EXHIBIT 99.08
Page 47 of 80 Pages
[FEDERAL DEPOSIT INSURANCE CORPORATION LETTERHEAD]
March 18, 1997
Baby Grand Corp.
000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
RE: PLEDGED SHARES OF DUNES HOTELS AND CASINOS INC.
Ladies and Gentlemen:
Baby Grand Corp., a Nevada corporation ("Baby Grand"), has
previously entered into that certain Baby Grand Pledge Agreement,
dated as of November 30, 1989 (the "Baby Grand Pledge
Agreement"), with the Federal Deposit Insurance Corporation, a
corporation organized under the laws of the United States, acting
in its corporate capacity, and as successor and assignee of
Eurekabank, formerly known as Eureka Federal Savings and Loan
Association (the "FDIC"). Concurrently with the execution of the
Baby Grand Pledge Agreement, Xxxx X. Xxxxxxxx and Xxxxx Xxxxxxxx
(collectively, "Xxxxxxxx") entered into that certain Debtor-
Creditor Agreement (the "Debtor-Creditor Agreement") with the
FDIC. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Baby Grand
Pledge Agreement.
THE BABY GRAND PLEDGE AGREEMENT
Pursuant to Sections 2 and 3 of the Baby Grand Pledge
Agreement, Baby Grand pledged certain collateral (the "Pledged
Collateral") as security for the fulfillment of all obligations
of Xxxxxxxx and the other Xxxxxxxx Parties under the Settlement
Documents, whether for payment of principal, interest, fees,
expenses or otherwise, and all obligations of Baby Grand existing
under the Baby Grand Pledge Agreement (collectively, the
"Obligations").
The Pledged Collateral included all of Baby Grand's right
and interest, whether then existing or acquired after the
execution of the Baby Grand Pledge Agreement, in and to the
following:
1. All shares of common stock (the "Dune Shares") of Dunes
Hotels and Casinos Inc. ("Dunes") then owned by Baby Grand (the
"Pledged Dunes Shares");
2. The certificates representing the Pledged Dunes Shares;
3. All dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed
in respect of or in exchange for any all or all of the Pledged
Dunes Shares; and
4. All additional shares of stock of Dunes from time to
time acquired by Baby Grand in any manner, and the certificates
representing such additional shares, and all dividends, cash,
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instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any all or all of such Dunes Shares.
The Pledged Dunes Shares included 1,280,756 shares of the
common stock of Dunes.
Section 7(b) of the Baby Grand Pledge Agreement provides,
among other things, that upon the occurrence and during the
continuance of an Event of Default or an event which, with the
giving of notice of the lapse of time, or both, would become an
Event of Default, all rights of Baby Grand to exercise the voting
and other consensual rights pertaining to the Pledged Collateral,
including the Pledged Dunes Shares, which it would otherwise be
entitled to exercise pursuant to Section 7(a) of the Baby Grand
Pledge Agreement, and to receive the dividends, distributions and
interest payments which it would otherwise be authorized to
receive (all of which amounts were to be immediately paid to the
FDIC on behalf of Xxxxxxxx) pursuant to Section 7(a) of the Baby
Grand Pledge Agreement shall cease, and all such rights shall
thereupon become vested in the FDIC, which shall thereupon have
the sole right to exercise such voting and other consensual
rights and to receive such dividends, distributions and interest
payments and apply the same to the General Debt as required by
the Debtor-Creditor Agreement. In addition, Section 12 of the
Baby Grand Pledge Agreement provides for additional remedies upon
the occurrence and continuation of an Event of Default. These
additional remedies, include, without limitation, the right of
the FDIC to sell the Pledged Dunes Shares upon and during the
occurrence of an Event of Default.
THE DEBTOR-CREDITOR AGREEMENT
Section 8.01 (a) of the Debtor-Creditor Agreement provides
that the failure to make the payment of principal or interest on
the General Debt, when and as the same shall become due and
payable, whether at maturity thereof, on a date fixed for
prepayment, or by acceleration or otherwise, shall, at the sole
discretion of the FDIC, be deemed an Event of Default.
Xxxxxxxx has failed, and continues to fail, to make payments
of principal and interest on the General Debt when the same
became due and payable. On January 25, 1993 and again on
February 12, 1993, Eurekabank (predecessor-in-interest to the
FDIC) sent, and Xxxxxxxx and the Xxxxxxxx Parties received,
Notices of Default pursuant to Sections 8.01, 8.02(a) and 9.10 of
the Debtor-Creditor Agreement, declaring Xxxxxxxx in default of
its obligations under, among other things, the Debtor-Creditor
Agreement. On May 11, 1995, the FDIC sent, and Xxxxxxxx and the
Xxxxxxxx Parties received, Notices of Default pursuant to
Sections 8.01 8.02(a) and 9.10 of the Debtor-Creditor Agreement,
declaring Xxxxxxxx in default of its obligations under, among
other things, the Debtor-Creditor Agreement. On August 28, 1996,
judgment was entered in the matter of in FDIC X. XXXX X.
XXXXXXXX, ET AL., Case No. CV-S-95-00679-PMP (LRL), by the United
States District Court for the District of Nevada, wherein said
Court specifically found that Xxxxxxxx had failed, and continues
to fail, to make payments of principal and interest on the
General Debt when the same became due and payable and said Court,
among other things, granted the FDIC judgment for specific
performance of the Debtor-Creditor Agreement.
An Event of Default under the Debtor-Creditor Agreement
having occurred and continuing, notice is hereby given to Baby
Grand and Dunes that all rights of Baby Grand to
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exercise the voting and other consensual rights pertaining to the
Pledge Collateral, including the Pledged Dunes Shares, shall
hereby cease, and all such rights are hereby vested in the FDIC,
who shall hereby have the sole right to exercise such voting and
other consensual rights and to receive such dividends,
distributions and interest payments with respect to the Pledged
Collateral, including the Pledged Dunes Shares. The FDIC further
reserves the right to demand of Dunes, or petition a court of
competent jurisdiction to require, that a special meeting of the
stockholders of Dunes be called to consider such matters as may
be lawfully considered and acted upon at such meeting.
The exercise by the FDIC of its rights under the Baby Grand
Pledge Agreement shall not be deemed to be a waiver or in
derogation of any right or remedy available to the FDIC, either
pursuant to the Baby Grand Pledge Agreement, the Debtor-Creditor
agreement, the Consent Judgment or otherwise, nor shall the
exercise by the FDIC of any of its rights under the Baby Grand
Pledge Agreement be deemed to be a waiver of any other rights or
of any Event of Default and any failure by the FDIC to exercise
any rights under the Baby Grand Pledge Agreement, the Debtor-
Creditor Agreement, the Consent Judgment or otherwise shall not
be deemed to be a waiver of or an acquiescence to any Event of
Default.
The application by the FDIC to the Nevada Gaming Commission
for the approval of the exercise by the FDIC of its rights under
the Baby Grand Pledge Agreement, the Debtor-Creditor Agreement,
the Consent Judgment or otherwise shall not be deemed to be a
waiver or in derogation of any right or remedy available to the
FDIC, either pursuant to the Baby Grand Pledge Agreement, the
Debtor-Creditor Agreement, the Consent Judgment or otherwise, nor
shall the application by the FDIC to the Nevada Gaming Commission
for such approval be deemed to be a waiver of any other rights or
of any Event of Default and any failure by the FDIC to exercise
any rights under the Baby Grand Pledge Agreement, the Debtor-
Creditor Agreement, the Consent Judgment or otherwise shall not
be deemed to be a waiver of or an acquiescence to any Event of
Default.
Very truly yours,
Federal Deposit Insurance
Corporation
By: /s/ X. Xxxxxxx Xxxxx
Name: X. Xxxxxxx Xxxxx
Title: Credit Specialist
cc: Xxxx X. Xxxxxxxx Dunes Hotels and Casinos Inc.
Xxxxx Xxxxxxxx 0000 Xxxxx Xxxxxxx Xxxxxx, #000
c/o Anderson Farms Las Vegas, Nevada 00000
Xxxx Xxxx. xxx Xxxx 00X
Xxxxx, Xxxxxxxxxx 00000
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Dunes Hotels and Casinos Inc. Xxxxx Xxxx
c/o CT Corporation c/o Anderson Farms
0000 Xxxxxxxx Xxxx Xxxx. xxx Xxxx 00X
Xxx Xxxx, XX 00000 Xxxxx, Xxxxxxxxxx 00000
Dunes Hotels and Casinos Inc. Xxxxx Xxxx
c/o Corporation Trust Co. of Nevada c/o M&R Investment Co.
Xxx Xxxx Xxxxx Xxxxxx 0000 Xxxxx Xxxxxxx Xxx., #000
Xxxx, XX 00000 Xxx Xxxxx, XX 00000
Xxxxx X. Xxxxxxx Xxxxxx Xxxx
000 Xxx Xxxxx Xxxx. So., #206 c/o Maxim Hotel & Casino
Las Vegas, Nevada 89101 000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Xxxxxx & Xxxxxxxx Xxxxxxxx X. Xxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, 7th Floor Xxxxxx Xxxxxxx & Xxxx LLP
Las Vegas, Nevada 89109 000 Xxxxx Xxxxx Xxx., 00xx Floor
Attn: Xxxxxxx X. Xxxxxx, Esq. Los Angeles, California 90071
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