purpose for which given.
Section 7.05 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of its parties and their respective successors and
assigns. The Obligor may not assign or transfer its rights or obligations under
this Agreement without the prior written consent of the Secured Party.
Section 7.06 Survival. Each representation and warranty made, or
--------
deemed to be made by a notice of any extension of credit, in or pursuant to this
Agreement shall survive the making or deemed making of that representation and
warranty, and the Secured Party shall be deemed to have waived, by reason of
making any extension of credit, any Default that may arise by reason of that
representation or warranty proving to have been false or misleading,
notwithstanding that such may have had notice or knowledge or reason to believe
that such representation or warranty was false or misleading at the time that
extension of credit was made.
Section 7.07 Agreements Superseded. This Agreement supersedes all
---------------------
prior agreements and understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
Section 7.08 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of that prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable that provision in any other jurisdiction.
Section 7.09 Captions. The table of contents, captions and section
--------
headings appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
Section 7.10 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of that taken together shall constitute one and the
same instrument, and any of the parties to the Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to this Agreement by hand or by telecopy shall be effective
as the delivery of a fully executed counterpart of this Agreement.
Section 7.11 Governing Law; Submission to Jurisdiction. THIS
-----------------------------------------
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEVADA.
24
Section 7.12 Waiver of Jury Trial. THE OBLIGOR AND THE SECURED PARTY
--------------------
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
SANTA FE GAMING CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: President
STATION CASINOS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: EVP/CFO/CAO
26
ANNEX 1
PLEDGED STOCK
-------------
-----------------------------------------------------------------------------------------
Certificate
Issuer Nos. Registered Owner Number of Shares
-----------------------------------------------------------------------------------------
Sahara Resorts [_________] Santa Fe Gaming _______ shares of common
Corporation stock, [no] par value
[$________]
-----------------------------------------------------------------------------------------
27
