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PARTICIPATION AGREEMENT
dated as of May 28, 1999
among
STRATOSPHERE GAMING CORP.,
as Lessee,
STRATOSPHERE CORPORATION,
as Guarantor,
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Lessor and Trustee,
THE PERSONS LISTED ON SCHEDULE II,
as Lenders
and
▇▇▇▇▇▇ FINANCIAL LEASING, INC.,
as Agent
Financing for Equipment Associated with
Stratosphere Casino and Hotel in Las Vegas, Nevada
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ARTICLE I DEFINITIONS 1
ARTICLE II EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS 1
SECTION 2.1. Effectiveness of Agreement 1
SECTION 2.2. Advances 2
SECTION 2.3. Notes 3
SECTION 2.4. Procedures for Advance; Use of Proceeds 3
SECTION 2.5. Postponement of Advance 3
SECTION 2.6. Obligations Several 4
SECTION 2.7. Timing of Advance to Trustee and Payments to Lenders 4
SECTION 2.8. Lenders' Instructions to Agent 4
SECTION 2.9. Computations 4
SECTION 2.10. Fees 5
SECTION 2.11. Legal and Tax Representation 5
SECTION 2.12. Amortization Schedule 5
SECTION 2.13. Replacement of Equipment 5
SECTION 2.14. The Account 5
SECTION 3.1. Advance Date 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES 8
SECTION 4.1. Representations and Warranties of Lessee and Guarantor 8
SECTION 4.2. Representations and Warranties of Each Lender 12
SECTION 4.3. Representations and warranties of Trust Company 13
SECTION 4.4. Representations and Warranties of Agent 14
ARTICLE V COVENANTS OF LESSEE AND PARENT 15
SECTION 5.1. Further Assurances 15
SECTION 5.2. Consolidation, Merger, Sale, etc. 15
SECTION 5.3. Corporate Existence 17
SECTION 5.4. Ownership of Lessee 18
SECTION 5.5. Liens 18
SECTION 5.6. Financial Covenant Compliance Certificates 18
SECTION 5.7. Investigation by Governmental Authorities 18
SECTION 5.8. Books and Records 18
SECTION 5.9. Payment of Taxes, etc. 18
SECTION 5.10. Inspection 18
SECTION 5.11. Maintenance of Property, etc. 19
SECTION 5.12. Maintenance of Insurance 19
SECTION 5.13. Change of Name or Principal Place of Business 19
SECTION 5.14. Financial and Other Information 19
SECTION 5.15. Securities 21
ARTICLE VI COVENANTS OF TRUSTEE AND LENDERS 21
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SECTION 6.1. Covenants of Trustee and Lenders 21
SECTION 6.2. Restrictions On and Effect of Transfer 23
SECTION 6.3. Participations 25
SECTION 6.4. Required Transfers 25
ARTICLE VII GENERAL INDEMNITY 25
SECTION 7.1. General Indemnification 25
ARTICLE VIII GENERAL TAX INDEMNITY 28
SECTION 8.1. General Tax Indemnity 28
SECTION 8.2. Exclusions from General Tax Indemnity 29
SECTION 8.3. Contests 29
SECTION 8.4. Payments 30
SECTION 8.5. Reports 31
SECTION 8.6. Withholding Tax Exemption 31
ARTICLE IX MISCELLANEOUS 31
SECTION 9.1. Survival of Agreements 31
SECTION 9.2. No Broker. etc. 31
SECTION 9.3. Notices 31
SECTION 9.4. Counterparts 32
SECTION 9.5. Amendments 32
SECTION 9.6. Headings, etc. 32
SECTION 9.7. Governing Law 32
SECTION 9.8. Transaction Costs 33
SECTION 9.9. Severability 33
SECTION 9.10. Successors and Assigns 33
SECTION 9.11. Final Agreement 33
SECTION 9.12. No Third Party Beneficiaries 33
SECTION 9.13. Release of Lien 33
SECTION 9.14. Reproduction of Documents 33
SECTION 9.15. Submission to Jurisdiction 34
SECTION 9.16. Jury Trial 34
SECTION 9.17. Payments Set Aside 34
SECTION 9.18. Trust Agreement 35
ARTICLE I DEFINITIONS; LESSEE LIABILITY 1
ARTICLE II LEASE OF EQUIPMENT; LEASE TERM 1
SECTION 2.1. Acceptance and Lease of Equipment 1
SECTION 2.2. Acceptance Procedure 1
SECTION 2.3. Lease Term 1
ARTICLE III RENT; QUIET ENJOYMENT; NET LEASE; SUBLEASING 1
SECTION 3.1. Periodic Rent 1
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SECTION 3.2. Supplemental Rent 1
SECTION 3.3. Place and Manner of Payment 2
SECTION 3.4. Late Payment 2
SECTION 3.5. Quiet Enjoyment 2
SECTION 3.6. Net Lease; No Setoff, etc. 2
SECTION 3.7. No Bar 3
SECTION 3.8. Intent of the Parties 3
ARTICLE IV POSSESSION AND SUBLEASING 4
ARTICLE V LEASE TERMINATION 4
SECTION 5.1. Early Termination 4
SECTION 5.2. Termination and Transfer 5
ARTICLE VI DISCLAIMER AND ASSIGNMENT OF WARRANTIES 5
SECTION 6.1. Disclaimer of Warranties 5
SECTION 6.2. Assignment of Warranties 6
ARTICLE VII MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS 6
SECTION 7.1. Maintenance and Repair; Compliance with Law 6
SECTION 7.2. Alterations 6
SECTION 7.3. Replacement and Substitution 7
SECTION 7.4. Removal 7
SECTION 7.5. Maintenance and Repair Reports 7
ARTICLE VIII USE 7
SECTION 8.1. Use 7
ARTICLE IX CASUALTY; REPLACEMENT; INSURANCE 8
SECTION 9.1. Casualty. 8
SECTION 9.2. Non-Casualty Losses 9
SECTION 9.3. Required Coverage 9
SECTION 9.4. Delivery of Insurance Certificates 10
ARTICLE X LEASE EVENTS OF DEFAULT 11
SECTION 10.1. Lease Events of Default 11
SECTION 10.2. Remedies 12
SECTION 10.3. Waiver of Certain Rights 13
SECTION 10.4. Power of Attorney 13
SECTION 10.5. Remedies Cumulative: No Waiver; Consents 13
ARTICLE XI [NOT USED] 14
ARTICLE XII ASSIGNMENTS 14
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ARTICLE XIII GRANT OF SECURITY INTEREST 14
SECTION 13.1. Grant of Security Interest 14
SECTION 13.2. Retention of Title or Proceeds in the Case of Default 14
ARTICLE XIV MISCELLANEOUS 15
SECTION 14.1. Governing Law 15
SECTION 14.2. Notices 15
SECTION 14.3. Counterpart 15
SECTION 14.4. Severability 15
SECTION 14.5. Successors and Assigns 15
SECTION 14.6. Parties in Interest 15
SECTION 14.7. Limitation of Liability 15
SECTION 14.8. Captions; Table of Contents 16
SECTION 14.9. Schedules and Exhibits 16
ARTICLE I - DEFINITIONS 1
SECTION 1.1. DEFINED TERMS 1
ARTICLE II - AMOUNT AND TERMS OF COMMITMENTS; REPAYMENT AND PREPAYMENT OF LOANS 1
SECTION 2.1. Commitment; Term 1
SECTION 2.2. Notes 1
SECTION 2.3. Procedure for Borrowing 2
SECTION 2.4. Prepayments; Lease Termination Payments and Premium 2
SECTION 2.5. Interest Rates 2
SECTION 2.6. Determination of Interest Rate 3
SECTION 2.7. Pro Rata Treatment among Loans 3
SECTION 2.8. Payment from Trust Estate Only 3
SECTION 2.9. Taxes 3
SECTION 2.10. Illegality 4
SECTION 2.11. Increased Costs and Reduction of Return 4
SECTION 2.12. Funding Losses 5
SECTION 2.13. Inability to Determine Rates 5
SECTION 2.14. Survival 6
ARTICLE III - RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE 6
SECTION 3.1. Rent Distribution 6
SECTION 3.2. Distribution of Mandatory Prepayments 6
SECTION 3.3. Distribution of Payments After Loan Event of Default 6
SECTION 3.4. Other Payments 7
SECTION 3.5. Distribution of Excluded Amounts 8
SECTION 3.6. Guaranty Payments 8
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ARTICLE IV - ARTICLE IV CONDITIONS PRECEDENT
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ARTICLE V - AFFIRMATIVE COVENANTS OF BORROWER 8
SECTION 5.1. Performance by Borrower 8
SECTION 5.2. Waiver by Borrower 8
ARTICLE VI - LOAN EVENTS OF DEFAULT; REMEDIES 9
SECTION 6.1. Loan Events of Default 9
SECTION 6.2. Remedies 9
ARTICLE VII - AGENT 11
SECTION 7.1. Appointment and Authorization 11
SECTION 7.2. Delegation of Duties 11
SECTION 7.3. Liability of Agent 11
SECTION 7.4. Reliance by Agent 11
SECTION 7.5. Notice of Default 12
SECTION 7.6. Credit Decision 12
SECTION 7.7. Indemnification of Agent 12
SECTION 7.8. Agent in Individual Capacity 13
SECTION 7.9. Successor Agent 13
SECTION 7.10. Withholding Tax 13
SECTION 7.11. Concerning the Trust Estate 14
SECTION 7.12. Distribution and Receipt of Payments by Trust Company 15
ARTICLE VIII - MISCELLANEOUS 16
SECTION 8.1. Amendments and Waivers 16
SECTION 8.2. Notices 16
SECTION 8.3. Successors and Assigns; Transfers and Participations 16
SECTION 8.4. Counterparts 16
SECTION 8.5. Governing Law 16
SECTION 8.6. Survival and Termination of Agreement 16
SECTION 8.7. Entire Agreement 17
SECTION 8.8. Severability 17
ARTICLE I THE TRUST ESTATE 2
SECTION 1.1. Appointment, Authorization and Direction to Trustee 2
SECTION 1.2. Declaration and Purpose 2
ARTICLE II COLLECTIONS AND DISTRIBUTIONS 3
SECTION 2.1. Collections and Remittances by Trustee 3
SECTION 2.2. Distribution of Payments. 4
SECTION 2.3. Effect of Sales by Trustee 4
ARTICLE III CERTAIN PROVISIONS RESPECTING TRUSTEE 4
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SECTION 3.1. Acceptance of Trusts and Duties 4
SECTION 3.2. Limitation of Power 4
SECTION 3.3. Notice of Event of Default 5
SECTION 3.4. Action Upon Instructions 5
SECTION 3.5. Certain Duties and Responsibilities of Trustee 5
SECTION 3.6. Certain Rights of Trustee 6
SECTION 3.7. NO REPRESENTATIONS OR WARRANTIES AS TO THE EQUIPMENT OR DOCUMENTS 8
SECTION 3.8. Status of Moneys Received 8
SECTION 3.9. Permitted Activities 8
SECTION 3.10. Resignation or Removal of Trustee 8
SECTION 3.11. Estate and Rights of Successor Trustee 9
SECTION 3.12. Merger or Consolidation of Trustee 9
SECTION 3.13. Co-Trustees 9
ARTICLE IV TERMINATION OF AND AMENDMENTS TO TRUST 9
SECTION 4.1. Termination 9
SECTION 4.2. Distribution of Trust Estate Upon Termination 10
SECTION 4.3. Amendments 10
ARTICLE V MISCELLANEOUS 10
SECTION 5.1. Compensation and Indemnification 10
SECTION 5.2. Notices 11
SECTION 5.3. GOVERNING LAW 11
SECTION 5.4. Tax Reports: Information Reporting: Withholding Taxes 11
SECTION 5.5. Headings 12
SECTION 5.6. Successors and Assigns 12
SECTION 5.7. Severability 12
SECTION 5.8. Only Written Waivers 12
SECTION 5.9. Counterparts 12
SECTION 5.10. Rights in Trust Agreement 12
SECTION 5.11. Payment of Trustee Fees, Costs and Expenses 12
SECTION 5.12. Identification of Trust 12
ARTICLE I DEFINITIONS 1
SECTION 1.1. Certain Terms 1
SECTION 1.2. Participation Agreement Definitions 1
SECTION 1.3. UCC Definitions 1
ARTICLE II SECURITY INTEREST 2
SECTION 2.1. Grant of Security 2
SECTION 2.2. Security for Obligations 2
SECTION 2.3. Continuing Security Interest; Transfer of Notes 2
SECTION 2.4. Grantor Remains Liable 3
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ARTICLE III REPRESENTATIONS AND WARRANTIES 3
SECTION 3.1. Representations and Warranties 3
SECTION 3.1.1. Ownership, No Liens, etc. 3
SECTION 3.1.2. Validity, etc 3
SECTION 3.1.3. Authorization, Approval, etc 4
SECTION 3.1.4. Compliance with Laws 4
ARTICLE IV COVENANTS 4
SECTION 4.1. Certain Covenants 4
SECTION 4.1.1. As to Collateral 5
SECTION 4.1.2. Transfers and Other Liens 5
SECTION 4.1.3. Further Assurances, etc 5
ARTICLE V AGENT 6
SECTION 5.1. Agent Appointed Attorney-in-Fact 6
SECTION 5.2. Agent May Perform 6
SECTION 5.3. Agent Has No Duty 6
SECTION 5.4. Reasonable Care 6
ARTICLE VI REMEDIES 7
SECTION 6.1. Certain Remedies 7
ARTICLE VII MISCELLANEOUS PROVISIONS 9
SECTION 7.1. Operative Document 9
SECTION 7.2. Amendments; etc 9
SECTION 7.3. Addresses for Notices 9
SECTION 7.4. Section Captions 9
SECTION 7.5. Severability 9
SECTION 7.6. Counterparts 9
SECTION 7.7. Governing Law, Entire Agreement, etc 9
1. GUARANTY 1
2. GUARANTOR'S GUARANTEED OBLIGATIONS UNCONDITIONAL 2
3. WAIVER AND AGREEMENT 4
4. ASSIGNMENT 5
5. WAIVER OF SUBROGATION 5
6. RIGHTS OF THE BENEFICIARIES 5
7. TERM OF GUARANTY 5
8. AGREEMENT OF GUARANTOR 6
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9. REPRESENTATIONS AND WARRANTIES 6
10. FURTHER ASSURANCES 6
11. NOTICES. ETC 6
12. AMENDMENTS. ETC 6
13. SEVERABILITY 7
14. OPERATIVE DOCUMENT 7
15. GOVERNING LAW 7
16. SUCCESSORS AND ASSIGNS 7
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SCHEDULE I EQUIPMENT DESCRIPTION
SCHEDULE II LENDER COMMITMENTS
SCHEDULE III NOTICE INFORMATION, FUNDING OFFICES, AND WIRE INSTRUCTIONS
SCHEDULE IV RECORDINGS, FILINGS AND REGISTRATIONS
SCHEDULE V REQUIRED LICENSES AND APPROVALS
SCHEDULE VI AMORTIZATION SCHEDULE
SCHEDULE VII DISCLOSURE SCHEDULE
APPENDIX 1 DEFINITIONS AND INTERPRETATION
EXHIBIT A FORM OF LEASE AGREEMENT
EXHIBIT B FORM OF LOAN AGREEMENT
EXHIBIT C FORM OF TRUST AGREEMENT
EXHIBIT D FORM OF SECURITY AGREEMENT AND ASSIGNMENT OF LEASE
EXHIBIT E FORM OF GUARANTY
EXHIBIT F [NOT USED]
EXHIBIT G FORM OF LANDLORD WAIVER AND CONSENT
EXHIBIT H FORM OF ADVANCE REQUEST
EXHIBIT I FORM OF ▇▇▇▇ OF SALE
EXHIBIT J FORM OF CERTIFICATE OF ACCEPTANCE
EXHIBIT K FORM OF INVESTOR's Letter
EXHIBIT L [NOT USED]
EXHIBIT M FORM OF LESSEE's and Guarantor's Counsel's Opinion
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement"), dated as of May 28,
1999, is entered into by and among STRATOSPHERE GAMING CORP., a Nevada
corporation, as Lessee; STRATOSPHERE CORPORATION, a Delaware corporation, as
Guarantor; FIRST SECURITY TRUST COMPANY OF NEVADA, a Nevada trust company, not
in its individual capacity, except as expressly stated herein, but solely as
Lessor and Trustee; the persons listed on Schedule II hereto, as Lenders; and
▇▇▇▇▇▇ FINANCIAL LEASING, INC., a Delaware corporation, as Agent.
WITNESSETH
WHEREAS, pursuant to the terms of the Lease, Lessor will lease to
Lessee, and Lessee will lease from Lessor, the Equipment; and
WHEREAS, pursuant to the Trust Agreement, Trustee will apply the
Advance to the Trust to finance the acquisition of the Equipment subject to the
terms of the Lease; and
WHEREAS, Lenders are willing, on the terms and conditions hereinafter
set forth (including Article III), to provide financing to Lessor in an
aggregate principal amount not to exceed the Commitment Amount to fund payment
of Equipment Costs; and
WHEREAS, to secure such financing by Lenders, Agent, on behalf of
Lenders, will have the benefit of a Lien from Lessor on all of Lessor's right,
title and interest in and to the Equipment and other Collateral and an
assignment of Lessor's rights in the Operative Documents; and
WHEREAS, Lessee's obligations under the Operative Documents will be
guaranteed pursuant to the terms of the Guaranty;
NOW, THEREFORE, in consideration of the mutual terms and conditions
herein contained, the parties hereto agree as follows.
ARTICLE I
DEFINITIONS
Unless the context shall otherwise require, capitalized terms used but
not defined herein (including those used in the foregoing recitals) shall have
the meanings specified in Appendix 1 hereto for all purposes hereof; and the
rules of interpretation set forth in Appendix 1 hereto shall apply to this
Agreement.
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
SECTION 2.1. Effectiveness of Agreement. This Agreement shall become
effective upon the happening of each of the following conditions (the "Closing
Date").
(a) Authorization, Execution and Delivery of the Operative
Documents. Each of the Operative Documents shall have been duly authorized,
executed and delivered by each of the parties thereto, and shall be in full
force and effect. No Default or Event of Default shall exist under any of the
Operative Documents to which Lessee is a party (either before or after giving
effect to the transactions contemplated by the Operative Documents).
(b) Articles of Incorporation, Bylaws, Corporate Resolutions and
Certificates of Good Standing. Agent shall have received from each of Lessee and
Guarantor:
(i) CERTIFICATES OF EXISTENCE AND GOOD STANDING ISSUED BY THE
SECRETARY OF STATE OF THE STATE OF NEVADA WITH RESPECT TO LESSEE AND
THE SECRETARY OF STATE OF THE STATE OF DELAWARE WITH RESPECT TO
GUARANTOR, RESPECTIVELY, EACH DATED WITHIN 30 BUSINESS DAYS OF THE
CLOSING DATE;
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(II) COPIES OF THE RESPECTIVE ARTICLES OF INCORPORATION AND BYLAWS
CERTIFIED TO BE TRUE AND CORRECT BY A RESPONSIBLE OFFICER OF EACH OF
LESSEE AND GUARANTOR, RESPECTIVELY; AND
(III) CERTIFICATES OF A RESPONSIBLE OFFICER OF EACH OF LESSEE AND
GUARANTOR CERTIFYING AS TO (A) THE RESOLUTIONS OF THE BOARD OF
DIRECTORS DULY AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE BY
LESSEE AND GUARANTOR, RESPECTIVELY, OF EACH OPERATIVE DOCUMENT TO WHICH
THEY ARE OR WILL BE A PARTY, (B) THE INCUMBENCY AND SIGNATURE OF
PERSONS AUTHORIZED TO EXECUTE AND DELIVER SUCH DOCUMENTS AND AGREEMENTS
ON BEHALF OF LESSEE AND GUARANTOR, RESPECTIVELY AND (C) THE ACCURACY OF
ALL REPRESENTATIONS AND WARRANTIES AND ABSENCE OF DEFAULTS AND EVENTS
OF DEFAULT.
(c) No Material Adverse Effect. Since December 31, 1998, there
shall not have occurred any Material Adverse Effect.
(d) Opinion of Counsel. Agent, Trustee and each Lender shall have
received the following legal opinion, dated as of Closing Date and addressed to
Agent, Trustee and each Lender: from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel to Lessee and
Guarantor, as to the matters set forth in the form of Exhibit M.
(e) Financial Statements. Agent shall have received (with copies
for Trustee and each Lender) copies of the audited consolidated financial
statements of Parent and its consolidated Subsidiaries for the last fiscal year
ended December 31, 1998, together with a statement or certificate from the
controller, treasurer or chief financial officer of Parent to the effect that
(i) such financial statements are true, complete and correct, (ii) the financial
condition of Parent and its consolidated Subsidiaries has not materially
adversely changed since the date of such financial statements and (iii) no other
event affecting Parent and its consolidated Subsidiaries shall have occurred
since the date of such financial statements which could reasonably be expected
to have a Material Adverse Effect.
(f) [not used]
(g) [not used]
(h) Recordation. Agent shall have received evidence satisfactory
to Lenders that the Uniform Commercial Code financing statements with respect to
the Collateral shall have been or are being filed with the appropriate
Governmental Authorities.
(i) Payment of Fees. Trustee and each Lender shall have received
payment of all fees which are due and payable on the Closing Date pursuant to
this Agreement.
SECTION 2.2. Advances. Subject to the terms and conditions hereinafter
set forth, and in reliance on the representations and warranties contained
herein or made pursuant hereto, upon receipt of the Advance Request, on the
Advance Date each Lender shall finance a portion of the applicable Advance by
making a Loan to Trustee (in accordance with Trustee's payment instructions set
forth on Schedule III) in an amount in immediately available funds equal to such
Lender's Commitment Percentage of the aggregate amount of the Commitment Amount.
Notwithstanding any other provision hereof, no Lender shall be permitted or
required to fund any Loan to the extent that, after giving effect thereto, the
aggregate amount advanced would exceed such Lender's Commitment, and the
aggregate original principal amount of all Loans made since the Closing Date
would exceed the Commitment Amount. No amounts paid or prepaid with respect to
the Loans may be readvanced.
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SECTION 2.3. Notes. Each amount made available by a Lender pursuant to
Section 2.2 shall be evidenced by one or more Notes issued by Trustee payable to
the order of such Lender in a maximum principal amount equal to such Lender's
Commitment and shall be repayable in accordance with the terms of the Loan
Agreement.
SECTION 2.4. Procedures for Advance; Use of Proceeds.
(a) Request. With respect to the funding of the Advance, Lessee
shall deliver to Trustee, Agent and Lenders, not later than 12:00 noon, Las
Vegas, Nevada time, three Business Days prior to the proposed Advance Date, an
irrevocable written notice substantially in the form of Exhibit H (an "Advance
Request"), specifying (i) the proposed Advance Date, (ii) the total Equipment
Cost, including Charges therefor, and (iii) the invoice charges of each item of
Equipment.
(b) Funding. On the scheduled Advance Date, upon (i) receipt by
Trustee of all amounts to be paid by Lenders pursuant to Section 2.2 and (ii)
satisfaction or waiver of each of the applicable conditions set forth in Section
3.1, (A) Lessor shall purchase, and Lessee or a vendor shall deliver a ▇▇▇▇ of
sale conveying to Lessor, as collateral security, all of such Person's right,
title and interest in, the Equipment described in the Advance Request, and (B)
in consideration therefor, Trustee shall pay, from funds made available by
Lenders pursuant to Section 2.2 and the Loan Agreement, the amount specified in
the Advance Request in immediately available funds remitted by wire transfer to
the Persons therein listed.
(c) Number and Dates of Advances. There shall be one Advance which
shall be made no later than 1:00 p.m., Las Vegas, Nevada time, on May 28, 1999,
and no Advance may occur following suspension of the Commitments.
(d) Use of Proceeds. Proceeds from all Loans shall be used solely
for the purpose of funding Equipment Costs.
(e) Interest Rate. Each determination of an Interest Rate pursuant
to any provision of the Loan Agreement shall be conclusive and binding on
Trustee, Lessee and Lenders in the absence of manifest error.
SECTION 2.5. Postponement of Advance. If Lenders make a Loan requested
pursuant to the Advance Request and the conditions precedent to such Advance
have not been satisfied on the date specified in the Advance Request, Lessee
shall pay to Trust Company, for the benefit of each Lender, interest on the
amount funded by each Lender at a rate equal to the Alternate Base Rate for the
period from the date of each such Advance to the date such Advance is returned
to such Lender or such Advance date shall have occurred, less any interest
earned by Trust Company on behalf of Lenders by investing such funded amounts.
Trust Company (or its assignee) shall not be required to invest such funds in
interest bearing investments, but Trust Company (or its assignee) shall upon
direction of Lessee (or, if an Event of Default exists, the Required Lenders)
invest such funds in Cash Equivalents to the extent it is practicably able to do
so. Such interest shall be due and payable by Lessee upon the occurrence of such
Advance Date or upon return of such funds to Lenders. Such payment of interest
shall be an additional condition precedent to such Advance Date. If the Advance
Date shall not have occurred by the third Business Day following the Advance
Date in respect thereof, then all such interest shall be due and payable on such
date, and Trust Company shall refund to each Lender all amounts funded by such
Lender and all accrued interest allocable to such Lender. No additional Advance
Request shall be required if the Advance Date is postponed and thereafter
consummated.
SECTION 2.6. Obligations Several. The obligations of Lenders hereto or
elsewhere in
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the Operative Documents shall be several and not joint; and, except with respect
to Lessee and Guarantor in connection with the Guaranty and the other Operative
Documents, no party shall be liable or responsible for the acts or defaults of
any other party hereunder or under any other Operative Document.
SECTION 2.7. Timing of Advance to Trustee and Payments to Lenders.
(a) Timing of Advances to Trustee. Subject to timely delivery of
an Advance Request pursuant to Section 2.4(a) and the other terms and conditions
of the Operative Documents, each Lender shall make its Commitment available to
Trust Company by 1:00 p.m., Las Vegas, Nevada time, on the requested Advance
Date, and Trust Company will forward any such amounts so received to Lessee, not
later than 4:00 p.m., Las Vegas, Nevada time, on such Advance Date.
(b) Payments to Lenders. So long as there are obligations
outstanding under the Operative Documents, Trustee has assigned all payments of
Rent to Agent pursuant to Section 2.1 of the Security Agreement, and Agent has
appointed Trust Company as its agent to receive such payments of Rent under
Section 7.1 of the Loan Agreement. Any payments received by Agent (or Trust
Company as agent to Agent) from or on behalf of Lessee not later than 10:00
a.m., Las Vegas, Nevada time, shall be paid by Agent (or Trust Company) to
Lenders in immediately available funds no later than 1:00 p.m., Las Vegas,
Nevada time, on the same day, and any payments, received by Agent (or Trust
Company) from or on behalf of Lessee after 10:00 a.m., Las Vegas, Nevada time,
shall be paid by Agent or Trust Company to Lenders as soon after receipt as
practicable, but not later than 10:00 a.m., Las Vegas, Nevada time, on the next
succeeding Business Day. Rent and all other payments due to Trustee, Agent or
any Lender under the Operative Documents shall be paid in immediately available
funds, at its respective office specified in Schedule III or at such other
office as it may from time to time specify to Trustee, Agent and Lessee in a
notice pursuant hereto. All such payments shall be received by Trustee (in its
individual or trust capacity), Agent or such Lender, as applicable, not later
than 10:00 a.m., Las Vegas, Nevada time, on the date due. Funds received after
such time shall for all purposes of the Operative Documents be deemed to have
been received on the next succeeding Business Day.
(c) Agency. So long as the Notes remain outstanding, Rent shall be
paid to Trust Company as agent for Agent and as Trustee's assignee under the
Operative Documents.
SECTION 2.8. Lenders' Instructions to Agent. By making its Advance
pursuant to Section 2.2, each Lender agrees that such act shall constitute,
without further act, (i) evidence that the applicable conditions precedent set
forth in Article III have been satisfied or waived; provided that any Lender's
failure to raise the issue of noncompliance with respect to any such condition
as to any third party shall not be deemed to be a waiver of such condition
unless such Lender shall have acknowledged such waiver in writing, and (ii)
authorization and direction by such Lender to Agent to make a Loan pursuant to
Section 2.3 of the Loan Agreement.
SECTION 2.9. Computations.
(a) Determination of Interest. All computations of accrued amounts
pursuant to the Operative Documents shall be made on the basis of actual number
of days elapsed in a 360 day year or, in the case of the Alternate Base Rate, on
the basis of actual number of days elapsed in a 365 day or 366 day year.
(b) Dollars. All payments required to be made by Lessee, Trustee,
or Agent, including the Advance of any payment of Rent, shall be made only in
Dollars in immediately
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PARTICIPATION AGREEMENT
available funds.
SECTION 2.10. Fees. Lessee shall pay to Agent, for the account of each
Lender, a nonrefundable upfront fee in an amount equal to the fee set forth
opposite such Lender's name on Schedule II, payable upon the Closing Date.
SECTION 2.11. Legal and Tax Representation. Lessee acknowledges and
agrees that neither Agent, Trustee nor any Lender has made any representation or
warranty concerning the tax, accounting or legal characteristics of the Lease or
any of the other Operative Documents, and that Lessee has obtained and relied on
such tax, accounting and legal advice regarding the Lease and the other
Operative Documents as it deems appropriate. Each of Trustee and each Lender
acknowledges and agrees that it has obtained and relied on the Operative
Documents and the various items delivered in connection therewith, and on such
tax, accounting and legal advice regarding the Lease and the other Operative
Documents as it deems appropriate.
SECTION 2.12. Amortization Schedule. Schedule VI sets forth the
mandatory principal amortization schedule for the Loans (the "Amortization
Schedule"). Lenders will receive principal payments on each scheduled principal
Payment Date so as to cause all of the Loans to amortize as set forth on the
Amortization Schedule. Each Note or the Notes will reflect mandatory principal
amortization equal to the product of (i) such Lender's Commitment Percentage and
(ii) the aggregate amount payable to Lenders on such Payment Date pursuant to
the preceding sentence.
SECTION 2.13. Replacement of Equipment. Trustee and Agent shall release
from the lien of the Security Agreement and the Lease items of Equipment which
Lessee has elected to replace under Section 7.3 or 9.1 of the Lease, upon
satisfaction by Lessee of the conditions contained in Section 9.1(b) of the
Lease.
SECTION 2.14. The Account. Trustee shall establish and maintain (or
cause to be established and maintained) with Trust Company a deposit account
(the "Account") in its name in favor of Agent into which proceeds of the Loan on
the Advance Date shall be remitted upon satisfaction of the provisions of
Section 3.1. Trustee shall release funds on deposit in the Account to the order
of Lessee, or to a vendor as directed by Lessee, as the case may be, upon
receipt of a certificate from Lessee, dated the date of such requested release,
stating that (i) the sum requested is required to pay, or reimburse Lessee for,
the invoices and purchase orders of the vendors identified in such certificate,
together with copies of such invoices and purchase orders attached to such
certificate and evidence satisfactory to Agent of all amounts previously paid to
any vendor identified in such certificate for which Lessee is requesting
reimbursement and (ii) all of the statements contained in Section 3.1(b) are
true and correct on and as of such date as though made on and as of such date,
except to the extent such representations and warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct on and as of such earlier date. In the event of a dispute over
payment of any amount owed under an invoice or purchase order referenced in such
certificate, Trustee shall not release funds from the Account until such time as
Lessee notifies Trustee of the resolution of such dispute. All funds deposited
in the Account shall constitute Collateral.
ARTICLE III
CONDITIONS TO THE ADVANCE
SECTION 3.1. Advance Date. The obligation of Trustee and each Lender to
perform their respective obligations on the Advance Date shall be subject to the
fulfillment to the satisfaction of, or the waiver in writing by, Trustee and
each Lender of the conditions precedent
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PARTICIPATION AGREEMENT
set forth in this Section 3.1 on or before the Advance Date (except that the
obligation of any party hereto shall not be subject to such party's own
performance or compliance).
(a) Advance Request. With respect to the Advance, Agent, Trustee
and each Lender shall have received, at least three Business Days before the
Advance Date, a fully executed Advance Request duly executed by Lessee, in
accordance with Section 2.4(a). Each of the delivery of the Advance Request and
the acceptance by Lessee of the proceeds of such Advance shall constitute a
representation and warranty by Lessee that on the date of such Advance (both
immediately before and after giving effect to such Advance and the application
of the proceeds thereof) the statements made in Section 3.1(c) and in such
Advance Request, are true and correct.
(b) Accuracy of Representations and Warranties, No Default, etc.
On the Advance Date, the following statements shall be true and correct:
(I) ALL OF THE REPRESENTATIONS AND WARRANTIES OF THE PARTIES
HERETO CONTAINED HEREIN AND IN EACH OF THE OTHER OPERATIVE DOCUMENTS
ARE TRUE AND CORRECT ON AND AS OF THE ADVANCE DATE IN ALL MATERIAL
RESPECTS AS THOUGH MADE ON AND AS OF THAT DATE, EXCEPT TO THE EXTENT
THAT SUCH REPRESENTATIONS AND WARRANTIES RELATE SOLELY TO AN EARLIER
DATE, IN WHICH CASE SUCH REPRESENTATIONS AND WARRANTIES SHALL HAVE BEEN
TRUE AND CORRECT ON AND AS OF SUCH EARLIER DATE; AND
(II) EXCEPT AS SET FORTH IN THE DISCLOSURE SCHEDULE, NO LABOR
CONTROVERSY, LITIGATION, ARBITRATION OR GOVERNMENTAL INVESTIGATION OR
PROCEEDING SHALL BE PENDING OR, TO THE KNOWLEDGE OF LESSEE AND/OR
PARENT, THREATENED AGAINST LESSEE AND/OR PARENT OR ANY OTHER GUARANTOR
WHICH MIGHT HAVE A MATERIAL ADVERSE EFFECT OR WHICH IN THE REASONABLE
JUDGMENT OF AGENT WOULD OR MIGHT, ENJOIN, PROHIBIT, LIMIT OR RESTRAIN
THE MAKING OF THE ADVANCE.
(c) Officers' Certificates. If the Advance Date is a date after
the date of this Agreement, Agent shall have received (with copies for Trustee
and each Lender) certificates of the secretary or assistant secretary of each of
Parent and Lessee stating that all of the representations and warranties of such
Person contained herein and in each of the other Operative Documents are true
and correct on and as of the Advance Date in all material respects as though
made on and as of that date, except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct on and as of such earlier date.
(d) Gaming Permits. Lessee and Parent shall have obtained all
Gaming Permits required for or in connection with the conduct of its gaming
business and the conduct of games of chance at the Casino and such Gaming
Permits shall not then be suspended, enjoined or prohibited (for any length of
time) by any Gaming Authority or any other Governmental Authority.
(e) Liquor Permits. Lessee and Parent shall have obtained all
Liquor Permits required for or in connection with the operation and use of the
Casino and the Resort and the Liquor Permits shall not then be suspended,
enjoined or prohibited (for any length of time) by any Governmental Authority
having or asserting jurisdiction over the Casino and/or the Resort.
(f) Taxes. All Taxes other than Charges due and payable by Lessee
on or prior to the Advance Date in connection with the execution, delivery,
recording and filing of any
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PARTICIPATION AGREEMENT
of the Operative Documents, in connection with the filing of any of the
financing statements or in connection with the consummation of any of the
transactions contemplated hereby or by the Operative Documents shall have been
paid in full.
(g) Filings and Recordings. All filing, registrations and
recordings set forth on Schedule IV shall have been made in the appropriate
places or offices and all fees and taxes with respect to any recordings, filings
or registrations made pursuant to this Section 3.1(g) shall have been paid in
full, and satisfactory evidence thereof shall have been delivered to Trustee and
Agent, or arrangements for such payment shall have been made to the satisfaction
of Trustee and Agent.
(h) Searches. Agent shall have received a report, as of a current
date, prepared by a search company reasonably satisfactory to Agent, of judgment
liens, tax liens, Uniform Commercial Code filings and other encumbrances of
record with respect to Parent, Lessee and the Equipment with the applicable
filing offices in the State of Nevada, and such report shall show no Liens other
than Permitted Liens.
(i) Insurance. Agent shall have received (with copies for Trustee
and each Lender) evidence of each of the insurance coverages required to be
maintained pursuant to the Lease, setting forth the respective coverages, limits
of liability, carrier, policy number and period of coverage, accompanied by
affidavits, certificates, paid bills or other documents evidencing that all
premium payments are current.
(j) Governmental Approvals, Permits, Consents, etc. Agent shall
have received copies of all material permits, approvals or consents by all
Governmental Authorities required for or in connection with the use and
operation of the Equipment and the transactions provided for in this Agreement
which can be obtained as of the Advance Date, together with all supporting
documents and materials reasonably requested by Agent, Trustee or any Lender,
including a copy of each order or license issued by the Nevada Gaming Commission
or the Liquor Authority, as then available or required by Applicable Law,
evidencing approval of all licenses necessary for the creation and continued
existence of Lessee as the operator of the Casino and of Parent as the parent
corporation of Lessee.
(k) ▇▇▇▇ of Sale. Agent shall have received a fully executed ▇▇▇▇
of Sale from Lessee or other vendor(s) to Trustee substantially in the form of
Exhibit I with respect to the items of Equipment identified in such Advance
Request.
(l) Certificates of Acceptance. Lessee shall have delivered to
Agent a fully-executed Certificate of Acceptance substantially in the form of
Exhibit J with respect to each item of Equipment identified in such Advance
Request.
(m) [not used]
(n) Third Party Approvals. All third party approvals, necessary in
the reasonable opinion of Agent for the operation and use of the Equipment and
for Lessee to perform its obligations with respect to the Lease shall have been
obtained.
(o) Further Assurances, etc. Agent shall have received such other
and further instruments, duly executed, acknowledged (if appropriate) and
delivered, as Agent reasonably shall have requested in connection with the
Advance and this Agreement.
(p) Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of Lessee and Parent shall be satisfactory in
form and substance to Agent and its counsel; Agent and its counsel shall have
received all information, approvals, opinions, documents or instruments as Agent
or its counsel may reasonably request.
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(q) Transaction Costs. Lessee shall have paid all Transaction
Costs invoiced three Business Days prior to the Advance Date to the parties to
whom such Transaction Costs are payable (or shall have requested payment thereof
or reimbursement therefor pursuant to the Advance Request). Such payment shall
be made by wire transfer of immediately available funds.
(r) Litigation. No law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall, and no action or
proceeding shall be pending or threatened which in the reasonable judgment of
Agent would or might, enjoin, prohibit, limit or restrain the making of the
Advance.
(s) No Material Adverse Effect. Since December 31, 1998, there
shall not have occurred any Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of Lessee and Guarantor.
Lessee and Guarantor jointly and severally represent and warrant to each of the
other parties hereto as follows.
(a) Due Organization, etc. Each of Lessee and Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and Delaware, respectively, and is duly qualified or
licensed and in good standing as a foreign corporation authorized to do business
in all jurisdictions where failure to so qualify could reasonably be expected to
have a Material Adverse Effect, and each has the requisite power and authority
to execute, deliver and perform its respective obligations under each of the
Operative Documents to which it is a party and each other agreement, instrument
and document executed and delivered by it on the Advance Date in connection with
or as contemplated by each such Operative Document. The "principal place of
business" and "chief executive office" (as such terms are used in Section
9-103(3) of the UCC) of Lessee is located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; and of Guarantor is located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
(b) Authorization; No Conflict; No Approvals; etc. The execution
and delivery by each of Lessee and Guarantor of each of the Operative Documents
to which it is a party, and the performance by each such Person of its
respective obligations under such Operative Documents, have been duly authorized
by all necessary corporate action (including any necessary stockholder action)
on its part, and do not and will not: (i) contravene any Applicable Law
currently in effect applicable to or binding on it or the Equipment; (ii)
violate any provision of its respective charter or bylaws; (iii) result in a
breach of or constitute a default under (with or without the giving of notice or
lapse of time or both) any indenture, mortgage, deed of trust, lease, loan or
credit agreement, or any other agreement or instrument to which Lessee or
Guarantor is a party or by which Lessee or Guarantor or their respective
properties may be bound or affected, except for such breaches or defaults which
individually or in the aggregate would not have a Material Adverse Effect; or
(iv) require any Governmental Approval by any Governmental Authority, except for
(x) the filings and recordings listed on Schedule IV to perfect the rights of
Trustee, Lenders and Agent intended to be created by the Operative Documents and
(y) the required licenses and approvals listed on Schedule V; and neither Lessee
nor Guarantor is in default under or in violation of its respective charter or
bylaws.
(c) Enforceability. Each Operative Document to which Lessee or
Guarantor is a party constitutes the legal, valid and binding obligation of such
Person, enforceable against
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such Person in accordance with the terms thereof, except as such enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) Litigation. Except as set forth on Schedule VII, there is no
action, suit or proceeding, or any governmental investigation or any
arbitration, in each case pending or, to the knowledge of Lessee or Guarantor,
threatened against such Person or the Equipment or before any Governmental
Authority (i) which challenges the validity of the Operative Documents to which
such Person is a party or any action taken or to be taken pursuant to the
Operative Documents to which such Person is a party, or (ii) which if adversely
determined would have, individually or in the aggregate, a Material Adverse
Effect.
(e) Ownership. Parent has sole beneficial and record ownership,
directly or indirectly, of 100% of the issued and outstanding capital stock of
Lessee. Except as set forth on Schedule VII, there are no outstanding
subscriptions, options, warrants, calls, rights (including preemptive rights) or
other arrangements or commitments of any nature relating to any capital stock of
Lessee.
(f) Financial Statements. The audited consolidated financial
statements of Parent and its consolidated Subsidiaries for the fiscal year ended
December 31, 1998 fairly present the financial condition of Parent and its
consolidated Subsidiaries on such date, and the results of its consolidated
operations for the period then ended, and there has been no Material Adverse
Effect with respect to Parent and its consolidated Subsidiaries since such date.
(g) No Other Agreements. Neither Lessee nor Guarantor is a party
to any agreement to sell any interest in the Equipment or any portion thereof
(except as otherwise specifically contemplated in the Operative Documents).
(h) Compliance With Law. With respect to the Equipment and the
operation of the Resort, Lessee and Guarantor have at all times complied and are
in compliance with all Applicable Law, except for any violations which,
individually or in the aggregate, would not have a Material Adverse Effect.
(i) Investment Company Act. Neither Lessee nor Guarantor is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(j) Public Utility Holding Company. Neither Lessee nor Guarantor
is subject to regulation as a "holding company," an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(k) Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment due any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA. No action has been
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taken by any member of the ERISA Group since January 1, 1996, to terminate any
Plan. No member of the ERISA Group has any knowledge of any event that could
result in a liability of any such member to the PBGC, whether under a Plan, a
Multiemployer Plan or otherwise. There have not been any nor are there now
existing any events or conditions that would permit any Plan to be terminated
under circumstances that would cause the lien provided under Section 4068 of
ERISA to attach to the material assets of Lessee or its ERISA Affiliates. The
value of the Plans' benefits guaranteed under Title IV of ERISA on the date
hereof does not exceed the value of such Plans' assets allocable to such
benefits as of the date of this Agreement. No transaction prohibited under
Section 406 of ERISA exists or will exist upon the execution and delivery of
this Agreement or any Operative Document with respect to any Plan, Multiemployer
Plan or Benefit Arrangement.
(1) Environmental Matters. There are no conditions existing
currently which would be likely to subject Trustee, Agent, Lenders or Lessee or
Guarantor to damages, penalties, injunctive relief or cleanup costs under any
Environmental Laws or assertions thereof, or which require or are likely to
require cleanup, removal, remedial action or other response at or with respect
to the Resort pursuant to Environmental Laws; (ii) neither Lessee nor Guarantor
is a party to any litigation or administrative proceeding for which it has
received service of process or other similar notification, and to the knowledge
of Lessee and Guarantor, any litigation or administrative proceeding threatened
against any of them, which asserts or alleges that Lessee or Guarantor, or the
Resort has violated or is violating Environmental Laws with respect to the
Resort or that Lessee or Guarantor is required to clean up, remove or take any
remedial or other responsive action due to the disposal, depositing, discharge,
leaking or other release of any Hazardous Materials at or from the Resort; (iii)
neither Lessee nor Guarantor is subject to any judgment, decree or order or
citation arising out of Environmental Laws which relates to the Resort (or any
interest therein); and (iv) neither Lessee nor Guarantor has been named or
listed as a potentially responsible party by any governmental body in a manner
arising under any Environmental Laws with respect to or which affects the
Resort.
(m) Subjection to Government Regulation. Except in the case of the
ownership of, or the holding of an interest in, the Equipment following the
exercise of remedies under the Lease, none of Trustee, Agent or any Lender will
become subject to ongoing regulation of its operations by a Governmental
Authority solely by reason of entering into the Operative Documents or the
consummation of the transactions contemplated thereby. The exercise of remedies
by Trustee, any Agent or any Lender under any of the Operative Documents with
respect to the Collateral will not require the approval of or filing with any
Gaming Authority except as otherwise disclosed on Schedule V hereto.
(n) Securities Laws. Neither Lessee nor anyone authorized to act
on its behalf has, directly or indirectly, offered or sold any interest in the
Notes, the Equipment, the Lease or any of the Operative Documents in violation
of Section 5 of the Securities Act or any state securities laws.
(o) Federal Reserve Regulations. Neither Parent nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board). No part of the
Advance will be used directly or indirectly for the purpose of purchasing or
carrying any such margin stock, to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any other purpose violative
of or
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PARTICIPATION AGREEMENT
inconsistent with any of the provisions of Regulation G, T, U or X of the Board.
(p) Taxes. Lessee and Guarantor have filed all tax returns and
reports required by law to have been filed by each of them and have paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on their books.
(q) Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of Lessee and Guarantor in writing
to Agent, Trustee and Lenders for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of Lessee and Guarantor to
Agent, Trustee and Lenders will be, true and accurate in every material respect
on the date as of which such information is dated or certified and as of the
date of execution and delivery of this Agreement by Agent, Trustee and Lenders,
and such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
(r) Licenses, Registrations and Permits. As of any date on which
this representation is made, all licenses, registrations and permits (other than
Gaming Permits and Liquor Permits) required of Lessee as of such date by any
Governmental Authority having jurisdiction shall have been obtained for (i) the
use and occupancy of the Resort, and (ii) the installation and operation of the
Equipment on the Resort, except where the failure to obtain the same would not
have, individually or the aggregate, a Material Adverse Effect.
(s) Title to Property. Except as set forth on the Schedule VII
hereto, Parent has good and marketable title to all of its material assets
reflected on the financial statements delivered pursuant to Section 2.1(e),
except for such material assets as have been disposed of in the ordinary course
of business, and all such material assets are free and clear of any Lien, except
as reflected in the financial statements and/or notes thereto or as otherwise
permitted by the provisions hereof or under the Operative Documents, and except
for Permitted Liens. Parent has such trademarks, trademark rights, trade names,
trade name rights, franchises, copyrights, patents, patent rights and licenses
as to allow it to conduct its business as now operated, without known conflict
with the rights of others. Lessee or Parent has good and marketable title to the
land and buildings constituting the Resort.
(t) Insurance. Lessee has obtained or caused to be obtained
insurance coverage covering the Equipment which meets in all respects the
requirements of the Lease, and such coverage is in full force and effect. Lessee
carries insurance with reputable insurers, or self-insures, in respect of its
material assets, in such manner, in such amounts and against such risks as is
customarily maintained by other Persons of similar size engaged in similar
business.
(u) Defaults. Neither Lessee nor Guarantor is in default under any
Operative Document, instrument evidencing any Debt, or under any material
agreement relating thereto or any indenture, mortgage, deed of trust, security
agreement, lease, franchise, or other agreement or other instrument to which any
such Person is a party or by which any such Person or any of its material assets
is subject to or bound including the Indenture which would result in a Material
Adverse Effect.
(v) Solvency. The consummation by Lessee or Guarantor of the
transactions contemplated by the Operative Documents will not render Lessee or
Guarantor insolvent, nor was it made in contemplation of Lessee's or Guarantor's
insolvency; the value of the assets and
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PARTICIPATION AGREEMENT
properties of the of Lessee and Guarantor at fair valuation and at their then
present fair salable value is and, after the transactions, will be greater than
the respective total liabilities, including contingent liabilities, as they
become due of Lessee and Guarantor; the property remaining in the hands of
Lessee and of Guarantor was not and will not be an unreasonably small amount of
capital.
(w) Perfection of Security Interests. Upon the filing of an
appropriate UCC Financing Statements with the Secretary of State of Nevada and
appropriate fixture filings in the office of the Recorder of ▇▇▇▇▇ County,
Nevada, Trustee, for the benefit of Lenders, and Lenders, will have an
enforceable, perfected first priority Lien of record in the Collateral granted
pursuant to the Lease and the Security Agreement as against all Persons,
including Lessee and its creditors and Trustee and its creditors.
(x) Gaming Permits; Liquor Permits. All Gaming Permits and Liquor
Permits required to be held by Lessee and Guarantor for the conduct of its
business as then conducted as of each date this representation is made are
current and in good standing and upon the Casino Opening Lessee and Guarantor
will hold all Gaming Permits and Liquor Permits necessary for the operation of
the Casino and sale of alcoholic beverages at the Resort.
(y) Location of Gaming Activities. No gaming activities requiring
a Gaming Permit will be maintained at the Resort other than at a location that
has obtained all requisite Gaming Permits.
(z) No Change in Name or Entity. Lessee has not, prior to the date
of this Agreement, changed its name, or been the surviving entity of a merger or
consolidation.
(aa) Purchase Price. The fair market value of the items of
Equipment accepted on the Advance Date is approximately equal to the invoice
cost for the items of Equipment identified in such Advance Request plus the
Charges properly attributable thereto.
SECTION 4.2. Representations and Warranties of Each Lender. Each Lender
represents and warrants, severally and only as to itself, to each of the other
parties hereto as follows.
(a) Due Organization, etc. It is duly organized and validly
existing under the laws of the jurisdiction of its organization and has the
requisite power and authority to enter into and perform its obligations as a
Lender under each Operative Document to which it is or will be a party and each
other agreement, instrument and document to be executed and delivered by it in
connection therewith.
(b) Authorization; No Conflict. The execution and delivery by it
of, the consummation by it of the transactions provided for in, and the
compliance by it with all the provisions of, each Operative Document to which it
is or is to be a party as Lender have been duly authorized by all necessary
corporate action on its part; and neither the execution and delivery thereof,
nor the consummation of the transactions contemplated thereby, nor compliance by
it as Lender with any of the terms and provisions thereof (i) requires any
approval of its stockholders or approval or consent of any trustee or holders of
any of its indebtedness or obligations, (ii) contravenes or will contravene any
Applicable Law currently in effect applicable to or binding on it (except no
representation or warranty is made as to any Applicable Law to which it or the
Equipment, directly or indirectly, may be subject because of the lines of
business or other activities of Lessee) or (iii) results in any breach of or
constitutes any default under, any indenture, mortgage, chattel mortgage, deed
of trust, lease, conditional sales contract, loan or credit arrangement, other
material agreement or instrument, corporate charter, bylaws or other agreement
or instrument to which it is a party or by which it or its properties may be
bound or
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PARTICIPATION AGREEMENT
affected.
(c) ERISA. It is purchasing its interest in the Note with assets
that are either (i) not assets of any employee benefit plan (or its related
trust) which is subject to Title I of ERISA or Section 4975 of the Code, or (ii)
assets of an employee benefit plan (or its related trust) which is subject to
Title I of ERISA or Section 4975 of the Code, but for which there is available
an exemption from the prohibited transaction rules under Section 406(a) of ERISA
and Section 4975 of the Code and such exemption is immediately applicable to
each transaction contemplated by the Operative Documents to the extent that any
other party to such transaction is a "party in interest" as defined in Section
3(14) of ERISA, or a "disqualified person" as defined in Section 4975(e)(2) of
the Code, with respect to such plan assets.
(d) Investment in Notes. It is acquiring the Note for its own
account for investment and not with a view to any distribution (as such term is
used in Section 2(11) of the Securities Act) thereof, and if in the future it
should decide to dispose of all or any portion of its interest in its Note or
other Operative Documents, it understands that it may do so only in compliance
with the Securities Act and the rules and regulations of the SEC thereunder and
any applicable state securities laws. Neither it nor anyone authorized to act on
its behalf has taken or will take any action which would subject the issuance or
sale of any Note, the Trust Estate (including the Equipment constituting a part
thereof), the Collateral or the Lease to the registration requirements of
Section 5 of the Securities Act. Subject to the foregoing, it is understood
among the parties that the disposition of each Lender's property shall be at all
times within its control.
(e) Lessor Liens. The Equipment is free and clear of all Lessor
Liens attributable to it.
SECTION 4.3. Representations and warranties of Trust Company. First
Security Trust Company of Nevada, in its individual capacity ("Trust Company"),
represents and warrants to each of the other parties hereto as follows:
(a) Chief Executive Office. Trust Company's "chief executive
office" and "principal place of business" as such terms are used in Section
9-103(3) of the UCC and the place where the documents, accounts and records
relating to the transactions contemplated by the Operative Documents are kept is
located at ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
(b) Due Organization, etc. Trust Company is a trust company duly
organized and validly existing in good standing under the laws of the State of
Nevada and has full power and authority to execute, deliver and perform its
obligations (i) in its individual capacity under the Trust Agreement and, to the
extent it is a party hereto in its individual capacity, this Agreement, and (ii)
as Trustee under the Trust Agreement, under this Agreement and each other
Operative Document to which it is or will be a party as Trustee.
(c) Due Authorization: Enforceability. The Operative Documents to
which Trust Company is or will be a party have been or will be, on the date
required to be delivered hereby, duly authorized, executed and delivered by or
on behalf of Trust Company (in its individual capacity) and are, or upon
execution and delivery by Trust Company will be, legal, valid and binding
obligations of Trust Company (in its individual capacity), enforceable against
it in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general equitable principles.
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PARTICIPATION AGREEMENT
(d) No Conflict. The execution and delivery by (i) Trust Company,
in its individual capacity, of the Trust Agreement and, to the extent it is a
party hereto in its individual capacity, this Agreement, and (ii) Trust Company,
in its capacity as Trustee, of each operative Document to which Trustee is or
will be a party, are not and will not be, and the performance by Trust Company,
in its individual capacity or as Trustee, as the case may be, of its obligations
under each are not and will not be inconsistent with the articles of association
or bylaws of Trust Company, do not and will not contravene any Applicable Law of
the United States of America or the State of Nevada relating to the banking or
trust powers of Trust Company, and do not and will not result in a breach of or
constitute a default under (with or without the giving of notice or lapse of
time or both) any indenture, mortgage, deed of trust, lease, loan or credit
agreement or any other agreement or instrument to which Trust Company is a party
or by which it or its properties may be bound or affected.
(e) No Approvals, etc. Neither the execution and delivery by
Trustee in its individual capacity or as Trustee, as the case may be, of any of
the Operative Documents to which it is a party requires any Governmental
Approval by any Governmental Authority under any Applicable Law of the United
States of America or the State of Nevada relating to the banking or trust powers
of Trust Company.
(f) Litigation. There is no action, proceeding or investigation
pending or threatened against Trust Company (in its individual capacity or as
Trustee) which questions the validity of the Operative Documents or which is
reasonably likely to result, individually or in the aggregate, in any material
adverse effect on the ability of Trust Company (in its individual capacity or as
Trustee) to perform its obligations (in either capacity) under the Operative
Documents to which it is a party.
(g) Lessor Liens. The Equipment is free and clear of all Lessor
Liens attributable to Trust Company (in its individual capacity).
(h) Securities Act. Neither Trust Company (in its individual
capacity or as Trustee) nor anyone authorized to act on its behalf has, directly
or indirectly, in violation of Section 5 of the Securities Act or any state
securities laws, offered or sold any interest in the Notes, the Equipment or the
Lease, or in any security or lease the offering of which, for purposes of the
Securities Act or any state securities laws, would be deemed to be part of the
same offering as the offering of the aforementioned securities or leases, or
solicited any offer to acquire any of the aforementioned securities or leases.
SECTION 4.4. Representations and Warranties of Agent. Agent hereby
represents and warrants to each of the other parties hereto as follows.
(a) Due Organization, etc. Agent is duly organized and validly
existing under the laws of the jurisdiction of its organization and has the
requisite power and authority to execute, deliver and perform its obligations
under the Operative Documents to which it is or will be a party.
(b) Due Authorization: Enforceability. The Operative Documents to
which Agent is or will be a party have been or will be, on the date required to
be delivered hereby, duly authorized, executed and delivered by Agent, and are,
or, upon execution and delivery will be, legal, valid and binding obligations of
Agent, enforceable against it in accordance with their respective terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by general equitable
principles.
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PARTICIPATION AGREEMENT
(c) No Conflict. Neither the execution and delivery by Agent of
the Operative Documents to which it is or will be a party, nor performance of
its obligations thereunder, results in a breach of, or constitutes a default
under (with or without the giving of notice or lapse of time or both), or
violates the terms, conditions or provisions of: (i) the articles of
incorporation of Agent; (ii) any agreement, to which Agent is now a party or by
which it or its property is bound or affected, where such breach, default or
violation would be reasonably likely to materially and adversely affect the
ability of Agent to perform its obligations under any Operative Document to
which it is or will be a party; or (iii) any Applicable Law of the United States
or the State of Delaware, where such conflict, breach, default or violation
would be reasonably likely to materially and adversely affect the ability of
Agent to perform its obligations under any Operative Document to which it is or
will be a party.
(d) No Approvals, etc. No Governmental Approval by any
Governmental Authority under any Applicable Law of the United States of America
or the State of Delaware is or will be required in connection with the execution
and delivery by Agent of the Operative Documents to which it is party or the
performance by Agent of its obligations under such Operative Documents.
ARTICLE V
COVENANTS OF LESSEE AND PARENT
SECTION 5.1. Further Assurances. Lessee, at its own cost and expense,
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as any Lender, Trustee or Agent
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Agreement and the other Operative Documents to
which it is a party and the transactions contemplated thereby. Parent, at its
own cost and expense, will cause all financing statements (including
precautionary financing statements), fixture filings and other documents, to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary or as
may be reasonably requested by any Lender, Trustee or Agent in order to
establish, preserve, protect and perfect the title of Trustee to the Equipment
and Trustee's rights under this Agreement and the other Operative Documents and
to perfect, preserve and protect the first and prior Lien of the Security
Agreement on the Trust Estate in favor of Agent for the benefit of Lenders.
SECTION 5.2. Consolidation, Merger, Sale, etc.
(a) Subject to Section 5.4, Lessee (for purposes of this Section
5.2, Lessee shall be referred to as the "Transferor") shall not consolidate with
any Person, merge with or into any Person or convey, transfer or lease to any
Person all or substantially all of its assets in any single transaction (or
series of related transactions), unless, immediately after giving effect to such
transaction, the conditions set forth in clauses (i) through (vii) shall have
been satisfied:
(I) THE PERSON FORMED BY SUCH CONSOLIDATION WITH OR INTO WHICH THE
TRANSFEROR SHALL BE MERGED OR THE PERSON WHICH SHALL ACQUIRE BY
CONVEYANCE, TRANSFER OR LEASE ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE TRANSFEROR (THE "SURVIVING COMPANY") SHALL BE A CORPORATION THAT IS
ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA, A STATE
THEREOF OR THE DISTRICT OF COLUMBIA;
(II) THE SURVIVING COMPANY (IF OTHER THAN LESSEE) SHALL EXECUTE
AND DELIVER TO EACH OF THE PARTIES HERETO AN AGREEMENT, IN FORM AND
SUBSTANCE REASONABLY
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PARTICIPATION AGREEMENT
SATISFACTORY TO LENDERS, TRUSTEE AND AGENT, CONTAINING THE ASSUMPTION
BY THE SURVIVING COMPANY OF THE DUE AND PUNCTUAL PAYMENT, PERFORMANCE
AND OBSERVATION OF EACH OBLIGATION COVENANT AND AGREEMENT OF THE
TRANSFEROR UNDER THIS AGREEMENT AND EACH OTHER OPERATIVE DOCUMENT TO
WHICH, IMMEDIATELY PRIOR TO SUCH TRANSACTION, THE TRANSFEROR WAS A
PARTY;
(III) NO LEASE DEFAULT OR LEASE EVENT OF DEFAULT, SHALL HAVE
OCCURRED OR WOULD OCCUR AS A RESULT THEREOF;
(IV) THE TITLE OF TRUSTEE TO THE EQUIPMENT AND TRUSTEE'S RIGHTS
UNDER THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS AND THE FIRST
AND PRIOR LIEN GRANTED TO TRUSTEE IN THE LEASE SHALL NOT BE ADVERSELY
AFFECTED;
(V) THE GUARANTY SHALL NOT BE IMPAIRED IN ANY RESPECT;
(VI) THE SURVIVING COMPANY (IF OTHER THAN LESSEE) SHALL HAVE
OBTAINED ALL GAMING PERMITS NECESSARY FOR THE CONTINUED OPERATION OF
THE CASINO AND THE RESORT; AND
(VII) THE TRANSFEROR SHALL HAVE DELIVERED TO LENDERS, TRUSTEE AND
AGENT A CERTIFICATE OF A RESPONSIBLE OFFICER OF LESSEE AND AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO EACH SUCH PERSON STATING THAT
SUCH TRANSACTION COMPLIES WITH THIS SECTION 5.2(A), THAT ALL CONDITIONS
TO THE CONSUMMATION OF SUCH TRANSACTION HAVE BEEN FULFILLED AND THAT
ALL GOVERNMENTAL ACTION REQUIRED IN CONNECTION WITH SUCH TRANSACTION
HAS BEEN OBTAINED, GIVEN OR MADE.
Upon the consummation of such transaction, the Surviving Company shall succeed
to, and be substituted for, and may exercise every right and power of, the
Transferor immediately prior to such transaction under this Agreement and each
other Operative Document to which the Transferor was a party immediately prior
to such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 5.2, no conveyance, transfer or lease of all or substantially all of the
assets of the Transferor shall release Lessee or Guarantor from its respective
payment or other obligations under this Agreement or any other Operative
Document without the written consent of Trustee, Agent and each Lender.
(b) Parent shall not consolidate with any Person, merge with or
into any Person or convey, transfer or lease to any Person all or substantially
all of its assets in any single transaction (or series of related transactions),
unless, immediately after giving effect to such transaction, the conditions set
forth in clauses (i) through (vi) shall have been satisfied:
(I) THE PERSON FORMED BY SUCH CONSOLIDATION WITH OR INTO WHICH
PARENT SHALL BE MERGED OR THE PERSON WHICH SHALL ACQUIRE BY CONVEYANCE,
TRANSFER OR LEASE ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF PARENT (THE
"SURVIVING COMPANY"), IF OTHER THAN PARENT IMMEDIATELY PRIOR TO SUCH
TRANSACTION, SHALL BE A CORPORATION, PARTNERSHIP, ASSOCIATION OR OTHER
BUSINESS ENTITY THAT IS ORGANIZED UNDER THE LAWS OF THE UNITED STATES
OF AMERICA, A STATE THEREOF OR THE DISTRICT OF COLUMBIA;
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PARTICIPATION AGREEMENT
(II) THE SURVIVING COMPANY (IF OTHER THAN PARENT), IMMEDIATELY
PRIOR TO SUCH TRANSACTION, SHALL EXECUTE AND DELIVER TO EACH OF THE
PARTIES HERETO AN AGREEMENT, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO LENDERS, TRUSTEE AND AGENT, CONTAINING THE ASSUMPTION
BY THE SURVIVING COMPANY OF THE DUE AND PUNCTUAL PAYMENT, PERFORMANCE
AND OBSERVATION OF EACH OBLIGATION, COVENANT AND AGREEMENT OF PARENT
UNDER THIS AGREEMENT AND EACH OTHER OPERATIVE DOCUMENT TO WHICH,
IMMEDIATELY PRIOR TO SUCH TRANSACTION, PARENT WAS A PARTY;
(III) NO LEASE DEFAULT OR LEASE EVENT OF DEFAULT SHALL HAVE
OCCURRED OR WOULD OCCUR AS A RESULT THEREOF;
(IV) THE GUARANTY SHALL NOT BE IMPAIRED IN ANY RESPECT;
(V) THE SURVIVING COMPANY (IF OTHER THAN PARENT) SHALL HAVE
OBTAINED ALL GAMING PERMITS, INCLUDING A FINDING OF SUITABILITY TO OWN
CAPITAL STOCK OF LESSEE, AS THEN REQUIRED BY APPLICABLE LAW;
(VI) PARENT SHALL HAVE DELIVERED TO LENDERS, TRUSTEE AND AGENT A
CERTIFICATE OF A RESPONSIBLE OFFICER OF PARENT AND AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO EACH SUCH PERSON STATING THAT SUCH
TRANSACTION-COMPLIES WITH THIS SECTION 5.2(B), THAT ALL CONDITIONS TO
THE CONSUMMATION OF SUCH TRANSACTION HAVE BEEN FULFILLED AND THAT ALL
GOVERNMENTAL ACTION REQUIRED IN CONNECTION WITH SUCH TRANSACTION HAS
BEEN OBTAINED, GIVEN OR MADE; AND
(VII) IMMEDIATELY AFTER THE CONSUMMATION OF SUCH TRANSACTION, NO
CHANGE OF CONTROL SHALL HAVE OCCURRED.
Upon the consummation of such transaction, the Surviving Company shall succeed
to, and be substituted for, and may exercise every right and power of, Parent
immediately prior to such transaction under this Agreement and each other
Operative Document to which Parent was a party immediately prior to such
transaction, with the same effect as if the Surviving Company had been named
herein and therein. Notwithstanding the foregoing provisions of this Section
5.2(b), no conveyance, transfer or lease of all or substantially all of the
assets of Parent shall release Lessee from its payment or other obligations
under this Agreement or any other Operative Document without the written consent
of Trustee, Agent and each Lender.
SECTION 5.3. Corporate Existence. Subject to Section 5.2, each of
Parent and Lessee shall at all times maintain its existence as a corporation in
good standing under the laws of its respective jurisdiction of incorporation and
shall use commercially reasonable efforts to preserve and keep in full force and
effect its franchises material to its business.
SECTION 5.4. Ownership of Lessee. Parent shall at all times maintain
ownership of 100% of the issued and outstanding capital stock of Lessee
(including all rights to subscribe for, purchase (including by conversion of any
other security) or otherwise acquire any such capital stock), free and clear of
all Liens.
SECTION 5.5. Liens. Neither Lessee nor Parent shall incur or suffer to
exist any Lien on any of the Equipment or the Collateral other than Permitted
Liens. There is no Permitted Lien of the type described in clause (viii) of the
definitions of "Permitted Liens" with respect to the
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PARTICIPATION AGREEMENT
Equipment or the Collateral. Neither Lessee nor Parent shall incur or suffer to
exist any Lien, other than a Permitted Lien, or any of its material assets other
than the Equipment or the Collateral, which, individually or in the aggregate
with other such Liens, is more than $5,000,000.
SECTION 5.6. Financial Covenant Compliance Certificates.
(a) Annual Certificate. Within 90 days after the close of each
fiscal year, Lessee shall deliver to Trustee, Agent, and each Lender a
certificate of Lessee signed by a Responsible Officer of Lessee to the effect
that the signer is familiar with or has reviewed the relevant terms of this
Agreement, the Lease and each other Operative Document to which Lessee is a
party and has made, or caused to be made under his or her supervision, a review
of the transactions contemplated hereby and thereby and the condition of the
Equipment during the preceding fiscal year, and that such review has not
disclosed the existence during such fiscal year of any condition or event which
constitutes a Lease Default, a Lease Event of Default or Casualty (except as
described therein), nor does the signer have knowledge, after due inquiry, of
the existence as at the date of such certificate, of any condition or event
which constitutes a Lease Default, a Lease Event of Default or Casualty or, if
any such condition or event existed or exists, specifying the nature and period
of existence thereof and what action such Lessee has taken or is taking or
proposes to take with respect thereto.
(b) [not used]
(c) [not used]
SECTION 5.7. Investigation by Governmental Authorities. Lessee shall
deliver to Trustee, each Lender and to Agent promptly upon Lessee's receiving
written notice of the intent by a Governmental Authority to (i) revoke, suspend,
enjoin, restrict or modify any Gaming Permit or Liquor Permit necessary for the
ownership or operation of the Casino or gaming operations in respect thereof,
(ii) take an action which would constitute a requisition of title to any of the
Equipment, (iii) investigate the Equipment for a material violation of any
Applicable Law with respect to the Equipment, including any Environmental Law,
under which liability may be imposed upon Trustee, any Lender, Agent or Lessee,
or (iv) investigate the Equipment (other than routine fire, life safety and
similar inspections) for any violation of Applicable Law under which criminal
liability may be imposed upon Trustee, any Lender, Agent or Lessee.
SECTION 5.8. Books and Records. Lessee will, at all times maintain
corporate books and records separate from those of any other Person in
accordance with GAAP.
SECTION 5.9. Payment of Taxes, etc. Lessee shall pay and discharge
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its property, and (ii)
all lawful claims that, if unpaid, might by law become a Lien upon its property,
other than those arising from Permitted Liens;
SECTION 5.10. Inspection. Lessee shall permit Agent, Trustee and
Lenders or any agents or representatives thereof annually (or upon demand during
an Event of Default) to (upon reasonable notice) examine and make copies of and
abstracts from the records and books of account of, Lessee (except for any
proprietary information which involves trade secrets of Lessee) and to discuss
the affairs, finances and accounts of Lessee with any of its officers. Agent,
Trustee, Lenders and any agents or representatives thereof shall keep
confidential and not disclose any confidential written information received from
Lessee in connection with such inspections, subject to Agent's, Trustee's or
Lenders', (a) obligation to disclose such information pursuant to an order under
Applicable Law and regulations or pursuant to a subpoena or other
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PARTICIPATION AGREEMENT
legal process, (b) right to disclose any such information to its bank examiners,
Affiliates, auditors, counsel and other professional advisors but only on a need
to know basis in connection with the Operative Documents and only if such
Persons are similarly bound in a separate writing to the provisions of this
Section 5.10, (c) right to disclose any such information in connection with any
litigation or dispute involving Parent and Lessee or any of its Subsidiaries or
Affiliates and (d) right to provide such information to participants to which
sales of participating interests are permitted pursuant to this Participation
Agreement and prospective assignees to which assignments of interest are
permitted pursuant to this Participation Agreement, but only if such participant
or prospective assignee agrees in writing to maintain the confidentiality of
such information on terms substantially similar to those of this Section as if
it were a "Lender" party hereto. Notwithstanding the foregoing, any such
information supplied to a participant or prospective assignee under this
Participation Agreement shall cease to be confidential information if it is or
becomes known to such Person by other than unauthorized disclosure, or if it
becomes a matter of public knowledge. Lessee shall upon reasonable notice from
Agent (except that no notice shall be required if an Event of Default has
occurred and is continuing) permit Agent, Trustee and Lenders and their
respective authorized representatives to inspect the Equipment during normal
business hours, provided that such inspections shall not unreasonably interfere
with Lessee's business operations at the Resort. Annual inspections by Agent and
all inspections following the occurrence of Event of Default shall be conducted
at the cost and expense of Lessee.
SECTION 5.11. Maintenance of Property, etc. Lessee shall maintain and
preserve all material assets used or useful in the conduct of its business in
good working order and condition.
SECTION 5.12. Maintenance of Insurance. Lessee shall maintain insurance
coverage covering the Equipment which meets in all respects the requirements of
Article IX of the Lease, and such coverage shall remain in full force and
effect. Without limiting the foregoing, Lessee shall carry insurance with
reputable insurers, or self-insure, in respect of its material assets, in such
manner, in such amounts and against such risks as is customarily maintained by
other Persons of similar size engaged in a similar business.
SECTION 5.13. Change of Name or Principal Place of Business. Lessee
shall furnish to Trustee, Agent and Lenders notice on or before the thirtieth
day before any relocation of its chief executive office, principal place of
business or the office where it keeps its records concerning its accounts or
contract rights relating to the Equipment or the Equipment or Lessee changes its
name, identity or corporate structure.
SECTION 5.14. Financial and Other Information. Parent and Lessee shall
deliver to Trustee, each Lender and Agent the following financial and other
information:
(a) Audited Statements. As soon as available and in any event
within 90 days after the end of each fiscal year of Parent, a consolidated
balance sheet of Parent and its consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations, cash flows
and common shareholders' equity for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, with such
consolidated financial statements audited by independent public accountants of
nationally recognized standing acceptable to Agent, which such report shall be
without qualifications other than qualifications acceptable to all Lenders,
together with a certificate from such accountant to the effect that, in making
the examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or Event of Default that
has occurred and is
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continuing, or, if they have become aware of such Default or Event of Default,
describing such Default or Event of Default and the steps, if any, being taken
to cure it.
(b) Quarterly Statements. As soon as available and in any event
within 45 days after the end of each of the first three quarters of each fiscal
year of Parent, the consolidated balance sheet of Parent and its consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statement of operations and cash flows of Parent and its consolidated
Subsidiaries for the portion of Parent's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter of, and the corresponding portion of Parent's preceding
fiscal year, all certified (subject, in the case of such quarterly financial
statements, to normal year-end auditing adjustments) by the chief financial
officer of Parent as to fairness of presentation and preparation in accordance
with GAAP applied on a basis consistent with those used in preparing the
financial statements referred to in Section 5.14(a) (subject to such changes in
accounting principles as shall be described in such certificate and shall have
been approved in writing attached to such certificate by Parent's independent
accountants).
(c) Pension Plan. If and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or contribution
due any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief accounting
officer of Parent setting forth details as to such occurrence and action, if
any, which Parent or applicable member of the ERISA Group is required or
proposes to take.
(d) Default. As soon as possible and in any event within three
Business Days after the occurrence of each Default or Event of Default under any
Operative Document a statement of an officer of Parent setting forth details of
such Default or Event of Default and the action that Parent proposes to take
with respect thereto.
(e) Condition. Promptly upon becoming aware thereof, written
notice of any Material Adverse Effect.
(f) Proceedings. Promptly upon becoming aware thereof, written
notice of the commencement or existence of any proceeding against Parent or any
Affiliate of Parent by or before any Governmental Authority that might, in the
reasonable judgment of Parent, result in a Material Adverse Effect.
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(g) Environmental. As soon as possible and in any event within 10
days after the occurrence of any Environmental Violation or alleged
Environmental Violation, a statement of an authorized officer setting forth the
details of such violation or alleged violation and the action which Parent
proposes to take with respect thereto.
(h) Security Reports. As soon as available and in any event within
45 days after the end of each of the first three fiscal quarters of each fiscal
year of Parent, Form 10Qs of Parent shall have been delivered to Trustee (with
copies for each Lender) and within 90 days after the end of each fiscal year of
Parent, Form 10K of Parent shall have been delivered to Trustee (with copies for
each Lender).
(i) Annual Projections. As soon as possible and in any event no
later than 45 days after the commencement of each calendar year of Parent,
financial projections of Parent and its Subsidiaries for such calendar year
setting forth, in reasonable detail, a statement, on a monthly basis, of the
projected consolidated expenses and cash flows of Parent and its Subsidiaries.
(j) Other Information. Promptly upon written request therefore,
any other information in respect of Parent or Lessee reasonably requested by
Agent.
SECTION 5.15. Securities. Neither Lessee nor Parent, nor anyone
authorized to act on behalf of either of them, will take any action which would
subject the issuance or sale of the Notes, the Equipment or the Lease, or in any
security or lease the offering of which, for purposes of the Securities Act or
any state securities laws, would be deemed to be part of the same offering as
the offering of the aforementioned securities or leases to the registration
requirements of Section 5 of the Securities Act or any state securities laws.
ARTICLE VI
COVENANTS OF TRUSTEE AND LENDERS
SECTION 6.1. Covenants of Trustee and Lenders.
(a) Discharge of Liens. Each of Lenders and Trustee covenants as
to itself, and not jointly with any other Lender, that it will not, directly or
indirectly, create, incur, assume or permit to exist at any time, and will, at
its own cost and expense, take such. action as may be necessary to promptly
discharge, or to cause to be discharged, any Lessor Liens attributable to it,
and will indemnify the Trust Estate in the amount of any diminution of the value
thereof and any costs and expenses associated therewith as a result of its
failure to comply with its obligations under this Section 6.1(a).
Notwithstanding the foregoing, none of Lenders or Trustee, as the case may be,
shall be required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so long
as such proceedings shall not involve any risk of invalidity or the loss of
priority of the Lien of the Security Agreement or any risk of the sale,
forfeiture, foreclosure or loss of, and shall not interfere with the use or
disposition of, any part of the Equipment, the Lease or the Trust Estate or
title thereto or any interest therein or the payment of Rent; provided, however,
that each Lender and Trustee shall discharge any such Lessor Lien, whether or
not subject to contest as provided above, upon the purchase of the Equipment by
Lessee pursuant to the Lease.
(b) Trust Agreement. Without prejudice to any right under the
Trust Agreement of Trustee to resign, or Lenders' right under the Trust
Agreement to remove Trustee, Trustee hereby agrees with Lessee, Lenders and
Agent (i) not to terminate or revoke the trust
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created by the Trust Agreement except as permitted by Article IV of the Trust
Agreement prior to the later of the Lease Termination Date or the payment in
full of the obligations under the Notes, (ii) not to amend, supplement or
otherwise modify or consent to any amendment, supplement or modification of any
provision of the Trust Agreement prior to the Lease Termination Date in any
manner which would have a Material Adverse Effect on the rights of any such
party thereto, and (iii) to comply with all of the terms of the Trust Agreement
applicable to it except for such nonperformance which would adversely affect
such party.
(c) Successor Trustee. Trustee or any successor may resign or be
removed by Lenders as Trustee, a successor Trustee may be appointed, and a
corporation may become Trustee under the Trust Agreement, only in accordance
with the provisions of Article III of the Trust Agreement. Notwithstanding
anything to the contrary contained in this Agreement or the Trust Agreement, so
long as no Default or Event of Default shall be continuing, the appointment of a
successor Trustee shall be subject to the consent of Lessee (such consent is not
to be unreasonably withheld or delayed). In addition, so long as there exists no
Default or Event of Default, Lessee or Parent may request Agent to remove
Trustee in accordance with Section 3.10 of the Trust Agreement. Upon receipt of
such request, Agent shall survey the Required Lenders to determine whether to
proceed to remove Trustee. If the Required Lenders consent to such removal,
Trustee shall be removed in accordance with Section 3.10 of the Trust Agreement.
(d) Indebtedness; Other Business. Trustee on behalf of the Trust
shall not contract for, create, incur or assume any indebtedness, or enter into
any business or other activity, other than pursuant to or under the Operative
Documents and, for the benefit of Lessee, Agent and Lenders, agrees to be bound
by Section 1.2(b) of the Trust Agreement.
(e) Change of Principal Place of Business. Trustee shall give
prompt notice to Lenders, Lessee and Agent if Trustee's principal place of
business or chief executive office, or the office where the records concerning
the accounts or contract rights relating to the Equipment or the transactions
contemplated by the Operative Documents are kept, shall cease to be located at
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or if it shall change
its name, identity or corporate structure.
(f) Loan Agreement. Trustee, Agent, Lessee, and each Lender hereby
agrees that, so long as the Lease is in effect, Trustee shall not consent to or
permit any amendment of the terms and provisions of the Loan Agreement or any
Note, whether or not any Lease Event of Default shall have occurred and be
continuing, if any such amendment or action would have the effect of increasing
the obligations of Lessee or decreasing the rights of Lessee, in each case
without the prior written consent of Lessee, except that without such consent,
Trustee may waive performance by Agent of obligations to Trustee the
non-performance of which does not adversely affect Lessee. Each Lender agrees to
comply with Section 7.7 of the Loan Agreement.
(g) Funding. Trustee shall give prompt notice to Lenders, Lessee
and Agent in the event any Lender does not fund the full amount to be funded by
such Lender on the Advance Date as described in Article II.
(h) Lease Financing Party Removal. If any of the Lessor, Trustee,
Lenders or Agent (and any successors thereto) (each, a "Lease Financing Party")
is found by any Gaming Authority to be unsuitable or unqualified for any
license, registration, approval or finding of suitability to serve as Lessor,
Trustee, Lender or Agent, or otherwise to be associated with Lessee or any
Guarantor, or the Board of Directors of Parent determines in its reasonable
judgment that such Lease Financing Party's continued association with Lessee or
the Guarantor may result in
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PARTICIPATION AGREEMENT
(i) the disapproval, modification, or non-renewal of any contract under which
Parent or any Subsidiary thereof has sole or shared authority to manage any
gaming operations, or (ii) the loss or non-reinstatement of any license,
registration, approval, finding of suitability or franchise from any Gaming
Authority held by Parent or any Subsidiary thereof to conduct any portion of the
business of Parent or any Subsidiary thereof, such Lease Financing Party agrees,
upon receiving payment in cash in full of all outstanding principal amounts,
accrued interest, fees and all other amounts payable to it under the Operative
Documents, to cooperate with Parent with respect to the assignment, sale or
transfer of such Lease Financing Party's interest in the Operative Documents as
Lessor, Trustee, Lender or Agent, as appropriate, to a suitable party and
complete such assignment, sale or transfer within 30 days of a request by Parent
to do so (or such lesser period of time as required by any Gaming Authority).
(i) Filings and Recordings. Agent, Lenders and Trustee shall amend the
UCC Financing Statements filed pursuant to Section 3.1(f) to more clearly
identify the items of Equipment securing the obligations created under the Lease
and other Operative Documents if (A) Lessee proposes to do another secured
financing secured by similar type or types of Equipment and (B) Lessee requests
in writing of Agent, Lenders and Trustee that the description of the similar
items of Equipment in the UCC Financing Statements, when it is practical to do
so, be modified so that only items of Equipment subject to the Lease are covered
by such UCC Financing Statements. When it is impractical to further identify the
items of Equipment described in the UCC Financing Statements, the parties hereto
will be under no obligation to modify such financing statements, although Lessee
may propose, at its expense, that Agent, Trustee and Lenders enter into an
intercreditor agreement or similar instrument with the proposed new secured
creditor or creditors to facilitate the proposed secured financing.
SECTION 6.2. Restrictions On and Effect of Transfer. No Lender shall
assign and delegate all or any portion of its right, title or interest in, to or
under any of the Operative Documents, its Commitment, the Loans or any Note,
except (x) that any Lender may pledge, assign or grant a security interest in
its interest to any Federal Reserve Board or any other central bank authority
with respect to such Lender, (y) upon satisfaction of the conditions set forth
in clauses (a) through (d) of this Section 6.2 any Lender may transfer all or
any ratable portion of its interest to an Affiliate or to any other existing
Lender or any Affiliate of such Lender and, upon compliance with any applicable
provisions of Section 6.3(a), may sell, assign or otherwise transfer a
participation in its interest in any of the foregoing; provided, that no
Participating Entity (as hereinafter defined) shall become, by means of such
transfer, a Lender under the Operative Documents, and Lessee shall be entitled
to continue to deal for all purposes under the Operative Documents exclusively
with Lender who has transferred such participation, and (z) any Lender may
assign and delegate any ratable portion or all of such right, title and interest
upon the satisfaction of each of the following conditions (which conditions will
not be applicable to a transfer pursuant to clause (x) or (y) of this Section
6.2):
(a) Required Notice and Effective Date. Any Lender desiring to
effect a transfer of its interest shall give written notice of each such
proposed transfer to Parent, Lessee and Agent at least three Business Days prior
to such proposed transfer, setting forth the name of such proposed transferee,
the percentage of interest to be retained by such Lender, if any, and the date
on which such transfer is proposed to become effective. All reasonable
out-of-pocket costs incurred by Trustee or Agent in connection with any such
disposition by a Lender under this Section 6.2 shall be borne by such Lender. In
the event of a transfer under this Section 6.2, any
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PARTICIPATION AGREEMENT
expenses incurred by the transferee in connection with its review of the
Operative Documents and its investigation of the transactions contemplated
thereby shall be borne by such transferee or the relevant Lender, as they may
determine, but shall not be considered costs and expenses which Lessee is
obligated to pay or reimburse under Section 9.8.
(b) Assumption of Obligations. Any transferee pursuant to this
Section 6.2 shall have executed and delivered to Agent and Trust Company a
letter in substantially the form of the Investor's Letter attached hereto as
Exhibit K, and thereupon the obligations of the transferring Lender under the
Operative Documents shall be proportionately released and reduced to the extent
of such transfer. Upon any such transfer as above provided, (i) the transferring
Lender shall still be entitled to the benefit of Article VII, and (ii) the
transferee shall be deemed to be bound by all obligations (whether or not yet
accrued) under, and to have become a party to, all Operative Documents to which
its transferor was a party, shall be deemed the pertinent "Lender" for all
purposes of the Operative Documents and shall be deemed to have made that
portion of the payments pursuant to this Agreement previously made or deemed to
have been made by the transferor represented by the interest being conveyed; and
each reference herein and in the other Operative Documents to the pertinent
"Lender" shall thereafter be deemed a reference to the transferee, to the extent
of such transfer, for all purposes. Upon any such transfer, Schedules I, II, and
III to this Agreement, as applicable, shall be deemed to be revised to reflect
the relevant information for such new Lender and the Commitment of such new
Lender (and the revised Commitment of the transferor Lender if it shall not have
transferred its entire interest).
(c) Employee Benefit Plans. No Lender may make any such
assignment, conveyance or transfer to or in connection with any arrangement or
understanding in any way involving any employee benefit plan (or its related
trust), as defined in Section 3(3) of ERISA, or with the assets of any such plan
(or its related trust), within the meaning of Section 4975(e)(1) of the Code
(other than a governmental plan, as defined in Section 3(32) of ERISA), with
respect to which Lessee or such Lender or any of their Affiliates is a "party in
interest" within the meaning of ERISA Section 3(14) or a "disqualified person"
within the meaning of Section 4975(e)(2) of the Code.
(d) Representations and Warranties. Notwithstanding anything to
the contrary set forth above, no Lender may assign, convey or transfer its
interest to any Person unless such Person shall have delivered to Agent and
Lessee a certificate confirming the accuracy of the representations and
warranties set forth in Section 4.3 with respect to such Person (other than as
such representation or warranty relates to the execution and delivery of
Operative Documents).
(e) Amounts. Any transfer of Notes shall be in a principal amount
which is equal to or greater than $1,000,000, or, if less, the full amount of
such Lender's Loan or Commitment.
(f) Effect. From and after any transfer of its Notes, the
transferring Lender shall be released, to the extent assumed by the transferee,
from its liability and obligations hereunder and under the other Operative
Documents relating to the Equipment to which such transferor is a party in
respect of obligations to be performed on or after the date of such transfer.
Upon any transfer by a Lender as above provided, any such transferee shall be
deemed a "Lender" for all purposes of such documents and each reference herein
to a Lender shall thereafter be deemed a reference to such transferee for all
purposes, except as the context may otherwise require.
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PARTICIPATION AGREEMENT
Notwithstanding any transfer pursuant to this Section 6.2, the transferor shall
continue to be entitled to all benefits accrued and all rights vested prior to
such transfer, including rights to indemnification under this Agreement or any
other Operative Document.
SECTION 6.3. Participations.
(a) Participations. Each Lender covenants and agrees that it will not
grant participations in its Notes to any Person (a "Participating Entity")
unless such Person (i) is a bank or other financial institution or finance
company and (ii) represents and warrants, in writing, to such Lender for the
benefit of Lenders and Lessee that no part of the funds used by it to acquire an
interest in the Notes constitutes assets of any Employee Benefit Plan or its
related trust. Any such transferor Lender shall require any transferee of its
interest in the Notes to make the representations and warranties set forth in
the preceding sentence, in writing, to such Person for its benefit and the
benefit of Lenders and Lessee. In the event of any such sale by a Lender of a
participating interest to a Participating Entity such Lender's obligations under
this Agreement and under the other Operative Documents shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of its Note for all purposes under this Agreement
and under the other Operative Documents, and Trustee, Agent and, except as set
forth in Section 6.3(b), Lessee shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and under the other Operative Documents, and such Lender shall retain
the sole right to enforce the obligations of Lessee and Guarantor under the
Operative Documents and to approve any amendment, modification or waiver of any
provision of any Operative Document. Any Lender selling a participation shall
give notice thereof to Lessee and Parent within ten (10) Business Days after
such sale.
(b) Transferee Indemnities. Each Participating Entity shall be
entitled to the benefits of Sections 2.9, 2.10, 2.11 and 2.12 of the Loan
Agreement and Articles VII and VIII with respect to its participation in the
Notes outstanding from time to time; provided, that no Participating Entity in
respect of its participation shall be entitled to receive any greater amount
pursuant to such Sections than the transferor Lender would have been entitled to
receive in respect of the amount of the participation in the Notes transferred
by such transferor Lender to such Participating Entity had no such transfer of a
participation occurred.
SECTION 6.4. Required Transfers. If at any time during the Lease Term
any Lender shall request from Trustee or Lessee reimbursement for any costs
pursuant to Section 2.09, 2.10 or 2.11 of the Loan Agreement (which cost Lessee
is obligated to pay as Supplemental Rent under Section 3.2 of the Lease), such
Lender shall, upon request of Lessee or Agent, attempt in good faith to promptly
sell to a Person who would qualify under Section 6.3(a) the Notes held by such
Lender, the Commitment of such Lender and any other interests of such Lender
hereunder and under the other Operative Documents, in accordance with this
Section 6.4, in exchange for an amount equal to the outstanding principal amount
of such Lender's Notes together with all interest accrued thereon and unpaid to
the date of such purchase and all other amounts then due and payable hereunder
or under the other Operative Documents to such Lender (including any requested
reimbursement amounts).
ARTICLE VII
GENERAL INDEMNITY
SECTION 7.1. General Indemnification. Lessee and Parent agree, whether
or not any of
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PARTICIPATION AGREEMENT
the transactions contemplated hereby shall be consummated, to assume liability
for, and to indemnify, protect, defend, save and keep harmless each Indemnitee
on an After-Tax Basis from and against any and all Claims that may be imposed
on, incurred by or asserted against such Indemnitee (whether because of action
or omission by such Indemnitee or otherwise), whether or not such Indemnitee
shall also be indemnified as to any such Claim by any other Person and whether
or not such Claim arises or accrues prior to the Closing Date or after the Lease
Termination Date, in any way relating to or arising out of (a) any of the
Operative Documents or any of the transactions contemplated thereby or any
investigation, litigation or proceeding in connection therewith, and any
amendment, modification or waiver in respect thereof; or (b) the Resort or any
part thereof or interest therein; or (c) the acquisition, mortgaging, design,
construction, preparation, installation, inspection, delivery, non-delivery,
acceptance, rejection, purchase, ownership, possession, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, operation, condition, sale (including any transfer pursuant to
Section 5.2 of the Lease or any sale pursuant to Section 5.1 of the Lease),
return or other disposition of all or any part of any interest in the Equipment
or the imposition of any Lien (or incurring of any liability to refund or pay
over any amount as a result of any Lien) thereon, including: (i) Claims or
penalties arising from any violation of law or in tort (strict liability or
otherwise), (ii) latent or other defects, whether or not discoverable, and (iii)
any Claim for patent, trademark or copyright infringement; or (d) any activity,
occurrence or condition that violates or results in non-compliance with any
Environmental Law arising out of or in any way relating to the Resort or any
part thereof or interest therein; (e) the offer, issuance, sale or delivery of
the Notes; (f) the breach or alleged breach by Lessee of any representation or
warranty made by it or deemed made by it in any Operative Document; (g) the
transactions contemplated hereby or by any other Operative Document (except for
any violation of Section 4.2(c)), in respect of the application of Parts 4 and 5
of Subtitle B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code or (h) any other agreement entered into or assumed
by Lessee in connection with the Equipment; provided, however, that neither
Parent not Lessee shall be required to indemnify under this Section 7.1 for any
of the following: (1) as to an Indemnitee, any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee or, if such
Indemnitee is Trust Company, ordinary negligence for the handling of funds
(other than willful misconduct or gross negligence imputed to such Indemnitee by
reason of its participation in the transactions contemplated hereby) or the
breach by such Indemnitee of any representation, warranty or covenant of such
Indemnitee set forth in any Operative Document, (2) as to an Indemnitee, any
Claim resulting from a transfer by such Indemnitee of all or any part of its
interest in the Lease, the other Operative Documents or the Equipment, other
than any such transfer either required by the Lease (including a transfer as a
result of a Casualty or a transfer pursuant to Section 5.1 or 5.2 of the Lease)
or any other Operative Document or while a Lease Event of Default shall have
occurred and be continuing, (3) any Claims in respect of Taxes (such Claims to
be subject to Article VIII, other than a payment necessary to make payments
under this Section 7.1 on an After-Tax Basis, provided, that this exclusion does
not apply to any taxes or penalties included in Claims against which the
Indemnitee is provided an indemnification under subsection (f) of this Section
7.1 and (4) as to an Indemnitee, any Claim resulting from Lessor Liens which
such Indemnitee is responsible for discharging under the Operative Documents.
Lessee shall be entitled to credit against any payments due under this
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PARTICIPATION AGREEMENT
Section 7.1 any insurance recoveries received by an Indemnitee in respect of the
related Claim under or from insurance paid for by Lessee or assigned to Trustee
by Lessee.
If Lessee shall obtain actual knowledge of any Claim indemnified against
under this Section 7.1, Lessee shall give prompt notice thereof to the
appropriate Indemnitee or Indemnitees, and if any Indemnitee shall obtain actual
knowledge of any Claim indemnified under this Section 7.1, such Indemnitee shall
give prompt notice thereof to Lessee, provided that failure to so notify Lessee
shall release Lessee from its obligations to indemnify hereunder only if and to
the extent that such failure results in a forfeiture by Lessee of substantive
rights and defenses. With respect to any amount that Lessee is requested by an
Indemnitee to pay by reason of this Section 7.1, such Indemnitee shall, if so
requested by Lessee and prior to any payment, submit such additional information
to Lessee as Lessee may reasonably request and which is reasonably available to
such Indemnitee to substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee for which the Indemnitee is indemnified under this Section 7.1, such
Indemnitee shall notify Lessee of the commencement thereof, and Lessee shall be
entitled, at its expense, acting through counsel reasonably acceptable to such
Indemnitee, to participate in, and, to the extent that Lessee desires to, assume
and control the defense thereof; provided, however, that Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee in
respect of such action, suit or proceeding; and provided, further, that Lessee
shall not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x)(i) such action, suit or proceeding involves any risk of
imposition of criminal liability or (ii) such action, suit or proceeding
involves any material risk of material civil liability on such Indemnitee or
will involve a material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Equipment, the Trust Estate or
any part thereof, unless, in the case of this clause (x)(ii), Lessee shall have
posted a bond or other security satisfactory to the relevant Indemnitees in
respect to such risk or (y) the control of such action, suit or proceeding would
involve a bona fide conflict of interest, (B) such proceeding involves Claims
not fully indemnified by Lessee which Lessee and the Indemnitee have been unable
to sever from the indemnified Claim(s), (C) a Default or a Lease Event of
Default has occurred and is continuing or (D) such action, suit or proceeding
involves matters which extend beyond or are unrelated to the transactions
contemplated by the Operative Documents and if determined adversely could be
materially detrimental to the interests of such Indemnitee notwithstanding
indemnification by Lessee. Indemnitee, on the one hand, and Lessee and Parent,
on the other hand, may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by each other in accordance
with the foregoing.
Each Indemnitee shall at Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee as are necessary or
advisable for Lessee to participate in any action, suit or proceeding to the
extent permitted by this Section 7.1. Unless a Lease Event of Default shall have
occurred and be continuing, no Indemnitee shall enter into any settlement or
other compromise with respect to any Claim which is entitled to be indemnified
under this Section 7.1 the prior written consent of Lessee, which consent shall
not be unreasonably withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Section 7.1 with respect to such Claim. In
addition, if an Indemnitee, in violation of
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PARTICIPATION AGREEMENT
Lessee's right to assume and control the defense of any Claim, refuses to permit
Lessee to control the defense, such Indemnitee waives its right to be
indemnified under Section 7.1 with respect to such Claim.
Upon payment in full of any Claim by Lessee pursuant to this Section 7.1 to
or on behalf of an Indemnitee, Lessee, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto
(other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with Lessee and give such further
assurances as are necessary or advisable to enable Lessee vigorously to pursue
such claims.
Any amount payable to an Indemnitee pursuant to this Section 7.1 shall be
paid to such Indemnitee promptly upon receipt of a written demand therefor from
such Indemnitee, accompanied by a written statement describing the basis for
such indemnity and the computation of the amount so payable and, if requested by
Lessee, such determination shall be verified by a nationally recognized
independent accounting firm mutually acceptable to Lessee and the Indemnitee at
Lessee's expense.
ARTICLE VIII
GENERAL TAX INDEMNITY
SECTION 8.1. General Tax Indemnity. Except as otherwise provided in this
Section 8.1, Lessee shall pay on an After-Tax Basis, and on written demand shall
indemnify and hold each Indemnitee harmless from and against, any and all fees
(including documentation, recording, license and registration fees), taxes
(including income (whether net, gross or adjusted gross, whether domestic or
foreign), gross receipts, sales, rental, use, turnover, value-added, property,
excise and stamp taxes), levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever, together with any penalties, fines or
interest thereon or additions thereto (any of the foregoing being referred to
herein as "Taxes" and individually as a "Tax") imposed on or with respect to any
Indemnitee, the Equipment or any portion thereof, any Operative Document or
Lessee or any sublessee or user of the Equipment, by any foreign authority, the
United States or by any state or local government or other taxing authority in
the United States in connection with or in any way relating to (i) the
acquisition, design, construction, preparation, installation, inspection,
delivery, non-delivery, acceptance, rejection, purchase, ownership, possession,
rental, lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, transfer of title, redelivery,
use, financing, refinancing, operation, condition, sale, return or other
application or disposition of all or any part of the Equipment or the imposition
of any Lien (or incurrence of any liability to refund or pay over any amount as
a result of any Lien) thereon, (ii) Rent or the receipts or earnings arising
from or received with respect to the Equipment or any part thereof, or any
interest therein or any applications or dispositions thereof, (iii) any other
amount paid or payable pursuant to the Notes, or any other Operative Documents,
the property or the income or other proceeds with respect to the property held
in the Trust Estate, (iv) the Equipment or any part thereof or any interest
therein, (v) all or any of the Operative Documents, any other documents
contemplated thereby and any amendments and supplements thereto, and (vi)
otherwise with respect to or in connection with the transactions contemplated by
the Operative Documents;
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PARTICIPATION AGREEMENT
provided, that Lessee's indemnification obligation hereunder in respect of any
Tax shall be net of any foreign, federal, state or local income tax benefits
which are recognized by the relevant Tax Indemnitee as a result of the
imposition of such Tax).
SECTION 8.2. Exclusions from General Tax Indemnity. Section 8.1 shall not
apply to:
(a) Taxes on, based on, or measured by or with respect to the net
income of an Indemnitee (including minimum Taxes, capital gains Taxes, Taxes on
or measured by items of tax preference or alternative minimum Taxes) other than
(A) any such Taxes that are, or are in the nature of, sales, use, rental (other
than Taxes imposed on net rental income) or property Taxes, (B) withholding
Taxes imposed by the United States or Nevada (I) on payments with respect to the
Notes, or (II) on Rent, to the extent the net payment of Rent after deduction of
such withholding Taxes would be less than amounts currently payable with respect
to the Notes and (C) any such Taxes imposed on such Indemnitee by any state
(other than Nevada) or local taxing authority in such state to the extent such
Taxes are imposed as a result of Lessee moving the Equipment or any part thereof
to such state;
(b) Taxes that are based on, measured by or imposed with respect to
the fees or other compensation received by a Person acting as Trustee or Agent
(in their respective individual capacities) or any Affiliate of any thereof for
acting as trustees under the Trust Agreement or the Loan Agreement,
respectively;
(c) Taxes that result from any act, event or omission, or are
attributable to any period of time, that occurs after the earliest of (A) the
expiration of the Lease Term with respect to the Equipment and, if the Equipment
is required to be returned to Trustee in accordance with the Lease, such return
and (B) the discharge in full of Lessee's obligations to pay the Lease Balance,
or any amount determined by reference thereto, with respect to the Equipment and
all other amounts due under the Lease and other Operative Documents, unless such
Taxes (and interest, penalties and late charges related thereto) relate to acts,
events or matters occurring prior to the earliest of such times or are imposed
on or with respect to any payments due under the Operative Documents after such
expiration or discharge; or
(d) Taxes imposed on an Indemnitee that result from any voluntary
sale, assignment, transfer or other disposition by such Indemnitee or any
related Indemnitee of any interest in the Equipment or any part thereof, or any
interest therein or any interest or obligation arising under the Operative
Documents or any Notes, or from any sale, assignment, transfer or other
disposition of any interest in such Indemnitee or any related Indemnitee, it
being understood that each of the following shall not be considered a voluntary
sale: (A) any substitution, replacement or removal of any of the Equipment by
Lessee shall not be treated as a voluntary action of any Tax Indemnitee, (B) any
sale or transfer resulting from the exercise by Lessee of any early termination
option, (C) any transfer under Section 5.2 of the Lease and (D) any sale or
transfer while a Lease Event of Default shall have occurred and be continuing
under the Lease.
SECTION 8.3. Contests. If any Claim shall be made against any Indemnitee or
if any proceeding shall be commenced against any Indemnitee (including a written
notice of such proceeding) for any Taxes as to which Lessee may have an
indemnity obligation pursuant to Section 8.2, or if any Indemnitee shall
determine that any Taxes as to which Lessee may have an indemnity obligation
pursuant to Section 8.2 may be payable, such Indemnitee shall promptly notify
Lessee. Lessee shall be entitled, at its expense, acting through counsel
reasonably acceptable to such Indemnitee, to participate in, and, to the extent
that Lessee desires to, assume and control the defense thereof; provided,
however, that Lessee shall have acknowledged in writing its obligation to
indemnify fully such Indemnitee in respect of such action, suit or proceeding;
and, provided, further, that Lessee shall not be entitled to assume
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PARTICIPATION AGREEMENT
and control the defense of any such action, suit or proceeding if and to the
extent that (A) Lessee is not able to provide such Indemnitee with a legal
opinion of counsel reasonably acceptable to such Indemnitee that such action,
suit or proceeding does not involve (x) a risk of imposition of criminal
liability or (y) any material risk of material civil liability on such
Indemnitee and will not involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien) on the Equipment,
the Trust Estate or any part thereof, unless, in the case of this clause (y),
Lessee contemporaneously with such opinion shall have posted a bond or other
security satisfactory to the relevant Indemnitee in respect to such risk, (B)
the control of such action, suit or proceeding would involve a bona fide
conflict of interest, (C) such proceeding involves Claims not fully indemnified
by Lessee which Lessee and the Indemnitee have been unable to sever from the
indemnified claim(s), (D) a Lease Event of Default has occurred and is
continuing or (E) such action, suit or proceeding involves matters which extend
beyond or are unrelated to the transaction contemplated by the Operative
Documents and if determined adversely could be materially detrimental to the
interests of such Indemnitee notwithstanding indemnification by Lessee.
Indemnitee, on the one hand, and Lessee and Parent, on the other hand, may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by each other in accordance with the foregoing.
Each Indemnitee shall at Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee as are necessary or
advisable for Lessee to participate in any action, suit or proceeding to the
extent permitted by this Section 8.3. Unless a Lease Event of Default shall have
occurred and be continuing, no Indemnitee shall enter into any settlement or
other compromise with respect to any Claim which is entitled to be indemnified
under this Section 8.3 without the prior written consent of Lessee, which
consent shall not be unreasonably withheld, unless such Indemnitee waives its
right to be indemnified under this Section a.3 with respect to such Claim. In
addition, if an Indemnitee, in violation of Lessee's right to assume and control
the defense of any Claim, refuses to permit Lessee to control the defense, such
Indemnitee waives its right to be indemnified under Section 8.1 with respect to
such Claim.
Notwithstanding anything contained herein to the contrary, an Indemnitee
will not be required to contest (and Lessee shall not be permitted to contest)
(a) a Claim with respect to the imposition of any Tax if such Indemnitee shall
waive its right to indemnification under this Section 8.3 with respect to such
claim (and any related claim with respect to other taxable years the contest of
which is precluded or otherwise adversely affected as a result of such waiver)
and (b) any Claim if the subject matter thereof shall be of a continuing nature
and shall have previously been decided adversely. Each Indemnitee and Lessee
shall consult in good faith with each other concerning each step and decision
regarding the conduct of such contest controlled by either, including the forum
in which the claim is most likely to be favorably resolved.
SECTION 8.4. Payments. Any Tax indemnifiable under this Article VIII shall
be paid directly when due to the applicable taxing authority if direct payment
is practicable and permitted. If direct payment to the applicable taxing
authority is not permitted or is otherwise not made, any amount payable to an
Indemnitee pursuant to Section 8.1 shall be paid within 30 days after receipt of
a written demand therefor from such Indemnitee accompanied by a written
40
41
PARTICIPATION AGREEMENT
statement describing in reasonable detail the amount so payable, but not before
the date that the relevant Taxes are due. Any payments made pursuant to Section
8.1 directly to the Indemnitee entitled thereto or Lessee, as the case may be,
shall be made in immediately available funds at such bank or to such account as
specified by the payee in written directions to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of
the payee by certified mail, postage prepaid at its address as set forth in this
Agreement. Upon the request of any Indemnitee with respect to a Tax that Lessee
is required to pay, Lessee shall furnish to such Indemnitee the original or a
certified copy of a receipt for Lessee's payment of such Tax or such other
evidence of payment as is reasonably acceptable to such Indemnitee.
SECTION 8.5. Reports. If any report, return or statement is required to be
filed with respect to any Taxes that are subject to indemnification under this
Article VIII, Lessee shall, if Lessee is permitted by Applicable Law, timely
prepare and file such report, return or statement; provided, however, that if
Lessee is not permitted by Applicable Law to file any such report Lessee will
promptly so notify the appropriate Indemnitee, in which case the Indemnitee will
file any such report after preparation thereof by Lessee.
SECTION 8.6. Withholding Tax Exemption. At least 10 Business Days prior to
the first date on which any payment is due under any Note for the account of any
Lender, which is a "foreign corporation, partnership or trust" within the
meaning of the Code and such Lender claims exemption from, or a reduction of
U.S. withholding tax under Section 1441 or 1442 of the Code, such Lender agrees
that it will have delivered to each of Lessee, Trustee and Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lender is entitled to receive payments under
the Operative Documents without deduction or withholding of any United States
Federal income taxes in accordance with Section 7.10 of the Loan Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery and the termination or expiration of
this Agreement and any of the Operative Documents, the transfer of the Equipment
to or by Trustee as provided herein or in any other Operative Documents, any
disposition of any interest of Trustee in the Equipment, the purchase and sale
of the Notes, payment therefor and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party hereto or
to any of the other Operative Documents and the fact that any such party may
waive compliance with any of the other terms, provisions or conditions of any of
the Operative Documents.
SECTION 9.2. No Broker. etc. Neither Lessee nor Parent has incurred any
fees or commissions to which Trustee, Agent or any Lender might be subjected by
virtue of their entering into the transactions contemplated by this Agreement.
Any party who is in breach of this representation shall indemnify and hold the
other parties harmless from and against any liability arising out of such breach
of this representation.
SECTION 9.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been given (i) in the case of notice by letter,
the earlier of when delivered to the addressee
41
42
PARTICIPATION AGREEMENT
by hand or courier if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter or on the fourth Business Day
after depositing the same in the mails, registered or certified mail, postage
prepaid, return receipt requested, and (ii) in the case of notice by facsimile
or bank wire, when receipt is confirmed if delivered on a Business Day and, if
not delivered on a Business Day, the first Business Day thereafter, addressed as
provided in Schedule III, or to such other address as any of the parties hereto
may designate by written notice.
SECTION 9.4. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same agreement.
SECTION 9.5. Amendments. Neither this Agreement nor any of the other
Operative Documents nor any of the terms hereof or thereof may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification shall be sought and consented to
by the Required Lenders; and no such termination, amendment, supplement, waiver
or modification shall be effective unless a signed copy thereof shall have been
delivered to Trustee, Lessee and Agent. Trustee and Lessee shall not be
permitted to amend, modify or supplement the Lease without the written consent
of the Required Lenders; provided, that without the prior written consent of
each Lender, Trustee shall not:
(a) modify any of the provisions of this Section 9.5, change the
definition of "Required Lenders," or modify or waive any provision of any
Operative Document requiring action by any of the foregoing, or release any
Collateral (except as otherwise specifically provided in any Operative
Document);
(b) reduce the amount or change the time of payment of any amount of
principal owing or payable under any Note or interest owing or payable on any
Note, reduce the amount or change the time of payment of any fee, or modify any
of the provisions of Section 2.2 of the Trust Agreement;
(c) modify, amend, waive or supplement any of the provisions of
Sections 3.1, 3.2, 3.4, 4, 5.1, 5.2, Article VII and Article X of the Lease;
(d) reduce, modify, amend or waive any indemnities in favor of any
Lender;
(e) reduce the amount or change the time of payment of Rent or the
Lease Balance, or reduce the amount or change the time of payment of any such
payment under any Guaranty with respect to any such payment;
(f) consent to any assignment of Lease releasing Lessee from its
obligations to pay Rent or the Lease Balance or changing the absolute and
unconditional character of such obligations;
(g) modify, amend, waive or supplement the Guaranty, or consent to any
amendment thereof or release any of the guarantees of any Guarantor; or
(h) permit the creation of any Lien on the Trust Estate or any part
thereof except as contemplated by the Operative Documents, or deprive any Lender
of the benefit of the security interest and Lien secured by the Trust Estate.
In any of the foregoing cases in which the prior written consent of each
Lender is required, if the Required Lenders are willing to give their consent
but any of the other Lenders is not willing to give its consent, the Required
Lenders may purchase the Note(s), of such other Lender(s) for the principal
balance thereof plus any accrued interest thereon, upon three Business
42
43
PARTICIPATION AGREEMENT
Days' prior written notice.
SECTION 9.6. Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Agreement are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
SECTION 9.7. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN, AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH
STATE. EXCEPT TO THE EXTENT THAT THE EXERCISE OF CERTAIN RIGHTS OR REMEDIES
HEREUNDER OR UNDER THE OTHER OPERATIVE DOCUMENTS MAY REQUIRE COMPLIANCE WITH THE
GAMING LAWS.
SECTION 9.8. Transaction Costs. Lessee shall pay all Transaction Costs
whether or not the transactions contemplated hereby are consummated. In
addition, Lessee agrees to pay or reimburse the Indemnitees on demand for all
other out-of-pocket costs and expenses, including attorneys' fees, reasonably
incurred in connection with: (a) entering into, or the giving or withholding of,
any future amendments, supplements, waivers or consents with respect to the
Operative Documents; (b) any Casualty or termination of the Lease or any other
Operative Documents; (c) the negotiation and documentation of any restructuring
or "workout," whether or not consummated, of any Operative Document; (d) the
enforcement or attempted enforcement, or preservation of any rights or remedies
under the Operative Documents; and (e) any transfer by an Indemnitee of any
interest in the Loan or the Notes during the continuance of an Event of Default.
SECTION 9.9. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law; but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 9.10. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
SECTION 9.11. Final Agreement. THIS AGREEMENT, TOGETHER WITH THE OPERATIVE
DOCUMENTS, REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED HEREBY AND THE OTHER OPERATIVE DOCUMENTS. THIS
AGREEMENT CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 9.12. No Third Party Beneficiaries. Nothing in this Agreement or
the other Operative Documents shall be deemed to create any right in any Person
not a party hereto or thereto (other than the permitted successors and assigns
of Lessee and Parent), and such agreements shall not be construed in any respect
to be a contract in whole or in part for the benefit of any third party except
as aforesaid.
SECTION 9.13. Release of Lien. Each Lender hereby instructs Trustee to
release, and
43
44
PARTICIPATION AGREEMENT
Agent shall also release, the Liens created by the Lease and Security Documents,
respectively, against the Equipment promptly upon Lessee's payment in full in
immediately available funds of the Lease Balance and of all other amounts then
due and owing under the Operative Documents. Each Lender, at the expense of
Lessee, will promptly and duly execute and deliver all documents and take such
further action as may be necessary to release, in accordance with the preceding
paragraph, the Liens, including if requested by Lessee the recording or filing
of any document evidencing the release of such Liens in accordance with the laws
of the appropriate jurisdictions.
SECTION 9.14. Reproduction of Documents. This Agreement, all documents
constituting Schedules or Exhibits hereto, and all documents relating hereto
received by a party hereto, including: (a) consents, waivers and modifications
that may hereafter be executed; (b) documents received by Lessor in connection
with Lessor's receipt and/or acquisition of the Equipment; and (c) financial
statements, certificates, and other information previously or hereafter
furnished to Lessor may be reproduced by Lessor by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process. Each of Lenders agrees and stipulates that, to the extent permitted by
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by Lessor in the
regular course of business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such reproduction shall
likewise be admissible in evidence; provided, however, that no such reproduction
shall be presented or accepted in lieu of the original of such reproduction for
purposes of Article 9 of the U.C.C. or any other applicable laws regarding
chattel paper.
SECTION 9.15. Submission to Jurisdiction. Lessor may bring suit to enforce
any claim arising out of the Operative Documents in any state or federal court
located in San Francisco, California having subject matter jurisdiction with
respect to any such claim. Each of Lessee and each Guarantor hereby irrevocably:
(a) submits to the jurisdiction of such courts; and (b) consents to the service
of process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to Lessee or any Guarantor at their respective addresses
specified in this Agreement, and agrees that such service, to the fullest extent
permitted by law: (i) shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding; and (ii) shall be taken
and held to be valid personal service upon and personal delivery to it. Each of
Lessee and any Guarantor irrevocably waives, to the fullest extent permitted by
law: (A) any claim, or any objection, that it now or hereafter may have, that
venue is not proper with respect to any such suit, action or proceeding brought
in such a court located in San Francisco, California including any claim that
any such suit, action or proceeding brought in such court has been brought in an
inconvenient forum; and (B) any claim that either Lessee or Guarantor is not
subject to personal jurisdiction or service of process in such forum. Nothing
herein contained shall preclude any Lender from bringing an action or proceeding
in respect hereof in any other state or federal court within the United States
having subject matter jurisdiction with respect to such action and personal
jurisdiction over the parties to such action. Lessee and each Guarantor agree
that a final judgment in any action or proceeding in a state or federal court
within the United States may be enforced in any other jurisdiction by suit on
the judgment or in any other manner provided by law.
SECTION 9.16. Jury Trial. LESSEE AND GUARANTOR EACH WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE
44
45
PARTICIPATION AGREEMENT
OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OPERATIVE DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OPERATIVE
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 9.17. Payments Set Aside. To the extent that Lessee makes a payment
to Trustee, Agent or Lenders, or Trustee, Agent or Lenders exercise their right
of set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any discretion) to be repaid to a
trustee, receiver or any other party, in connection with any insolvency of
Lessee, any Guarantor or any Subsidiary that is a sublessee, assignee or
transferee of any Equipment or otherwise, then (a) to the extent of such
recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b) each Lender severally
agrees to pay to Agent upon demand its pro rata share of any amount so recovered
for distribution by Agent in accordance with the Loan Agreement.
SECTION 9.18. Trust Agreement. The provisions of Section 5.1 of the Trust
Agreement limiting the reimbursement and indemnification obligations of Lenders
are incorporated by reference into this Agreement.
45
46
PARTICIPATION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
STRATOSPHERE GAMING CORP.,
as Lessee
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-Administration/
Chief Financial Officer
STRATOSPHERE CORPORATION,
as Guarantor
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-Administration/
Chief Financial Officer
46
47
PARTICIPATION AGREEMENT
FIRST SECURITY TRUST COMPANY OF
NEVADA, not in its individual
capacity except as expressly stated
herein, but solely as Lessor and
Trustee
By
Name:
Title:
47
48
PARTICIPATION AGREEMENT
▇▇▇▇▇▇ FINANCIAL LEASING, INC.
as Agent and as Lender
By:
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
48
49
PARTICIPATION AGREEMENT
PHOENIXCOR, INC. as Lender
By:
Name:
Title:
49
50
PARTICIPATION AGREEMENT
SCHEDULE I
TO
PARTICIPATION AGREEMENT
EQUIPMENT*
QUANTITY EQUIPMENT DESCRIPTION
---------------------------------------------------
I. GAMING EQUIPMENT
1,711 Slot Machines
81 Gaming Chairs and Stools
9 Bar/Slant Top Videos
5 Double-Sided Display/Signs
38 Wrappers, Counters and Slot Equip.
56 Gaming Tables
966,909 Token, Dies, Chips, Cards
1,623 Tugs, Carts and Pit Stands
20,694 Locks, Keys, Key Rings
Total Gaming Equipment
II. RESTAURANT EQUIPMENT
Dining/Kitchen Equipment
Millwork/Stainless Steel
Total Restaurant
III. HOTEL EQUIPMENT
Safelok System
Total Hotel Equipment
IV. CENTRAL PLAN
Spectrum Generator Set
Total Central Plant
V. ELEVATOR & ESCALATOR
Elevator and Escalator
Total Elevator and Escalator
* The Equipment on this page was previously financed under that certain
Amended and Restated Participation Agreement, dated as of October 14, 1998,
among Lessee, Guarantor, Lessor and the other parties thereto, and is more
specifically described on the 172 page supplement hereto.
51
PARTICIPATION AGREEMENT
SCHEDULE II
TO
PARTICIPATION AGREEMENT
LENDER COMMITMENTS
LENDERS COMMITMENT
------- PERCENTAGE FEE ----------
---------- ----
▇▇▇▇▇▇ Financial Leasing, Inc. $ 8,000,000 80 $ 32,000
Phoenixcor, Inc. 2,000,000 20
8,000
---------------------------------------
TOTAL (LENDERS) $ 10,000,000 100%
$ 40,000
52
PARTICIPATION AGREEMENT
SCHEDULE III
TO
PARTICIPATION AGREEMENT
NOTICE INFORMATION, FUNDING OFFICES, AND WIRE INSTRUCTIONS
Lessee: STRATOSPHERE GAMING CORP.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Instructions
▇▇▇▇▇ Fargo Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Name: Stratosphere General
Operating
Account #: 415 95 68 914
ABA #: ▇▇▇▇▇▇▇▇▇
Trustee: FIRST SECURITY TRUST COMPANY OF NEVADA
c/o First Security Bank
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Services
with a copy to:
First Security Bank, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Services
Wire Instructions
First Security Bank, N.A.
52
53
PARTICIPATION AGREEMENT
Account #: 0510922115
ABA #: ▇▇▇▇▇▇▇▇▇
Attn: Corporate Trust Dept.
Ref: Stratosphere
Agent: ▇▇▇▇▇▇ FINANCIAL LEASING, INC., as Agent
and as Lender
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Wire Instructions
The First National Bank of Chicago, N.A.
Chicago, IL
ABA No. ▇▇▇▇▇▇▇▇▇
for the account of: ▇▇▇▇▇▇ Financial, Inc.
Account No. 52-96404
Reference: CEFG/Stratosphere
Attention: ▇▇▇▇ ▇▇▇▇▇ (312-441-7639)
Agent's LIBOR Office:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: PHOENIXCOR, INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Transaction Manager
Wire Instructions
First National Bank of Chicago
ABA #: 071-000-013
Reference: Stratosphere
Account #: 52-40409
Account Name: Phoenixcor, Inc.
53
54
PARTICIPATION AGREEMENT
SCHEDULE IV
TO
PARTICIPATION AGREEMENT
RECORDINGS, FILINGS AND REGISTRATIONS
UCC-1 FINANCING STATEMENTS - LEASE
Debtor Federal Tax I.D. Secured Party Federal Tax I.D. Filing Office
------------------------------------- ---------------- -------------
1) Stratosphere #▇▇-▇▇▇▇▇▇▇ First Security Trust ▇▇-▇▇▇▇▇▇▇ Nevada SOS
Gaming Corp. Company of Nevada
2) Stratosphere #▇▇-▇▇▇▇▇▇▇ First Security Trust ▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇ County, NV
Gaming Corp. Company of Nevada
Assigns Federal Tax I.D.
------- ----------------
1) ▇▇▇▇▇▇ Financial
Leasing, Inc.
2) ▇▇▇▇▇▇ Financial
Recorder Leasing, Inc.
UCC-1 FINANCING STATEMENTS - SECURITY AGREEMENT
1) First Security #▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Financial Nevada SOS
Trust Company Leasing, Inc.
of Nevada
2) First Security #▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Financial ▇▇▇▇▇ County, NV
Trust Company Leasing
Recorder
of Nevada
54
55
PARTICIPATION AGREEMENT
UCC-2 - RELEASES
DATE OF DATE OF FILING OF FINANCING STATEMENT
DEBTOR FEDERAL TAX I.D. SECURED PARTY FEDERAL TAX I.D. FILING OFFICE STATEMENT STATEMENT
------ ---------------- ------------- ---------------- ------------- --------- ---------
FILING NUMBER
-------------
1) Stratosphere #▇▇-▇▇▇▇▇▇▇ First Security Nevada SOS
Gaming Corp. Trust Company
of Nevada
(assigned to BA
Leasing and Capital
Corporation)
2) Stratosphere #▇▇-▇▇▇▇▇▇▇ First Security ▇▇▇▇▇ County, NV
Gaming Corp. Trust Company Recorder
of Nevada
(assigned to BA
Leasing and Capital
Corporation)
3) First Security #▇▇-▇▇▇▇▇▇▇ BA Leasing and Nevada SOS
Trust Company Capital Corporation
of Nevada
4) First Security #▇▇-▇▇▇▇▇▇▇ BA Leasing and ▇▇▇▇▇ County, NV
Trust Company Capital Corporation Recorder
of Nevada
55
56
PARTICIPATION AGREEMENT
SCHEDULE V
TO
PARTICIPATION AGREEMENT
REQUIRED LICENSES AND APPROVALS
STATE OF NEVADA GENERAL LICENSES
- Business License
- Sales Tax Permit
- Workers Industrial Insurance Certificate
- Employment Security Department Certificate
STATE OF NEVADA GAMING LICENSES
- Nonrestricted Gaming License
- Finding of Suitability re: Individual Officers & Directors
- Registration of Stratosphere Corporation as a Publicly Traded
- Corporation - Filing with, and approval of, the Nevada State
Gaming Control Board for the disposition of the Equipment, if such
approval is denied, a distributor's license will be required for
such disposition
CITY OF LAS VEGAS GENERAL LICENSES
- Business License re: Gross Sales (includes restaurants, amusement
rides, wedding chapels, etc.)
- Hotel Business License
CITY OF LAS VEGAS LIQUOR LICENSE
- Tavern License - 5 bar locations
CITY OF LAS VEGAS GAMING LICENSES
- Nonrestricted Gaming License
- Licensure of Principal Individual Officers & Directors of
Stratosphere Gaming Corp.
CITY OF LAS VEGAS BUILDING/OCCUPANCY PERMIT
▇▇▇▇▇ COUNTY HEALTH PERMITS
57
PARTICIPATION AGREEMENT
SCHEDULE VI
TO
PARTICIPATION AGREEMENT
AMORTIZATION SCHEDULE
DATE
YEAR PRINCIPAL BALANCE PERIOD
---- --------- ------- ------
10,000,000.00
1 6/28/99 1 222,222.00 9,777,778.00
7/28/99 2 222,222.00 9,555,556.00
8/28/99 3 222,222.00 9,333,334.00
9/28/99 4 222,222.00 9,111,112.00
10/28/99 5 222,222.00 8,888,890.00
11/28/99 6 222,222.00 8,666,668.00
12/28/99 7 222,222.00 8,444,446.00
1/28/00 8 222,222.00 8,222,224.00
2/28/00 9 222,222.00 8,000,002.00
3/28/00 10 222,222.00 7,777,780.00
4/28/00 11 222,222.00 7,555,558.00
5/28/00 12 222,222.00 7,333,336.00
2 6/28/00 13 222,222.00 7,111,114.00
7/28/00 14 222,222.00 6,888,892.00
8/28/00 15 222,222.00 6,666,670.00
9/28/00 16 222,222.00 6,444,448.00
10/28/00 17 222,222.00 6,222,226.00
11/28/00 18 222,222.00 6,000,004.00
12/28/00 19 222,222.00 5,777,782.00
1/28/01 20 222,222.00 5,555,560.00
2/28/01 21 222,222.00 5,333,338.00
3/28/01 22 222,222.00 5,111,116.00
4/28/01 23 222,222.00 4,888,894.00
5/28/01 24 222,222.00 4,666,672.00
3 6/28/01 25 222,222.00 4,444,450.00
7/28/01 26 222,222.00 4,222,228.00
8/28/01 27 222,222.00 4,000,006.00
9/28/01 28 222,222.00 3,777,784.00
10/28/01 29 222,222.00 3,555,562.00
11/28/01 30 222,222.00 3,333,340.00
12/28/01 31 222,222.00 3,111,118.00
1/28/02 32 222,222.00 2,888,896.00
2/28/02 33 222,222.00 2,666,674.00
3/28/02 34 222,222.00 2,444,452.00
4/28/02 35 222,222.00 2,222,230.00
5/28/02 36 2,222,230.00 0.00
------------
58
PARTICIPATION AGREEMENT
TOTALS 10,000,000
59
PARTICIPATION AGREEMENT
SCHEDULE VII
TO
PARTICIPATION AGREEMENT
DISCLOSURE SCHEDULE
All matters and claims as disclosed in the Annual Report on Form 10-K of
Stratosphere Corporation for the year ended December 31, 1998.
60
APPENDIX 1
APPENDIX 1
TO
PARTICIPATION AGREEMENT
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Operative Documents, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms of the other Operative Documents and reference to
any promissory note includes any promissory note which is an extension or
renewal thereof or a substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix,
Schedule or Exhibit thereto;
(vii) "hereunder," "hereof," "hereto" and words of similar import shall
be deemed references to an Operative Document as a whole and not to any
particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term, and, for purposes of each Operative Document, the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned; and
(ix) relative to the determination of any period of time, "from" means
"from and including" and "to" means "to but excluding."
B. Accounting and Financial Determinations. Unless otherwise specified, all
accounting terms used in each Operative Document shall be interpreted, all
accounting determinations and computations thereunder (excluding with respect to
Section 5.16 of the Participation Agreement) shall be made, and all financial
statements required to be delivered thereunder shall be prepared in accordance
with, GAAP applied in the preparation of the financial statements referred to in
Section 4.1(f) of the Participation Agreement.
C. Legal Representation of the Parties. The Operative Documents were
negotiated
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APPENDIX 1
by the parties with the benefit of legal representation and any rule of
construction or interpretation otherwise requiring the Operative Documents to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof or thereof.
D. Defined Terms. Unless a clear contrary intention appears, terms defined
herein have the respective meanings indicated below when used in each Operative
Document.
"Account" is defined in Section 2.14 of the Participation Agreement.
"Additional Costs" means the amounts payable pursuant to Sections 2.9,
2.10, 2.11 and 2.12 of the Loan Agreement and the other amounts due and payable
by the Borrower under any Loan Document other than principal and interest on the
Notes.
"Advance" means, as the context may require, the advance of funds by
Lenders to Trustee, and the advance by Trustee pursuant to Articles II and III
of the Participation Agreement, to Lessee to finance the acquisition of the
Equipment.
"Advance Date" means the actual date on which the Advance is made pursuant
to the Participation Agreement.
"Advance Request" is defined in Section 2.4(a) of the Participation
Agreement.
"Affiliate" means, when used with respect to any Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common control with such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities or by contract or otherwise; provided
(but without limiting the foregoing), that no pledge of voting securities of any
Person without the current right to exercise voting rights with respect thereto
shall by itself be deemed to confer control over such Person upon the pledgee.
"After-Tax Basis" means, with respect to any payment to be received (taking
into account any tax savings or reductions in the amount of any Tax not
indemnifiable hereunder as a result of circumstances giving rise to a Tax for
which an indemnity payment has been made), the amount of such payment increased
so that, after deduction of the amount of all taxes required to be paid by the
recipient with respect to the receipt by the recipient of such amounts, such
increased payment (as so reduced) is equal to the payment otherwise required to
be made. In making a determination of the increased payment, it shall be assumed
that the Indemnitee was subject to taxation at the highest marginal federal
rates applicable to widely-held corporations for the year in which such income
is taxed and the state and local income tax rate shall be assumed to be 8.5%.
"Agent" means ▇▇▇▇▇▇ Financial Leasing, Inc., a Delaware corporation, and
includes each other Person as shall have subsequently been appointed as the
successor Agent pursuant to Section 7.9 of the Loan Agreement.
"Agent-Related Persons" means ▇▇▇▇▇▇ Financial Leasing, Inc. and any
successor agent arising under Section 7.9 of the Loan Agreement, together with
their respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agreement" is defined in the introductory paragraph hereof.
"Alteration" means a Permitted Alteration and a Required Alteration.
"Alternate Base Rate" means, for any day, an interest rate per annum
(rounded upwards, if necessary, to the highest 1/8 of 1%) equal to the higher of
(A) the rate of interest in effect for such day as publicly announced by
Citibank, N.A. in New York, New York from time to time as
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62
APPENDIX 1
its reference rate for calculating interest on certain loans (the "Reference
Rate"), which need not be the lowest interest rate charged by Citibank, N.A.,
plus 2.5% per annum and (B) the Federal Funds Effective Rate most recently
determined by Agent, plus 1/2 of 1% per annum. The "Federal Funds Effective
Rate" means, for any period, a fluctuating interest rate per annum equal for
each day during such period to the weighted average of the rate on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers as published on the succeeding Business Day by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by Agent from three federal funds brokers of recognized
standing selected by it. For purposes of this Agreement, any change in the
Alternate Base Rate due to a change in the Federal Funds Effective Rate or the
Reference Rate shall be effective on the effective date of such change.
"Alternate Base Rate Loan" means a Loan bearing interest by reference to
the Alternate Base Rate.
"Amortization Schedule" is defined in Section 2.12 of the Participation
Agreement.
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Gaming Laws and Environmental Laws) statutes, treaties,
codes, ordinances, permits, certificates, orders and licenses of and
interpretations by, any Governmental Authority, and applicable judgments,
decrees, injunctions, writs, orders or like action of any court, arbitrator or
other administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including those pertaining to health, safety or the environment
(including wetlands) and those pertaining to the construction or operation of
facilities).
"Applicable Margin" means, with respect to LIBO Rate Loans, the margin
above the LIBO Rate of 2.50%.
"Assigned Agreements" means each of the Participation Agreement, the Lease,
the Security Documents, the Bills of Sale, the Certificates of Acceptance and
each other document assigned to Agent as Collateral pursuant to the Security
Agreement.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
"▇▇▇▇ of Sale" means a ▇▇▇▇ of sale, substantially in the form of Exhibit I
to the Participation Agreement, to be delivered to Agent pursuant to the
provisions of the Participation Agreement.
"Board" means the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower" means Trustee, not in its individual capacity, but solely in its
trust capacity under the Trust Agreement as the borrower under the Loan
Agreement.
"Business Day" means any day other than a Saturday or Sunday or other than
a day on which
(a) banks in New York, New York, Chicago, Illinois, San Francisco,
California, South Norwalk, Connecticut or Las Vegas, Nevada are permitted or
required to be closed; and
(b) relative to the making, continuing, prepaying or repaying any LIBO
Rate Loans, any day on which banks are not open for dealings in Dollars in the
London interbank
62
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APPENDIX 1
market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" means all obligations under Capital Leases
of any Person, in each case taken at the amount thereof accounted for as
liabilities in accordance with GAAP.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentally thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of twelve months or less from the date
of acquisition, bankers', acceptances with maturities not exceeding twelve
months and overnight bank deposits, in each cash with any commercial bank having
capital and surplus in excess of $300 million, (iv) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) entered into with any financial institution
meeting the qualifications specified in clause (iii) above, (v) commercial paper
rated A-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. or
Standard & Poor's Corporation and in each case maturing within one year after
the date of acquisition and (vi) investment funds investing solely in securities
of the types described in clauses (ii) through (v) above.
"Casino" means any area, room or rooms wherein gaming is conducted at the
Resort and includes any bar, cocktail lounge or other facilities housed therein,
as well as the area occupied by the games.
"Casualty" means an event or occurrence in which an item of Equipment is
lost, stolen, totally destroyed, irreparably damaged from any cause whatsoever,
damaged beyond economic repair, or rendered permanently unfit for normal use for
any reason whatsoever (other than obsolescence) or damaged so as to result in an
insurance settlement on the basis of a total loss or a constructive or
compromised total loss, or taken or requisitioned by Condemnation.
"Casualty Item Amount" means the product of the Lease Balance on the date
of determination times a fraction the numerator of which is the Equipment Cost
of such item of Equipment suffering the Casualty and the denominator of which is
Lessor's Cost for all Equipment then subject to the Lease.
"Casualty Recoveries" means the proceeds of any recovery in respect of any
Casualty from insurance, a Governmental Authority or otherwise.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. ▇▇.▇▇. 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.
"Certificate of Acceptance" means each Certificate of Acceptance, fully
executed by Lessee, accepting the Equipment under the Lease, substantially in
the form of Exhibit J to the Participation Agreement.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease or
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APPENDIX 1
transfer, in one or a series of transactions, of all or substantially all of the
assets of Parent and its Subsidiaries, taken as a whole; (ii) Parent becomes
aware of (by way of a report or any other filing pursuant to Section 13(d) of
the Securities Exchange Act of 1934, proxy, vote, written notice or otherwise)
the acquisition by any person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Securities Exchange Act of 1934, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Securities Exchange Act of 1934), in a single transaction or in a related series
of transactions, by way of merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, or any successor provision) of 50% or more of
the voting stock of Parent on a fully diluted basis, (iii) the first day within
any two year period on which a majority of the members of the Board of Directors
of Parent on the first day of such period do not continue to be members of the
Board of Directors of Parent or (iv) ▇▇▇▇ ▇▇▇▇▇ shall cease to own, directly or
indirectly, at least 51% of the voting stock of Parent on a fully diluted basis.
"Charges" means freight, installation and applicable sales, use or similar
taxes imposed upon an item of Equipment.
"Claims" means liabilities, obligations, damages, losses, demands,
penalties, fines, claims, actions, suits, administrative and judicial
proceedings (including informal proceedings), judgments, orders, enforcement
actions of any kind and settlements, and any costs, fees, expenses and
disbursements (including legal fees and expenses and costs of investigation
which, in the case of counsel or investigators retained by an Indemnitee, shall
be reasonable) of any kind and nature whatsoever related to any of the foregoing
imposed on, incurred by or asserted against an Indemnitee.
"Closing Date" is defined in Section 2.1 of the Participation Agreement.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means the Account and all of the Trust Estate now owned or
hereafter acquired, upon which a Lien is purported to be created by the Security
Documents, as well as any Lessee Collateral.
"Commitment" means (i) with respect to each Lender, the obligation of such
Lender to make Advances to Trustee at the request of Lessee in an aggregate
principal amount not to exceed the amount set forth opposite such Lender's name
on Schedule II to the Participation Agreement, and (ii) with respect to Trustee,
the obligation of Trustee to make the Advance (to the extent Trustee receives
Advances from Lenders).
"Commitment Amount" means $10,000,000.
"Commitment Percentage" means, as to any Lender, the percentage set forth
opposite such Lender's name under the heading "Commitment Percentage" on
Schedule II to the Participation Agreement.
"Condemnation" means any condemnation, requisition, confiscation, seizure
or other taking or sale of the use, access, occupancy, easement rights or title
to the Equipment or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain or otherwise, or any transfer made in lieu of any such proceeding or
action. A "Condemnation" shall be deemed to have occurred on the earliest of the
dates that use, occupancy or title vests in the condemning authority.
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APPENDIX 1
"Consolidated Subsidiaries" means all Persons that are consolidated with
Parent for financial reporting purposes in accordance with GAAP.
"Corporate Trust Department" means the principal corporate trust office of
Trustee, located at ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department, or such other office at which the
corporate trust business of Trustee is administered and which Trustee specifies
by notice in writing to Lessee, Lessor Agent and each Lender.
"Debt" means, for any Person, (i) all obligations of such Person for
borrowed money or for the deferred purchase price of property or services and
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (ii) all obligations of such Person under any conditional
sale or other title retention agreement relating to property purchased by such
Person, (iii) all indebtedness secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any property owned by such Person, whether or not such indebtedness
has been assumed by such Person or is limited in recourse, (iv) all Capitalized
Lease obligations of such Person, (v) all obligations of such Person under
letters of credit issued for the account of such Person (whether or not drawn),
(vi) all obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clause (i)
through (vi) above, and (vii) all current or past due liabilities of such Person
in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
"Default" means any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule VII.
"Dollars" and "$" mean dollars in lawful currency of the United
States of America.
"End Date" is defined in the definition of Interest Period.
"Environmental Law" means, whenever enacted or promulgated, any applicable
federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, guideline,
administrative or court order, judgment, decree, injunction, code or requirement
or any agreement with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation thereof, or any other response thereto), or the regulation or
protection of human health, safety or the environment, including air, water,
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage,
recycling, treatment, generation, discharge, emission, Release or threatened
Release, transportation, processing, handling, labeling, containment,
production, disposal or remediation of any Hazardous Substance, Hazardous
Condition or Hazardous Activity.
In each case as amended and as now or hereafter in effect, and any
common law or equitable doctrine (including injunctive relief and tort doctrines
such as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations for injuries (whether personal or property) or damages
due to or threatened as a result of the presence of, exposure to, or ingestion
of, any Hazardous Substance, whether such common law or equitable doctrine is
now or hereafter recognized or developed. Applicable laws include, but are not
limited to, CERCLA; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss. 6901 et seq.; the Federal
65
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APPENDIX 1
Water Pollution Control Act, 33 U.S.C. ss.1251 et seq.; the Clean Air Act, 42
U.S.C. ▇▇.▇▇. 7401 et seq.; the National Environmental Policy Act, 42 U.S.C. ss.
4321; the Refuse Act, 33 U.S.C. ▇▇.▇▇. 401 et seq.; the Hazardous MaterialS
Transportation Act of 1975, 49 U.S.C. ▇▇.▇▇. 1801-1812; the Toxic Substances
Control Act, 15 U.S.C. ▇▇.▇▇. 2601 et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. ▇▇.▇▇. 136 et seq.; the Safe Drinking Water Act,
42 U.S.C. ▇▇.▇▇. 300f et seq., each as amended and as now or hereafter in
effect, and their state and local counterpaRts or equivalents, including any
regulations promulgated thereunder.
"Environmental Violation" means any activity, occurrence or condition that
violates or results in non-compliance with any Environmental Law in which
damages and penalties in excess of $2,000,000 may be imposed.
"Equipment" means, individually, each item of equipment described on
Schedule I to the Participation Agreement, and, collectively, each of the
foregoing, together with any substitutions therefor, replacements thereof and
additions thereto from time to time pursuant to the Operative Documents.
"Equipment Cost" means the invoice cost of each item of Equipment, plus up
to an additional twenty percent (20%) thereof for Charges.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that may be aggregated with Lessee
pursuant to the requirements of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412 of
the Code).
"ERISA Group" means Parent and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Parent, are treated as a single employer
under Section 414 of the Code.
"Event of Default" means a Lease Event of Default or a Loan Event of
Default.
"Excluded Amounts" means
(a) all indemnity payments and expenses to which Trustee, Trust
Company, Agent or any Lender (or the respective successors, assigns, agents,
officers, directors or employees of any such Person) is entitled pursuant to the
Operative Documents;
(b) any amounts payable under any Operative Documents to reimburse
Trustee, Trust Company, Agent or any Lender (including the reasonable expenses
of Trustee, Trust Company, Agent and any Lender incurred in connection with any
such payment) for performing any of the obligations of Lessee under and as
permitted by any Operative Document;
(c) any insurance proceeds under policies maintained by Trustee, Trust
Company, Agent or any Lender and not required to be maintained by Lessee under
the Lease;
(d) any insurance proceeds (or corresponding amounts with respect to
risks that are self-insured by Lessee and the amounts of any policy deductibles)
under liability policies payable to Trustee in its individual capacity, Agent or
any Lender (or the respective successors, assigns, agents, officers, directors
or employees of Trust Company, Agent or of any Lender);
(e) any amount payable in respect of Transaction Costs; and
(f) any payments of interest on payments referred to in clauses (a)
through (e) above.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
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67
APPENDIX 1
Business Day, the average of quotations for such day on such transaction
received by Lender from three Federal funds brokers of recognized standing
selected by it.
"Final Maturity Date" means the third anniversary of the Lease Commencement
Date, but not later than May 28, 2002.
"GAAP" means United States generally accepted accounting principles
(including principles of consolidation), in effect from time to time.
"Gaming Authorities" means, collectively, the Nevada Gaming Commission, the
Nevada State Gaming Control Board and any other agency of any state, county,
city or other political subdivision of the United States government which has
jurisdiction over the gaming activities of Lessee and its Affiliates at the
Resort, or any successor to such authority.
"Gaming Laws" means the Nevada Gaming Control Act, codified as Nevada
Revised Statutes Chapter 463, the Nevada Gaming Commission Regulations
promulgated thereunder, together with any local rules, regulations or ordinances
applicable to the conduct of games at the Resort.
"Gaming Permits" means, collectively, every license, franchise, permit,
registration, finding of suitability, approval or other authorization required
under the Gaming Laws to own, operate and otherwise conduct gaming operations at
the Resort, including all licenses, registrations, findings of suitability and
approvals granted by the Gaming Authorities and all other applicable
Governmental Authorities.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include all environmental and
operating permits and licenses that are required for the full use, occupancy,
zoning and operation of the Property.
"Governmental Authority" means any foreign, federal, state or local
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including Gaming Authorities.
"Guarantor" means Parent.
"Guaranty" means the Guaranty dated as of the Closing Date, made by
Guarantor in favor of Agent for the benefit of Lenders substantially in the form
of Exhibit E to the Participation Agreement.
"Hazardous Activity" means any activity, process, procedure or undertaking
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition that materially violates or
threatens to materially violate, or that results in or threatens material
noncompliance with, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any petroleum or
petroleum product, explosives, radioactive materials, asbestos,
ureaformaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any
substance, material, product, derivative, compound or
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APPENDIX 1
mixture, mineral, chemical, waste, gas, medical waste, or pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous to the environment or human health or
safety, as defined under any Environmental Law; or (iii) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste or pollutant that would support the assertion of any claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law.
"Indemnified Liabilities" means all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including all fees and expenses of legal counsel) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any Agent-Related Person in any way relating to or arising out of any
Operative Document or any document contemplated by or referred to in any
Operative Document, or the transactions contemplated by any Operative Document,
or any action taken or omitted by any Agent-Related Person under or in
connection with any of the foregoing.
"Indemnitee" means Trustee, in its individual and in its trust capacity,
each Lender, Agent any additional separate or co-trustee appointed in accordance
with the terms of the Trust Agreement and the respective successors, assigns,
directors, shareholders, partners, officers, employees and agents of each of the
foregoing.
"Insurance Requirements" means all terms and conditions of any insurance
policy either required by the Lease to be maintained by Lessee and all
requirements of the issuer of any such policy.
"Interest Period" means, with respect to any LIBO Rate Loan, the period
commencing on (and including) the day on which the LIBO Rate Loan is made or
continued and ending on (but excluding) the next following August 28, November
28, February 28 or May 28 (each an "End Date");
provided that, the foregoing provisions relating to Interest Periods are subject
to the following:
(a) if the End Date of any Interest Period is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the immediately
preceding Business Day; and
(b) any Interest Period that would otherwise extend beyond the Final
Maturity Date shall end on the Final Maturity Date.
"Interest Rate" means the rate per annum. at which interest accrues
(a) on a Loan maintained from time to time as an Alternate Base Rate
Loan equal to the Alternate Base Rate from time to time in effect; and
(b) on a Loan maintained as a LIBO Rate Loan, during each Interest
Period applicable thereto, equal to the LIBO Rate then in effect plus the
Applicable Margin.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Investor's Letter" means the Investor's Letter, dated as of the Closing
Date, in substantially the form of Exhibit K to the Participation Agreement.
"Landlord Waiver and Consent" means the Landlord Waiver and Consent, dated
as of the Closing Date, made by Parent in favor of Trustee and Agent,
substantially in the form of Exhibit G to the Participation Agreement.
"Lease" means the Lease, dated as of the Closing Date, between the Lessor
and Lessee,
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substantially in the form of Exhibit A to the Participation Agreement.
"Lease Balance" means, as of any date of determination, the sum of the
aggregate outstanding principal amount of the Notes.
"Lease Commencement Date" means the date the Equipment is accepted under
the Lease by Lessee.
"Lease Default" means any event, condition or failure which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" means any event, condition or failure designated
as a "Lease Event of Default" in Article X of the Lease. "Lease Term" is defined
in Section 2.3 of the Lease.
"Lease Termination Date" means the last day of the Lease Term, or any other
date on which the Lease is terminated, including pursuant to Article V or X of
the Lease.
"Lender" means a holder of a Note.
"Lending Office" means, as to any Lender, the office or offices of such
Lender specified as its "Lending Office" on Schedule III of the Participation
Agreement, or such other office as such Lender may from time to time notify the
Borrower and Agent.
"Lessee" means Stratosphere Gaming Corp., a Nevada corporation, as lessee
and debtor under the Lease.
"Lessee Collateral" is defined in Section 13.1 of the Lease.
"Lessor" means Trustee as lessor or mortgagor under the Lease.
"Lessor Lien" means any Lien on or against any or all of the Equipment, the
Lease, the Trust Estate or any payment of Rent which results from (a) any act
of, or any Claim against, Trustee, in its individual capacity, any Lender or
Agent, in its individual capacity, in any case unrelated to the transactions
contemplated by the Operative Documents, (b) any Tax owed by any such Person,
except for any Tax required to be paid by Lessee under the Operative Documents,
including any Tax for which Lessee is obligated to indemnify such Person, or (c)
any act or omission of such Person which is prohibited by the Operative
Documents.
"Lessor's Cost" means the aggregate Equipment Cost paid with proceeds of
the Advance.
"LIBO Rate" means, with respect to each LIBO Rate Loan for any Interest
Period, the interest rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined by Agent to be the average of the rates per
annum, at which Dollar deposits in immediately available funds are offered to
the Agent's LIBOR Office in an amount approximately equal to the amount of the
Agent's LIBO Rate Loan for which such determination is being made for a period
comparable to such Interest Period, commencing on the first day of such Interest
Period by leading banks in the London Eurodollar interbank market at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of the Interest Period. Agent will give notice promptly to Lessor upon
determining the applicable LIBO Rate; provided, that Agent's failure to give
such notice will not relieve Lessee of its obligations relating to such change.
"LIBO Rate Loans" means Loans bearing interest by reference to the LIBO
Rate.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such in Schedule III to the Participation Agreement, or such other
office of a Lender designated from time to time by notice from such Lender to
Trustee and Agent, whether or not outside the United States.
"Lien" means any mortgage, deed of trust, pledge, deposit arrangement,
security interest, encumbrance, lien (statutory or otherwise), easement,
servitude or charge of any kind, including,
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any irrevocable license, conditional sale or other title retention agreement,
any lease in the nature thereof, or any other right of or arrangement with any
creditor to have its claim satisfied out of any specified property or asset with
the proceeds therefrom prior to the satisfaction of the claims of the general
creditors of the owner thereof, whether or not filed or recorded, or the filing
of, or agreement to execute as "debtor", any financing or continuation statement
under the Uniform Commercial Code of any jurisdiction or any federal, state or
local lien imposed pursuant to any Environmental Law.
"Liquor Authority" means the City of Las Vegas and any agency of any state,
county, city or other political subdivision of the State of Nevada which has
jurisdiction over the sale by Lessee and its Affiliates of alcoholic beverages
at the Resort, or any successor to such authority.
"Liquor Permits" means, collectively, every license, franchise, permit,
approval, finding of suitability or other authorization required to sell
alcoholic beverages at the Resort, including all licenses and approvals granted
by the Liquor Authority and all other applicable Governmental Authorities.
"Loan" is defined in Section 2.1 of the Loan Agreement.
"Loan Agreement" means the Loan Agreement, dated as of the Closing Date,
among Trustee, as Borrower, and Lenders, substantially in the form of Exhibit B
to the Participation Agreement.
"Loan Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute a Loan Event of Default.
"Loan Documents" means the Loan Agreement, the Notes, the Security
Documents and all other documents and instruments executed and delivered in
connection with each of the foregoing.
"Loan Event of Default" is defined in Article VI of the Loan Agreement.
"Material Adverse Effect" means, with respect to Lessee or Parent, as the
case may be, any change or changes, effect or effects or condition or conditions
that individually or in the aggregate are or are likely to be materially adverse
to (i) the assets, business, operations or financial condition of Parent and its
Subsidiaries on a consolidated basis, (ii) the ability of Parent and each of its
Subsidiaries on a consolidated basis to perform its obligations under the
Operative Documents to which it is a party, (iii) the validity or enforceability
of any of the Operative Documents or any rights or remedies under any thereof or
(iv) the value of the Collateral or worth of the Collateral as collateral
security.
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $1,000,000.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Non-Casualty Loss" is defined in Section 9.2(a) of the Lease.
"Non-Casualty Recoveries" means the proceeds of any recovery in respect of
any Non-Casualty Loss from insurance, a Governmental Authority or otherwise.
"Note" is defined in Section 2.2 of the Loan Agreement.
"Obligations" means all obligations (monetary or otherwise) of Lessee under
the Operative Documents.
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"Operative Documents" means the following:
(a) the Participation Agreement;
(b) the Notes;
(c) the Lease;
(d) the Trust Agreement;
(e) the Loan Agreement;
(f) the Note;
(g) the Guaranty;
(h) the Security Agreement; and
(i) the Landlord Waiver and Consent.
"Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, any Operative Document.
"Overdue Rate" means the lesser of (i) the highest interest rate permitted
by Applicable Law and (ii) an interest rate per annum. equal to the Interest
Rate plus 2% per annum. "Parent" means Stratosphere Corporation, a Delaware
corporation.
"Participating Entity" is defined in Section 6.3(a) of the Participation
Agreement.
"Participation Agreement" means the Participation Agreement, dated
as of the Closing Date, among Lessee, Guarantor, Trustee, Lenders and Agent.
"Payment Date" means (a) the Final Maturity Date; (b) the date of any
payment (whether or not scheduled) of principal outstanding on a Loan; (c) with
respect to the payment of interest on Loans for which the Interest Rate is
determined by means of the Alternate Base Rate, on each End Date; and (d) with
respect to the payment of interest on LIBO Rate Loans, the last day of each
applicable Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Periodic Rent" means an amount payable on each Payment Date during the
Lease Term equal to the aggregate amount of interest and principal payable on
such Payment Date on the Notes.
"Permitted Alteration" is defined in Section 7.2(b) of the Lease.
"Permitted Contest" means actions taken by a Person to contest in good
faith, by appropriate proceedings initiated timely and diligently prosecuted,
the legality, validity or applicability to the Equipment or any location whereon
or wherein the Equipment or any portion thereof are located or to be located, or
any interest therein of any Person of (a) any law, regulation, rule, judgment,
order, or other legal provision or judicial or administrative requirements, (b)
any term or condition of, or any revocation or amendment of, or other proceeding
relating to, any authorization or other-consent, approval or other action by any
Governmental Authority or (c) any Lien or Tax, if the initiation and prosecution
of such contest would not: (i) result in, or materially increase the risk of,
the imposition of any criminal liability on any Indemnitee; (ii) materially and
adversely affect the security interests created by the Operative Documents or
the rights and interests of Lessor in or to any of the Equipment or the right of
Lessor, Agent or any Lender to receive payment of all or any portion of the
principal of or interest on any Note, Rent, Lease Balance or any other amount
payable under the Operative Documents; (iii) permit, or pose a material risk of,
the sale or forfeiture of, or foreclosure on, any
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of the Equipment or (iv) materially and adversely affect the fair market value,
utility or remaining useful life of the Equipment or any interest therein or the
continued economic operation thereof; provided, further, that in any event
adequate reserves in accordance with GAAP are maintained by such Person against
any adverse determination of such contest.
"Permitted Liens" means (i) the respective rights and interests of Lessee,
Lenders and Trustee, as provided in any of the Operative Documents; (ii)
materialmen's, mechanics', workers', artisans', repairmen's, employees' or other
like Liens securing payment of the price of goods or services rendered in the
ordinary course of business for amounts the payment of which is not overdue or
is being contested pursuant to a Permitted Contest; (iii) Lessor Liens; (iv)
Liens for current Taxes which are not delinquent or the validity of which is
being contested pursuant to a Permitted Contest; (v) the rights of any sublessee
or assignee under a sublease or an assignment permitted by the terms of the
Lease; (vi) Liens arising out of judgments or awards not constituting an Event
of Default with respect to which appeals or other proceedings for review are
being prosecuted pursuant to a Permitted Contest; (vii) easements, rights of way
and other encumbrances on title to real property not interfering in any material
respect with the rights of Lessor under the Lease and (viii) Liens securing
indebtedness of Lessee to vendors under any purchase contract until such time as
the full amount owed by Lessee under such purchase contract has been paid in
full or, in the event of a dispute with respect to any amount owed by Lessee
under such purchase contract, so long as the disputed amount is being contested
pursuant to a Permitted Contest.
"Person" means any individual, corporation, partnership, limited liability
company, limited liability partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental authority or any other
legal entity.
"Plan" means an employee benefit or other plan (other than a Multiemployer
Plan) established or maintained by Parent or any member of the ERISA Group and
which is covered by Title IV of ERISA.
"Premium" is defined in Section 2.4(d) of the Loan Agreement.
"Release" means any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Rent" means Periodic Rent and Supplemental Rent.
"Required Alteration" is defined in Section 7.2(a) of the Lease.
"Required Lenders" means, as of the date of the determination, Lenders
having aggregate investments in the transactions contemplated by the Operative
Documents (as measured by the outstanding principal amount of the Loans then
outstanding) equal to at least 79% of all such investments.
"Requirements of Law" means, as to any Person, any current or hereinafter
enacted law (statutory or common), treaty, rule or regulation or determination
of an arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Resort" means the establishment featuring a casino, a hotel, an
entertainment complex and tower in Las Vegas, Nevada being developed by Parent
and its Affiliates; provided, however that, for purposes of this definition, any
property leased to Strato-Retail LLC shall be deemed separate from the Resort.
"Responsible Officer" means with respect to Trustee or Agent, any officer
in its Corporate Trust Department, and with respect to any other Person, the
Chairman or Vice
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Chairman of the Board of Directors, the Chairman or Vice-Chairman of the
Executive Committee of the Board of Directors, the President, the Chief
Financial Officer, any Senior Vice President or Executive Vice President, any
Vice President, the Secretary, the Treasurer or the Controller and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Scheduled Principal Payment Date" means the last day of each Interest
Period and the Final Maturity Date. "SEC" means the Securities and Exchange
Commission of the United States.
"Securities Act" means the Securities Act of 1933, together with the rules
and regulations promulgated thereunder.
"Security Agreement" means the Security Agreement and Assignment of Lease,
dated as of the Closing Date, between the Borrower and Agent, substantially in
the form of Exhibit D to the Participation Agreement.
"Security Documents" means the collective reference to the Security
Agreement, the Guaranty and all other security documents hereafter delivered to
Agent granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of Trustee under the Loan Agreement and/or under any
of the other Loan Documents.
"Solvent" means with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person,
(ii) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability taking into account any subrogation and contribution rights.
"Strato-Retail LLC" means Strato-Retail, LLC, a Nevada limited liability
company.
"Strato-Retail Lease" means that certain Development and Lease Agreement,
dated March 11, 1996, between Stratosphere Corporation, as landlord, and
Strato-Retail LLC, as tenant.
"Sublease" has the meaning set forth in Article IV of the Lease.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than 50% of the
outstanding ownership interests, at the time any determination is being made, is
directly or indirectly owned by such Person, by such Person and one or more of
its Subsidiaries or by one or more of such Person's Subsidiaries.
"Supplemental Rent" means any and all amounts, liabilities and obligations
(i) which Trustee assumes or agrees or is otherwise obligated or designated to
pay under the Loan Agreement or any other Operative Document (whether or not
designated as Supplemental Rent)
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APPENDIX 1
to Agent, Lenders or any other Person, including Additional Costs and damages
for breach of any representations, warranties or agreements or (ii) which Lessee
agrees or is otherwise obligated or designated to pay (other than Periodic Rent)
under the Lease or any other Operative Document (whether or not designed as
Supplemental Rent) to Trustee.
"Taxes" and "Tax" are defined in Section 8.1 of the Participation
Agreement.
"Termination Date" is defined in 10.2(e) of the Lease.
"Transaction Costs" means legal and other fees, costs and expenses incurred
by Trustee, Agent and Lenders in connection with the consummation and closing of
the transactions contemplated the by Operative Documents, and the preparation,
negotiation, execution and delivery of the Operative Documents, including (i)
fees of Trustee and Trustee's legal counsel; (ii) reasonable fees and expenses
of ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP, special counsel to Lenders; (iii) all filing and
recording fees, and other search costs required by the Operative Documents; (iv)
all costs of appraisals; and (v) an upfront fee payable on the Closing Date to
Agent for the account of each Lender.
"Trust" is defined in Section 1.1 of the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of the Closing Date,
between Lessee and Trustee, substantially in the form of Exhibit C to the
Participation Agreement.
"Trust Company" is defined in Section 4.3 of the Participation Agreement.
"Trustee" means First Security Trust Company of Nevada, a Nevada trust
company, not in its individual capacity, but solely as Trustee under the Trust
Agreement, and any successor or replacement Trustee expressly permitted under
the Operative Documents.
"Trust Estate" means all estate, right, title and interest of Lessor in, to
and under the Equipment, the Trust Agreement, the Lease and all of the other
Operative Documents, including (i) all amounts (other than Excluded Amounts) of
Rent and other payments due or to become due of any kind for or with respect to
the Equipment or payable under any of the foregoing,(ii) any or all payments or
proceeds received by Lessor after the termination of the Lease with respect to
the Equipment as the result of the sale, lease or other disposition thereof, and
(iii) proceeds of the Loans, together with any other moneys, proceeds or
property at any time received by Lessor under or in connection with the
Operative Documents.
"UCC Financing Statements" means collectively Lender financing statements
and the Lessor financing statements.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
effect in any applicable jurisdiction.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
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