AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
BWBH, INC.,
BWCC, INC.,
MILLSITE 27, INC.,
SILVER HAWK CASINO, INC.
and
FOOTHILL CAPITAL CORPORATION
Dated as of June 5, 1996
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . 14
1.3 Code . . . . . . . . . . . . . . . . . . . . . . . 14
1.4 Construction . . . . . . . . . . . . . . . . . . . 14
1.5 Schedules and Exhibits. . . . . . . . . . . . . . . 14
2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . 14
2.1 Advances. . . . . . . . . . . . . . . . . . . . . . 14
2.2 Overadvances . . . . . . . . . . . . . . . . . . . 15
2.3 Amortization of Equipment Refinance/Finance
Facility, Millsite Parking Lot Construction Facility
and Silver Hawk Facility . . . . . . . . . . . . . 16
2.4 Interest: Rates, Payments, and Calculations . . . 16
2.5 Crediting Payments; Application of Collections . . 17
2.6 Statements of Obligations . . . . . . . . . . . . . 17
2.7 Fees . . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Costs and Expenses . . . . . . . . . . . . . . . . 19
2.9 Joint Borrower Provisions . . . . . . . . . . . . . 19
3. CONDITIONS; TERM OF AGREEMENT . . . . . . . . . . . . . 20
3.1 Conditions Precedent to Initial Advance . . . . . . 20
3.2 Conditions Precedent to Any Advance under the
Equipment Refinance/Finance Facility. . . . . . . . 24
3.3 Conditions Precedent to the Advance under the
Millsite Parking Lot Construction Facility . . . . 24
3.4 Conditions Precedent to the Advance under the
Silver Hawk Facility . . . . . . . . . . . . . . . 26
3.5 Conditions Precedent to All Advances. . . . . . . . 27
3.6 Term; Automatic Renewal . . . . . . . . . . . . . . 27
3.7 Effect of Termination . . . . . . . . . . . . . . . 27
3.8 Early Termination by Borrower . . . . . . . . . . . 28
3.9 Termination Upon Event of Default . . . . . . . . . 28
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . 28
4.1 Grant of Security Interest . . . . . . . . . . . . 28
4.2 Negotiable Collateral . . . . . . . . . . . . . . . 28
4.3 Collection of Accounts, General Intangibles,
Negotiable Collateral . . . . . . . . . . . . . . . 28
4.4 Delivery of Additional Documentation Required . . . 29
4.5 Power of Attorney . . . . . . . . . . . . . . . . . 29
4.6 Right to Inspect . . . . . . . . . . . . . . . . . 30
4.7 Completion of the Work . . . . . . . . . . . . . . 30
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . 31
5.1 No Prior Encumbrances . . . . . . . . . . . . . . . 31
5.2 Location of Inventory and Equipment . . . . . . . . 31
5.3 Inventory and Equipment Records . . . . . . . . . . 31
5.4 Location of Chief Executive Office; FEIN . . . . . 31
5.5 Due Organization, Qualification . . . . . . . . . . 31
5.6 Due Authorization; No Conflict . . . . . . . . . . 32
5.7 Litigation . . . . . . . . . . . . . . . . . . . . 32
5.8 No Material Adverse Change in Financial Condition . 32
5.9 Employee Benefits . . . . . . . . . . . . . . . . . 32
5.10 Environmental Condition . . . . . . . . . . . . . . 33
5.11 Equipment Financing Contracts . . . . . . . . . . . 33
5.12 Solvency . . . . . . . . . . . . . . . . . . . . . 33
5.13 Reliance by Foothill; Cumulative . . . . . . . . . 33
5.14 Governmental Compliance . . . . . . . . . . . . . . 34
5.15 Plan Changes . . . . . . . . . . . . . . . . . . . 34
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 34
6.1 Accounting System . . . . . . . . . . . . . . . . . 34
6.2 Collateral and Other Reports . . . . . . . . . . . 34
6.3 Financial Statements, Certificates . . . . . . . . 35
6.4 Tax Returns . . . . . . . . . . . . . . . . . . . . 36
6.5 Guarantor Reports . . . . . . . . . . . . . . . . . 36
6.6 Title to Equipment . . . . . . . . . . . . . . . . 36
6.7 Maintenance of Equipment . . . . . . . . . . . . . 36
6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . 37
6.9 Insurance . . . . . . . . . . . . . . . . . . . . . 37
6.10 Financial Covenant . . . . . . . . . . . . . . . . 38
6.11 No Setoffs or Counterclaims . . . . . . . . . . . . 38
6.12 Location of Inventory and Equipment . . . . . . . . 38
6.13 Compliance with Laws . . . . . . . . . . . . . . . 38
6.14 Employee Benefits . . . . . . . . . . . . . . . . . 39
6.15 Gaming Tax Escrow Accounts . . . . . . . . . . . . 39
6.16 Construction of Improvements . . . . . . . . . . . 39
6.17 Mechanic's Liens and Contest Thereof . . . . . . . 40
6.18 Personal Property . . . . . . . . . . . . . . . . . 40
6.19 Silver Hawk Property Appraisal. . . . . . . . . . . 40
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 40
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . 40
7.2 Restrictions on Equipment Financing . . . . . . . . 41
7.3 Liens . . . . . . . . . . . . . . . . . . . . . . . 41
7.4 Restrictions on Fundamental Changes . . . . . . . . 41
7.5 Extraordinary Transactions and Disposal of Assets . 41
7.6 Change Name . . . . . . . . . . . . . . . . . . . . 41
7.7 Guarantee . . . . . . . . . . . . . . . . . . . . . 41
7.8 Restructure . . . . . . . . . . . . . . . . . . . . 41
7.9 Purchase of CAI Notes or PIK Notes; Prepayments . . 42
7.10 Change of Control . . . . . . . . . . . . . . . . . 42
7.11 Capital Expenditures . . . . . . . . . . . . . . . 42
7.12 Distributions . . . . . . . . . . . . . . . . . . . 42
7.13 Amendments to Debt Instruments . . . . . . . . . . 43
7.14 Accounting Methods . . . . . . . . . . . . . . . . 43
7.15 Investments . . . . . . . . . . . . . . . . . . . . 43
7.16 Transactions with Affiliates . . . . . . . . . . . 44
7.17 Suspension . . . . . . . . . . . . . . . . . . . . 44
7.18 Compensation . . . . . . . . . . . . . . . . . . . 44
7.19 Use of Proceeds. . . . . . . . . . . . . . . . . . 44
7.20 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees. . . . . . . . 45
7.21 Limitation On Accounts . . . . . . . . . . . . . . 45
8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . 45
9. FOOTHILL'S RIGHTS AND REMEDIES. . . . . . . . . . . . . 48
9.1 Rights and Remedies . . . . . . . . . . . . . . . . 48
9.2 Remedies Cumulative . . . . . . . . . . . . . . . . 50
9.3 Gaming Regulations . . . . . . . . . . . . . . . . 50
10. TAXES AND EXPENSES REGARDING THE COLLATERAL . . . . . . 50
11. WAIVERS; INDEMNIFICATION . . . . . . . . . . . . . . . . 51
11.1 Demand; Protest; etc. . . . . . . . . . . . . . . . 51
11.2 Foothill's Liability for Collateral . . . . . . . . 51
11.3 Indemnification . . . . . . . . . . . . . . . . . . 51
11.4 Suretyship Waivers and Consents . . . . . . . . . . 51
12. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 56
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . 56
14. DESTRUCTION OF BORROWER'S DOCUMENTS . . . . . . . . . . 57
15. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 57
15.1 Effectiveness . . . . . . . . . . . . . . . . . . . 57
15.2 Successors and Assigns . . . . . . . . . . . . . . 57
15.3 Section Headings . . . . . . . . . . . . . . . . . 58
15.4 Interpretation . . . . . . . . . . . . . . . . . . 58
15.5 Severability of Provisions . . . . . . . . . . . . 58
15.6 Amendments in Writing . . . . . . . . . . . . . . . 58
15.7 Counterparts; Telefacsimile Execution . . . . . . . 58
15.8 Revival and Reinstatement of Obligations . . . . . 58
15.9 Integration . . . . . . . . . . . . . . . . . . . . 59
SCHEDULES
Schedule E-1 Equipment Financing Contracts
Schedule P-1 Permitted Liens
Schedule R-1 Real Property
Schedule 6.12 Location of Inventory and Equipment
Schedule 7.19 Executive Compensation
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated
as of June 5, 1996, is entered into between FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a place
of business located at 11111 Santa Monica Boulevard, Suite 1500,
Los Angeles, California 90025-3333, on the one hand, and BWBH,
INC., a Delaware corporation ("BWBH"), BWCC, INC., a Delaware
corporation ("BWCC"), MILLSITE 27, INC., a Delaware corporation
("Millsite"), and SILVER HAWK CASINO, INC., a Delaware
corporation ("Silver Hawk") (sometimes individually referred to
herein as a "Borrower," and collectively as the "Borrowers"),
each of the foregoing with its chief executive office located at
One Norwest Center, 1700 Lincoln Street, 49th Floor, Denver,
Colorado 80203, on the other hand, with reference to the
following facts:
A. Foothill and the Borrowers are parties to that certain
Loan and Security Agreement dated as of November 1, 1995, as
amended pursuant to Amendment Number One dated December 4, 1995,
as amended pursuant to Amendment Number Two dated January 24,
1996, and as amended pursuant to Amendment Number Three dated
April 11, 1996 (the "DIP Loan and Security Agreement").
B. Pursuant to the DIP Loan and Security Agreement,
Foothill has made secured loans to Silver Hawk and to BWBH, BWCC
and Millsite while they have been operating as debtors-in-
possession in the Bankruptcy Cases. The obligations of Borrowers
under the DIP Loan and Security Agreement are guaranteed by CG&E
which also has been operating as a debtor-in-possession in one of
the Bankruptcy Cases.
C. The Bankruptcy Court has confirmed the Plan of
Reorganization of CG&E, BWBH, BWCC and Millsite.
D. Borrowers, CG&E and Foothill mutually desire that
effective as of the Closing Date: (i) the DIP Loan and Security
Agreement be amended and restated in its entirety as set forth in
this Agreement, and (ii) Foothill continue to make secured loans
to Borrowers on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of an
Account.
"Accounts" means all currently existing and hereafter
arising accounts, contract rights, and all other forms of
obligations owing to each of the Borrowers arising out of the
sale or lease of goods or the rendition of services by a
Borrower, irrespective of whether earned by performance, and any
and all credit insurance, guaranties, or security therefor.
"Affiliate" means, as applied to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For purposes of this
definition, "control" as applied to any Person means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Amended and Restated Loan and
Security Agreement and any extensions, riders, supplements,
notes, amendments, or modifications to or in connection with this
Amended and Restated Loan and Security Agreement.
"Approved Project Budget" means a budget for the
Project submitted by Borrowers to Foothill and approved by
Foothill in its sole discretion, as the same may be amended from
time to time with the prior written consent of Foothill.
"Authorized Officer" means any officer of any of the
Borrowers.
"Average Unused Portion of Maximum Amount" means (a)
the Maximum Amount, less (b) the average Daily Balance of
advances made by Foothill under Section 2.1 that were outstanding
during the immediately preceding month.
"Bankruptcy Cases" means the chapter 11 cases of CG&E
(No. 96-10001 A), BWBH (No. Case No. 96-10018 A), BWCC
(No. 96-10019 A) and Millsite (No. 96-10020 A) in the Bankruptcy
Court.
"Bankruptcy Code" means the United States Bankruptcy
Code (11 U.S.C. section 101 et seq.), as amended, and any
successor statute.
"Bankruptcy Court" means the United States Bankruptcy
Court for the Eastern District of Louisiana in which the
Bankruptcy Cases are pending.
"Black Hawk Lease" means that certain Lease Agreement,
dated as of October 25, 1991 by and among Jerry L. Brown and
Harold Gene Reagin, as Landlord, and HP BLACK HAWK, L.P., a
California limited partnership, as Tenant, (of which a Short Form
of Lease Agreement was recorded as Reception No. 72164 in Book
517 at Page 397 of the real estate records for Gilpin County,
Colorado, on November 1, 1991) as amended by an Assignment and
Assumption of Ground Lease between HP Black Hawk, L.P. and HP
Black Hawk, L.L.C., a Delaware limited liability company, dated
September 22, 1993 and recorded as Reception No. 79057 in Book
550 at Page 460 of the real estate records for Gilpin County,
Colorado, on September 22, 1993 and further amended by a
Memorandum of Merger between HP Black Hawk, L.L.C. and Black Hawk
Management Company, L.L.C., a Delaware limited liability company,
dated as of November 17, 1993 and recorded in Book 554 at Page
201 of the real estate records for Gilpin County, Colorado, on
December 1, 1993 and further amended by a Memorandum of Merger
between Black Hawk Management Company, L.L.C. and BWBH dated
December 20 1993.
"Borrower" and "Borrowers" have the meaning set forth
in the preamble to this Agreement.
"Borrowers' Architect" means Borrowers' architect or
engineer as approved by Foothill.
"Borrower's Books" means all of each Borrower's books
and records including: ledgers; records indicating, summarizing,
or evidencing a Borrower's properties or assets (including the
Collateral) or liabilities; all information relating to a
Borrower's business operations or financial condition; and all
computer programs, disc or tape files, printouts, runs, or other
computer prepared information, and the equipment containing such
information.
"Business Day" means any day which is not a Saturday,
Sunday, or other day on which national banks are authorized or
required to close.
"CAI" means Capital Associates International, Inc., a
Colorado corporation.
"CAI Notes" means the two unsecured promissory notes in
the original principal amounts of $1,621,329.23 and $3,000,000,
respectively, issued to CAI by CG&E on or about the Closing Date
in accordance with the Plan of Reorganization.
"Casinos" means BWBH's casino located in Black Hawk,
Colorado, BWCC's casino located in Central City, Colorado and
Silver Hawk's casino located in Black Hawk, Colorado, together
with any future casino hereafter acquired or established by any
Borrower.
"CG&E" means Hemmeter Enterprises, Inc., a Delaware
corporation, to be known as Colorado Gaming & Entertainment Co.
after the Closing Date.
"CG&E Security Agreement" means a Security Agreement in
form and substance satisfactory to Foothill pursuant to which
CG&E grants to Foothill a first priority security interest in all
of its assets.
"CG&E Continuing Guaranty" means a Continuing Guaranty
in form and substance satisfactory to Foothill pursuant to which
CG&E unconditionally guarantees payment and performance of the
Obligations.
"Change of Control" means (i) if CG&E ceases to own one
hundred percent (100%) of all classes of stock then outstanding
of the Borrowers normally entitled to vote in the election of
directors, (ii) a sale, assignment, lease, transfer, conveyance
or other disposition, directly or indirectly, of all or
substantially all of the assets or properties of CG&E or any of
the Borrowers, whether in a single transaction or a series of
related transactions, to any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, whether or not applicable),
(iii) the liquidation or dissolution of CG&E or any of the
Borrowers, (iv) the time that CG&E first determines or reasonably
should have known that any "person" or "group" (as such terms are
used for purposes of Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, whether or not applicable) is or becomes
the "beneficial owner" (as such term is used in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, whether or not
applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly
(including as a result of a merger or consolidation), of more
than 50% of the total voting power in the aggregate of all
classes of stock then outstanding of CG&E normally entitled to
vote in the election of directors, or (v) during any period of 12
twelve consecutive months after the Closing Date, individuals who
at the beginning of such period constituted the Board of
Directors of CG&E (determined after the resignation of interim
directors who are serving as directors only until all of the
individuals who are proposed by the Plan of Reorganization as the
initial directors (other than Thomas Thorsen) (the "Initial
Directors") of CG&E are approved by the Gaming Authorities)
together with any new directors whose election by such board or
whose nomination for election by the shareholders of CG&E was
approved by a vote of a majority of the directors then still in
office who were directors at the beginning of such period, cease
for any reason to constitute a majority of the Board of Directors
of CG&E then in office. Notwithstanding anything contained
herein to the contrary, (A) any interim director of CG&E who is
still serving as a director of CG&E six (6) months after the
Closing Date shall be deemed to be an Initial Director as of the
Closing Date for purposes of clause (v) hereof, and (B) a
Permitted Sale of Bullwhackers Central City shall not in and of
itself give rise to a Change in Control.
"Closing Date" means the date of the initial advance
under this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following: the Accounts;
Borrower's Books; the Equipment; the General Intangibles; the
Inventory; the Negotiable Collateral; the Real Property; the
Option Agreement; any money, or other assets of a Borrower which
now or hereafter come into the possession, custody, or control of
Foothill; and the proceeds and products, whether tangible or
intangible, of any of the foregoing including proceeds of
insurance covering any or all of the Collateral, and any and all
Accounts, Borrower's Books, Equipment, General Intangibles,
Inventory, Negotiable Collateral, money, deposit accounts, or
other tangible or intangible property resulting from the sale,
exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the
proceeds thereof. Notwithstanding the foregoing, the Collateral
shall not include any gaming licenses or any liquor licenses of
any of the Borrowers to the extent that the grant of a security
interest therein is prohibited or restricted by applicable law;
provided, however, that the Collateral shall include the proceeds
from the sale or disposition of such licenses.
"Completion Date" means two hundred seventy (270) days
after the date of the advance under the Millsite Parking Lot
Construction Facility subject to being extended by up to an
additional ninety (90) days as a result of Force Majeure.
"Consent to Hypothecation" means a Consent to
Hypothecation of Lease and Landlord's Waiver executed by the
landlords on the Black Hawk Lease and by any other party which
has an interest in the Black Hawk Lease, in form and substance
satisfactory to Foothill.
"Construction Escrow Account" means an escrow account
established on terms and conditions acceptable to Foothill in its
sole discretion into which the advance under the Millsite Parking
Lot Construction Facility is to be deposited and from which
disbursements shall be made periodically upon completion of
stages of construction as verified pursuant to procedures and by
a Person acceptable to Foothill in its sole discretion. The
Construction Escrow Account shall be controlled by Foothill and
disbursements therefrom may only be authorized by Foothill.
"Daily Balance" means the amount of an Obligation owed
at the end of a given day.
"Deposit Account Agreements" means those certain Tri-
Party Deposit Agreements, in form and substance satisfactory to
Foothill, among each of the Borrowers, CG&E and the Deposit
Account Bank.
"Deposit Account Bank" means First Interstate Bank of
Denver, N.A. (also to be known as Wells Fargo Bank).
"Early Termination Premium" has the meaning set forth
in Section 3.7.
"EBITDA" means the earnings before interest, taxes,
depreciation and amortization of Borrowers and CG&E. For
purposes of calculating EBITDA, the corporate selling, general
and administrative expenses of Borrowers and CG&E shall exclude
Reorganization Expenses.
"Equipment" means all of each Borrower's present and
hereafter acquired machinery, machine tools, motors, equipment,
furniture, furnishings, fixtures, slot machines, gaming
equipment, vehicles (including motor vehicles and trailers),
tools, parts, dies, jigs, goods (other than consumer goods, farm
products, or Inventory), wherever located, and any interest of a
Borrower in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located.
"Equipment Refinance/Finance Facility" has the meaning
set forth in Section 2.1(b).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any predecessor,
successor, or superseding laws of the United States of America,
together with all regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which, within the meaning of Section 414 of
the IRC, is: (i) under common control with a Borrower;
(ii) treated, together with a Borrower, as a single employer;
(iii) treated as a member of an affiliated service group of which
a Borrower is also treated as a member; or (iv) is otherwise
aggregated with a Borrower for purposes of the employee benefits
requirements listed in IRC Section 414(m)(4).
"ERISA Event" means any one or more of the following:
(i) a Reportable Event with respect to a Qualified Plan or a
Multiemployer Plan; (ii) a Prohibited Transaction with respect to
any Plan; (iii) a complete or partial withdrawal by a Borrower or
any ERISA Affiliate from a Multiemployer Plan; (iv) the complete
or partial withdrawal of a Borrower or an ERISA Affiliate from a
Qualified Plan during a plan year in which it was, or was treated
as, a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (v) a failure to make full payment when due of all amounts
which, under the provisions of any Plan or applicable law, a
Borrower or any ERISA Affiliate is required to make; (vi) the
filing of a notice of intent to terminate, or the treatment of a
plan amendment as a termination, under Sections 4041 or 4041A of
ERISA; (vii) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to
administer, any Qualified Plan or Multiemployer Plan; (viii) the
imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon a Borrower or any ERISA Affiliate; and (ix) a violation of
the applicable requirements of Sections 404 or 405 of ERISA, or
the exclusive benefit rule under Section 403(c) of ERISA, by any
fiduciary or disqualified person with respect to any Plan for
which a Borrower or any ERISA Affiliate may be directly or
indirectly liable.
"Event of Default" has the meaning set forth in Section
8.
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble to
this Agreement.
"Foothill Expenses" means all: costs or expenses
(including taxes, photocopying, notarization, telecommunication
and insurance premiums) required to be paid by any Borrower under
any of the Loan Documents that are paid or advanced by Foothill;
documentation, filing, recording, publication, appraisal
(including periodic Collateral appraisals), real estate survey,
environmental audit, and search fees assessed, paid, or incurred
by Foothill in connection with Foothill's transactions with
Borrowers; costs and expenses incurred by Foothill in the
disbursement of funds to Borrowers (by wire transfer or
otherwise); charges paid or incurred by Foothill resulting from
the dishonor of checks; costs and expenses paid or incurred by
Foothill to correct any default or enforce any provision of the
Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated; costs and
expenses paid or incurred by Foothill in examining Borrower's
Books; costs and expenses of third party claims or any other suit
paid or incurred by Foothill in enforcing or defending the Loan
Documents; and Foothill's reasonable attorneys fees and expenses
incurred in advising, structuring, drafting, reviewing,
administering, amending, terminating, enforcing, defending, or
concerning the Loan Documents, irrespective of whether suit is
brought.
"Foothill's Operating Account" means Foothill's
operating account as follows (or any other Foothill account as
Foothill may designate in writing from time to time):
Chemical Bank
ABA# 021000128
Credit: Foothill Capital Corp.
Account No.: 323-266193
Re: Hemmeter
"Force Majeure" means only those work stoppages which
occur by reason of governmental order, decree, regulation,
shortage of materials, acts of God, strikes, or other causes
beyond the ability of Borrowers to control.
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States, consistently
applied.
"Gaming Authorities" means the Colorado Division of
Gaming, the Colorado Limited Gaming Control Commission and any
other applicable governmental or administrative state or local
agency involved in the regulation of gaming and gaming activities
in the State of Colorado.
"Gaming Regulations" means the laws and regulations of
the State of Colorado relating to gaming and the rules and
regulations of the Gaming Authorities.
"Gaming Taxes" means all taxes, interest, penalties,
fees (including license fees) and other amounts payable by
Borrowers under Gaming Regulations including, without limitation,
the amount of tax Borrowers are required to pay on their adjusted
gross proceeds pursuant to Part 6 of the Limited Gaming Act of
1991, C.R.S. 12-47-101, et seq. and the rules promulgated
thereunder.
"Gaming Tax Escrow Accounts" has the meaning set forth
in Section 6.15.
"Gaming Tax Reserve" means, as of the date of any
determination, an amount equal to the difference between the
amount of Gaming Taxes owed by the Borrowers and the amount on
deposit in the Gaming Tax Escrow Accounts.
"General Intangibles" means all of each Borrower's
present and future general intangibles and other personal
property (including contract rights, rights arising under common
law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, service marks,
copyrights, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing
agreements, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods and Accounts.
"Hazardous Materials" means all or any of the
following: (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or any other formulation
intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity"; (b) oil, petroleum, or petroleum derived substances,
natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural
gas, or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any
form or electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million.
"Improvements" means the construction of Phase 1 of a
parking structure on the Millsite Property and such other items
as are set forth in the Approved Project Budget.
"Indebtedness" means: (a) all obligations of each of
the Borrowers for borrowed money; (b) all obligations of each of
the Borrowers evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations of
such Borrower in respect of letters of credit, letter of credit
guaranties, bankers acceptances, interest rate swaps, controlled
disbursement accounts, or other financial products; (c) all
obligations under capitalized leases; (d) all obligations or
liabilities of others secured by a lien or security interest on
any property or asset of a Borrower, irrespective of whether such
obligation or liability is assumed; and (e) any obligation of a
Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse
to a Borrower) any indebtedness, lease, dividend, letter of
credit, or other obligation of any other Person.
"Indenture" means that certain Indenture, dated on or
about the Closing Date, by and among CG&E, Borrowers and Fleet
National Bank relating to PIK Notes issued by CG&E.
"Insolvency Proceeding" means any proceeding commenced
by or against any Person under any provision of the Bankruptcy
Code or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with its creditors,
or proceedings seeking reorganization, arrangement, or other
similar relief.
"Interest Expense" means for any period the total
interest expense during such period of Borrowers (i) in respect
of obligations owed to Foothill, and (ii) in connection with the
note secured by the first deed of trust on the Silver Hawk
Property. For purposes of calculating Borrowers' Interest
Expense during the first twelve (12) calendar months after the
Closing Date, Borrowers' actual Interest Expense for such
calendar months shall be annualized and shall be deemed to be
Borrowers' Interest Expense for the previous twelve calendar
months. For example, assuming the Closing Date occurs on June
30, 1996, for purposes of calculating Borrowers' interest expense
for the twelve months preceding October 1996, Borrowers' actual
Interest Expense for the months of July, August and September
1996 shall be multiplied by four and the product thereof shall be
deemed to be Borrowers' Interest Expense for the twelve months
preceding October 1996.
"Inventory" means all present and future inventory in
which any Borrower has any interest, including goods held for
sale or lease or to be furnished under a contract of service and
all of each Borrower's present and future raw materials, work in
process, finished goods, and packing and shipping materials,
wherever located, and any documents of title representing any of
the above.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Loan Documents" means this Agreement, the Deposit
Account Agreements, the CG&E Continuing Guaranty, the CG&E
Security Agreement, the Trademark Security Agreements, the
Mortgages, the Option Agreement Assignment, the Consent to
Hypothecation, any note or notes executed by a Borrower and
payable to Foothill, and any other agreement entered into in
connection with this Agreement.
"Maximum Amount" has the meaning set forth in Section
2.1.
"Millsite Parking Lot Construction Facility" has the
meaning set forth in Section 2.1(c).
"Millsite Property" means the Real Property located at
Millsite 27 in Black Hawk, Colorado 80422.
"Minimum EBITDA" means the EBITDA of Borrowers and CG&E
on a consolidated basis for the previous twelve (12) calendar
months calculated as of the end of each calendar month. For
purposes of calculating Minimum EBITDA, the aggregate corporate
selling, general and administrative expenses of Borrowers and
CG&E for each calendar month ending prior to January 1996 shall
be deemed to be the lesser of the following amount for each such
month: (i) the actual amount of such expenses for the month, or
(ii) Two Hundred Ten Thousand Dollars ($210,000) for the month.
"Mortgages" means one or more mortgages, deeds of
trust, or deeds to secure debt, executed by a Borrower in favor
of Foothill, the form and substance of which shall be
satisfactory to Foothill, that encumber the Real Property
(including, without limitation, Borrowers' leasehold interests)
and the related improvements thereto.
"Multiemployer Plan" means a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414
of the IRC in which employees of a Borrower or an ERISA Affiliate
participate or to which a Borrower or any ERISA Affiliate
contribute or are required to contribute.
"Negotiable Collateral" means all of each Borrower's
present and future letters of credit, notes, drafts, instruments,
certificated and uncertificated securities (including the shares
of stock of subsidiaries of each Borrower), documents, personal
property leases (wherein a Borrower is the lessor), chattel
paper, and Borrower's Books relating to any of the foregoing.
"Noteholder Documents" means the Indenture, the PIK
Notes, the Security Documents (as defined in the Indenture), the
Guarantee (as defined in the Indenture) and all related
agreements and instruments.
"Obligations" means all loans, advances, debts,
principal, interest, premiums, liabilities (including all amounts
charged to any Borrower's loan account pursuant to any agreement
authorizing Foothill to charge a Borrower's loan account),
obligations, fees, lease payments, guaranties, covenants, and
duties owing by each Borrower to Foothill of any kind and
description (whether pursuant to or evidenced by the Loan
Documents, by any note or other instrument, or pursuant to any
other agreement between Foothill and a Borrower, and irrespective
of whether for the payment of money), whether direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or
obligation owing from any Borrower to others that Foothill may
have obtained by assignment or otherwise, and further including
all interest not paid when due and all Foothill Expenses that
Borrowers are required to pay or reimburse by the Loan Documents,
by law, or otherwise.
"Option Agreement" means that certain Option to
Purchase relating to the Black Hawk Lease between Harold Gene
Reagin and Jerry L. Brown, as optionors, and HP Black Hawk, L.P.,
a California limited partnership, as optionee, dated October 25,
1991 (of which a Memorandum of Right to Purchase was recorded as
Reception No. 72165 in Book 517 at Page 401 of the real estate
records for Gilpin County, Colorado, on November 1, 1991) as
amended by an Assignment of Option to Purchase between HP Black
Hawk, L.P. and HP Black Hawk, L.L.C. a Delaware limited liability
company, dated September 22, 1993 and recorded as Reception No.
79058 in Book 500 at Page 463 of the real estate records for
Gilpin County, Colorado, on September 22, 1993 and further
amended by a Memorandum of Merger between HP Black Hawk, L.L.C.
and Black Hawk Management Company, L.L.C., a Delaware limited
liability company, dated as of November 17, 1993 and recorded in
Book 554 at Page 198 of the real estate records for Gilpin
County, Colorado, on December 1, 1993 and further amended by a
Memorandum of Merger between Black Hawk Management Company,
L.L.C. and BWBH dated December 20, 1993.
"Option Agreement Assignment" means an assignment of
the Option Agreement, in form and substance acceptable to
Foothill.
"Overadvance" has the meaning set forth in Section 2.2.
"Paine Webber" means Paine Webber Preferred Yield Fund,
L.P., Capital Preferred Yield Fund, L.P. and Capital Preferred
Yield Fund II, L.P. as successors in interest to CAI.
"Pay-Off Letters" means letters, agreements and/or
other documentation, in form and substance satisfactory to
Foothill, from Persons leasing/financing Equipment respecting the
dollar amount necessary to obtain a termination of all of the
security interests, liens and other interests of such Persons in
and to the Equipment and other property and assets of Borrowers
and CG&E.
"PBGC" means the Pension Benefit Guaranty Corporation
as defined in Title IV of ERISA, or any successor thereto.
"Permitted Casino Shut Down" means the closure of
Silver Hawk's Casino located in Black Hawk, Colorado during the
construction of the Improvements or the closure of BWCC's Casino
located in Central City, Colorado for up to seventy five (75)
days during the months of January, February and/or March, subject
to the condition that Borrowers' shall give Foothill not less
than fifteen (15) days prior written notice of a proposed
Permitted Casino Shut Down detailing the reasons and the period
of time for the proposed Permitted Casino Shut Down.
"Permitted Equipment Sales" means sales by BWBH, BWCC
or Silver Hawk in the ordinary course of business of slot
machines having a book value of not greater than Fifty Thousand
Dollars ($50,000) in the aggregate and the proceeds thereof are
paid to Foothill and applied against the Obligations as
determined by Foothill, unless: (i) the slot machines are
replaced with slot machines of equal or greater value as
determined by Foothill and Foothill obtains a first priority
perfected security interest in such slot machines, or (ii) the
sale is approved by Foothill and the proceeds thereof are paid to
Foothill and applied against the Obligations as determined by
Foothill.
"Permitted Liens" means: (a) liens and security
interests held by Foothill; (b) liens for unpaid taxes that are
not yet due and payable or which are junior and subordinate to
those of Foothill and which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Borrowers in
conformity with GAAP; and (c) liens and security interests set
forth on Schedule P-1 attached hereto subject to any conditions
stated therein.
"Permitted Sale of Bullwhackers Central City" means a
sale by BWCC of its Casino located in Central City, Colorado
which meets all of the following conditions: (a) the sale is for
cash only, (b) the net sales price is not less than Five Million
Dollars ($5,000,000), and (c) all of the sale proceeds are paid
to Foothill and shall be applied first against the outstanding
balance of the Millsite Parking Lot Construction Facility, second
against the outstanding balance of the Equipment
Refinance/Finance Facility and third against the remaining
Obligations as determined by Foothill. Borrowers' borrowing
availability under the Equipment Refinance/Finance Facility shall
be permanently reduced by the amount of any sale proceeds applied
against the outstanding balance of the Equipment
Refinance/Finance Facility.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships, joint
ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities,
and governments and agencies and political subdivisions thereof.
"PIK Notes" means the 12% Senior Pay-In-Kind Notes Due
2003 issued in accordance with the Indenture.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which a Borrower or any ERISA Affiliate
sponsors or maintains or to which a Borrower or any ERISA
Affiliate makes, is making, or is obligated to make
contributions, including any Multiemployer Plan or Qualified
Plan.
"Plan of Reorganization" means the First Amended Joint
Plan of Reorganization of CG&E, BWBH, BWCC and Millsite as
confirmed by the Bankruptcy Court effective as of April 8, 1996.
"Plans and Specifications" means the final plans and
specifications for the Project prepared by Borrowers' Architect
as approved by Foothill in its discretion.
"Pledged Account" and "Pledged Accounts" mean the
"Deposit Account(s)," "Master Account(s)," and "Subsidiary
Accounts" as defined in the respective Deposit Account
Agreements.
"Prohibited Transaction" means any transaction
described in Section 406 of ERISA which is not exempt by reason
of Section 408 of ERISA, and any transaction described in Section
4975(c) of the IRC which is not exempt by reason of Section
4975(c) of the IRC.
"Project" means the construction of the Improvements on
the Millsite Property.
"Qualified Plan" means a pension plan (as defined in
Section 3(2) of ERISA) intended to be tax-qualified under Section
401(a) of the IRC which a Borrower or any ERISA Affiliate
sponsors, maintains, or to which any such person makes, is
making, or is obligated to make, contributions, or, in the case
of a multiple-employer plan (as described in Section 4064(a) of
ERISA), has made contributions at any time during the immediately
preceding period covering at least five (5) plan years, but
excluding any Multiemployer Plan.
"Real Property" means the parcels of real property
(including the Millsite Property) and the related improvements
thereto (including the Improvements) identified on Schedule R-1,
and any parcels of real property hereafter acquired or leased by
any Borrower.
"Reference Rate" means the variable rate of interest,
per annum, most recently announced by Norwest Bank Minnesota,
N.A., or any successor to the foregoing institution, as its "base
rate", "prime rate" or "reference rate," as the case may be,
irrespective of whether such announced rate is the best rate
available from such financial institution.
"Reorganization Expenses" means legal, accounting and
other professional fees and other costs and expenses incurred by
Borrowers and CG&E in the Bankruptcy Cases including, without
limitation, any amounts that may be payable in respect of
restructuring the "PIK Notes" (as defined in the Plan of
Reorganization) and classified as reorganization expenses on the
balance sheets of Borrowers and CG&E.
"Reportable Event" means any event described in Section
4043 (other than Subsections (b)(7) and (b)(9)) of ERISA.
"Revolving Advance Facility" has the meaning set forth
in Section 2.1(a).
"RW Leasing" means RW Leasing Company.
"Silver Hawk Property" means the Real Property located
at 100 Chase Street, Black Hawk, Colorado 80422.
"Solvent" means, with respect to any Person on a
particular date, that on such date (a) at fair valuations, all of
the properties and assets of such Person are greater than the sum
of the debts, including contingent liabilities, of such Person,
(b) the present fair salable value of the properties and 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, (c) such Person is able to realize
upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not
intend to, and does not believe that it will, incur debts beyond
such Person's ability to pay as such debts mature, and (e) 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 properties and assets would constitute unreasonably
small capital after giving due consideration to the prevailing
practices 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
that, in light of all the facts and circumstances existing at
such time, represents the amount that reasonably can be expected
to become an actual or matured liability.
"Trademark Security Agreements" means Trademark
Security Agreements in form and substance satisfactory to
Foothill pursuant to which each of the Borrowers and CG&E grants
to Foothill a first priority security interest in all names,
logos, service mark and trademark rights of each of the Borrowers
and CG&E including, without limitation, with respect to the names
and marks "Bullwhackers" and "Silver Hawk."
"Title Company" and "Title Policy" have the meanings
set forth in Section 3.1(n).
"Unfunded Benefit Liability" means the excess of a
Plan's benefit liabilities (as defined in Section 4001(a)(16) of
ERISA) over the current value of such Plan's assets, determined
in accordance with the assumptions used by the Plan's actuaries
for funding the Plan pursuant to Section 412 of the IRC for the
applicable plan year.
"Voidable Transfer" has the meaning set forth in
Section 15.8.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto. Whenever the term
"Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrowers on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement which are
defined in the Code shall be construed and defined as set forth
in the Code unless otherwise defined herein.
1.4 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural
include the singular, references to the singular include the
plural, the term "including" is not limiting, and the term "or"
has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, subsection,
clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. Any reference in this Agreement or
in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions,
and supplements, thereto and thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated
herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Advances. Subject to the terms and conditions of
this Agreement, Foothill agrees to make advances to Borrowers not
exceeding Twelve Million Five Hundred Thousand Dollars
($12,500,000) in the original aggregate principal amount (the
"Maximum Amount") as follows:
(a) Revolving Advances. Revolving advances to
Borrowers not to exceed Three Million Five Hundred Dollars
($3,500,000) minus the Gaming Tax Reserve.
(b) Equipment Refinance/Finance Facility.
Revolving advances to Borrowers (the "Equipment Refinance/Finance
Facility") not to exceed Five Million Dollars ($5,000,000); the
amount of such borrowing availability being subject to permanent
reduction as provided in the definition of a "Permitted Sale of
Bullwhackers Central City."
(c) Millsite Parking Lot Construction Facility.
An advance to Borrowers (the "Millsite Parking Lot Construction
Facility") in an original aggregate principal amount not to
exceed Five Million Dollars ($5,000,000) which shall be deposited
by Foothill into the Construction Escrow Account; the amount of
such borrowing availability being subject to permanent reduction
as provided in the definition of a "Permitted Sale of
Bullwhackers Central City."
(d) Silver Hawk Facility. An advance to
Borrowers (the "Silver Hawk Facility") in an original aggregate
principal amount not to exceed One Million Dollars ($1,000,000)
to be used, together with other funds available to the Borrowers,
to prepay in full the remaining outstanding balance of the
existing note and deed of trust on the Silver Hawk Property in
favor of Millsite 20 Limited Liability Company LLC.
(e) The Borrowers acknowledge that even though
the amounts set forth in Sections 2.1(a), (b), (c) and (d) add up
to more than Twelve Million Five Hundred Thousand Dollars
($12,500,000), Foothill will not make advances to Borrowers which
result in more than Twelve Million Five Hundred Thousand Dollars
($12,500,000) in aggregate principal amount outstanding at any
time.
(f) Foothill is authorized to make advances under
this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Officer of
Borrower, or without instructions if pursuant to Section 2.4(d).
Borrowers agree to establish and maintain a single designated
deposit account for the purpose of receiving the proceeds of the
advances requested by any Borrower and made by Foothill
hereunder. Unless otherwise agreed by Foothill and Borrowers,
any advance requested by a Borrower and made by Foothill
hereunder shall be made to such designated deposit account.
Amounts borrowed pursuant to Section 2.1(a) and Section 2.1(b)
may be repaid and, subject to the terms and conditions of this
Agreement (including, without limitation, permanent reduction of
borrowing availability under the Equipment Refinance/Finance
Facility as a result of a Permitted Sale of Bullwhackers Central
City), reborrowed at any time during the term of this Agreement.
Any amounts borrowed pursuant to Section 2.1(c) or Section 2.1(d)
and repaid may not be reborrowed. All amounts of principal
prepaid under the Equipment Refinance/Finance Facility and/or the
Millsite Parking Lot Construction Facility and/or the Silver Hawk
Facility shall be applied against installments of principal due
thereunder in the inverse order of maturity.
2.2 Overadvances. If, at any time or for any reason,
the amount of Obligations owed by Borrowers to Foothill pursuant
to Section 2.1 is greater than the dollar limitations set forth
in Section 2.1 (an "Overadvance"), Borrowers immediately shall
pay to Foothill, in cash, the amount of such excess to be used by
Foothill to repay the Obligations.
2.3 Amortization of Equipment Refinance/Finance
Facility, Millsite Parking Lot Construction Facility and Silver
Hawk Facility. Subject to becoming due and payable earlier upon
the occurrence of an Event of Default or upon termination of the
term of this Agreement, the principal balance of amounts advanced
under the Equipment Refinance/Finance Facility and the Millsite
Parking Lot Construction Facility shall be repaid by Borrowers as
follows:
(a) Equipment Refinancing. The principal balance
of the amounts which are to be advanced on the Closing Date under
the Equipment Refinance/Finance Facility pursuant to Section
7.20(b)(i) to repay in full the outstanding balance of the
"Equipment Refinance Facility" (as defined in the DIP Loan and
Security Agreement) and to refinance Borrowers' Equipment that is
currently leased/financed by Paine Webber and RW Leasing shall be
repaid by Borrowers in thirty six (36) equal monthly installments
commencing on the first day of the month after the advance is
made and continuing on the first day of each month thereafter.
(b) Equipment Purchase. The principal balance of
amounts advanced under the Equipment Refinance/Finance Facility
to purchase new Equipment pursuant to Section 7.20(b)(ii) shall
be repaid by Borrowers in forty two (42) equal monthly
installments commencing on the first day of the month after the
advance is made and continuing on the first day of each month
thereafter.
(c) Millsite Parking Lot Construction Facility.
The principal balance of the amount advanced under the Millsite
Parking Lot Construction Facility shall be repaid by Borrowers in
equal monthly installments over the remaining initial term of
this Agreement commencing on the first day of the month after the
advance is made and continuing on the first day of each month
thereafter.
(d) Silver Hawk Facility. The principal balance
of the amount advanced under the Silver Hawk Facility shall be
repaid by Borrowers in thirty six (36) equal monthly installments
commencing on the first day of the month after the advance is
made and continuing on the first day of each month thereafter.
2.4 Interest: Rates, Payments, and Calculations.
(a) Interest Rate. All Obligations shall bear
interest, on the actual Daily Balance, at a per annum rate of two
and three eighths (2.375) percentage points above the Reference
Rate.
(b) Default Rate. All Obligations shall bear
interest, from and after the occurrence and during the
continuance of an Event of Default, at a per annum rate equal to
five and three eighths (5.375) percentage points above the
Reference Rate.
(c) Minimum Interest. In no event shall the rate
of interest chargeable hereunder be less than nine percent (9%)
per annum.
(d) Payments. Interest hereunder shall be due
and payable in arrears on the first day of each month during the
term hereof. Borrowers hereby authorize Foothill, at its option,
without prior notice to Borrowers, to charge such interest, all
Foothill Expenses (as and when incurred), and all installments or
other payments due hereunder and under any note or other Loan
Document to Borrowers' loan account, which amounts shall
thereafter accrue interest at the rate then applicable hereunder.
Any interest not paid when due shall be compounded by becoming a
part of the Obligations, and such interest shall thereafter
accrue interest at the rate then applicable hereunder.
(e) Computation. The Reference Rate as of this
date is eight and one quarter percent (8.25%) per annum. In the
event the Reference Rate is changed from time to time hereafter,
the applicable rate of interest hereunder automatically and
immediately shall be increased or decreased by an amount equal to
such change in the Reference Rate. The rates of interest charged
hereunder shall be based upon the actual Reference Rate in effect
during the month. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a three hundred
sixty (360) day year for the actual number of days elapsed.
(f) Intent to Limit Charges to Maximum Lawful
Rate. In no event shall the interest rate or rates payable under
this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that
a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and Foothill, in
executing this Agreement, intend to legally agree upon the rate
or rates of interest and manner of payment stated within it;
provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum as
allowed by law, and payment received from Borrowers in excess of
such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such
excess.
2.5 Crediting Payments; Application of Collections.
The receipt of any wire transfer of funds, check, or other item
of payment by Foothill immediately shall be applied to
provisionally reduce the Obligations as determined by Foothill.
Notwithstanding the foregoing, the receipt of any wire transfer
of funds, check, or other item of payment by Foothill shall not
be considered a payment on account unless such wire transfer is
of immediately available federal funds and is made to Foothill's
Operating Account or unless and until such check or other item of
payment is honored when presented for payment. Anything to the
contrary contained herein notwithstanding, any wire transfer,
check, or other item of payment shall be deemed received by
Foothill only if it is received into Foothill's Operating Account
at or before 11:00 a.m. Los Angeles time. If any wire transfer,
check, or other item of payment is received into Foothill's
Operating Account after 11:00 a.m. Los Angeles time it shall be
deemed to have been received by Foothill as of the opening of
business on the immediately following Business Day.
2.6 Statements of Obligations. Foothill shall render
statements to Borrowers of the Obligations, including principal,
interest, fees, and including an itemization of all charges and
expenses constituting Foothill Expenses owing. Within thirty
(30) days after receipt of any such statement, Borrowers may
request in writing that Foothill provide Borrowers with
supporting information relating to such statement. Such
statements and supporting information shall be conclusively
presumed to be correct and accurate and constitute an account
stated between Borrowers and Foothill unless, within thirty (30)
days after receipt thereof by Borrowers, Borrowers shall deliver
to Foothill by registered or certified mail at its address
specified in Section 12, written objection thereto describing the
error or errors contained in any such statements and supporting
information.
2.7 Fees. Borrowers shall pay to Foothill the
following fees:
(a) Closing Fee. A one time closing fee of One
Hundred Sixty Thousand Dollars ($160,000) which is earned, in
full, on the Closing Date and is due and payable by Borrowers to
Foothill in connection with this Agreement on the Closing Date.
(b) Unused Line Fee. On the first day of each
month after the Closing Date, a fee in an amount equal to one
half percent (0.50%) per annum times the Average Unused Portion
of the Maximum Amount.
(c) Equipment Refinance/Finance Facility Funding
Fee. Concurrently with each advance under the Equipment
Refinance/Finance Facility, a fee in an amount equal to one
percent (1%) of such advance.
(d) Millsite Parking Lot Construction Facility
Funding Fee. A fee in an amount equal to Fifty Thousand Dollars
($50,000) which is earned, in full, on the Closing Date and is
due and payable by Borrowers to Foothill upon the earlier of: (i)
September 30, 1996, or (ii) concurrently with the advance under
the Millsite Parking Lot Construction Facility.
(e) Silver Hawk Facility Fee. Concurrently with
the advance under the Silver Hawk Facility, a fee in an amount
equal to one percent (1%) of such advance.
(f) Financial Examination, Documentation, and
Appraisal Fees. Foothill's customary fee of Six Hundred Fifty
Dollars ($650) per day per examiner, plus out-of-pocket expenses
for each financial analysis and examination of Borrowers
performed by Foothill or its agents; Foothill's customary
appraisal fee of One Thousand Five Hundred Dollars ($1,500) per
day per appraiser, plus out-of-pocket expenses for each appraisal
of the Collateral performed by Foothill or its agents; and
Foothill's annual loan documentation review fee of Five Thousand
Dollars ($5,000). So long as no Event of Default has occurred,
Foothill will not conduct a financial analysis and examination
more frequently than quarterly or an appraisal more frequently
than annually.
(g) Servicing Fee. On the first day of each
month during the term of this Agreement, and thereafter so long
as any Obligations are outstanding, a servicing fee in an amount
equal to Six Thousand Five Hundred Dollars ($6,500) per month.
2.8 Costs and Expenses. Borrowers agree to pay up to
Seventy Five Thousand Dollars ($75,000) of Foothill's costs and
expenses incurred prior to the date hereof in connection with the
initial closing of the financing transaction governed by this
Agreement, including costs and expenses incurred by auditors and
appraisers in verifying Borrowers' records, Foothill's legal
expenses for advice in preparing Loan Documents and any filing
and search fees. Nothing contained in this Section 2.8 shall be
construed as limiting Borrowers' obligations to pay Foothill
Expenses in connection with any matters relating to the DIP Loan
and Security Agreement or as otherwise provided in this Agreement
with respect to matters other than Foothill's costs and expenses
incurred prior to the date hereof in connection with the initial
closing of the financing transaction governed by this Agreement.
2.9 Joint Borrower Provisions.
(a) Any advances made by Foothill hereunder shall
be deemed to be made jointly to Borrowers and shall be charged to
each Borrower jointly and severally and each Borrower shall be
jointly and severally liable for all advances. Any payments
received by Foothill hereunder likewise shall be credited to each
Borrower.
(b) Foothill will credit the amount of advances
made to Borrowers under Section 2.1 to Borrowers' designated
deposit account. It is expressly agreed and understood by each
Borrower that Foothill shall have no responsibility to inquire
into the apportionment, allocation, or disposition of any
advances made to Borrowers. All advances are to be made for the
collective account of Borrowers.
(c) For the purpose of implementing the joint
borrower provisions of the Loan Documents, each Borrower hereby
irrevocably appoints each other Borrower as its agent and
attorney-in-fact for all purposes of the Loan Documents,
including the making of requests for advances, the execution and
delivery of certificates, and the receiving and allocating of
disbursements from Foothill.
(d) It is understood and agreed that the handling
of the revolving credit facility on a joint borrowing basis as
set forth in this Agreement is solely as an accommodation to
Borrowers and at their request, and that Foothill shall not incur
any liability to Borrowers as a result thereof. To induce
Foothill to do so, and in consideration thereof, each Borrower
hereby agrees to indemnify Foothill and hold Foothill harmless
from and against any and all liabilities, expenses, losses,
damages, or claims of damage or injury asserted against Foothill
by Borrowers or by any other Person arising from or incurred by
reason of Foothill's handling of the financing arrangement of
Borrowers, as herein provided, reliance by Foothill on any
requests or instructions from any Borrower, or any other action
taken by Foothill hereunder.
(e) Each Borrower represents and warrants to
Foothill that the request for joint handling of the advances and
other financial accommodations to be made by Foothill hereunder
was made because Borrowers are engaged in an integrated operation
that requires financing on a basis permitting the availability of
credit from time to time to each Borrower. Each Borrower expects
to derive benefit, directly or indirectly, from such availability
because the successful operation of Borrowers is dependent on the
continued successful performance of the functions of the
integrated group.
(f) Each Borrower represents and warrants to
Foothill that (i) such Borrower has established adequate means of
obtaining from each other Borrower, on a continuing basis,
financial and other information pertaining to the business,
operations, and condition (financial and otherwise) of each other
Borrower, and its property, and (ii) such Borrower now is and
hereafter will be completely familiar with the business,
operations, and condition (financial and otherwise) of each other
Borrower and its property. Each Borrower hereby waives and
relinquishes any duty on the part of Foothill to disclose to such
Borrower any matter, fact or thing relating to the business
operations, or condition (financial or otherwise) of each other
Borrower, or the property of each other Borrower, whether now or
hereafter known by Foothill during the term of this Agreement.
(g) Each Borrower has determined that it has and,
after giving effect to the transactions contemplated by this
Agreement, will have, access to adequate capital for the conduct
of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
Accordingly, the Borrowers are and will be jointly and severally
liable for each and every representation, covenant and obligation
to be performed by the Borrowers under this Agreement and the
Loan Documents, and the invalidity, unenforceability or
illegality of this Agreement or any Loan Document as to one of
the Borrowers, or the release by Foothill of a Borrower hereunder
or thereunder, will not affect the Obligations of the other
Borrowers under this Agreement or the Loan Documents, all of
which will otherwise remain valid and legally binding obligations
of such other Borrowers. Each of the Borrowers agrees, on behalf
of itself, that it will not seek to exercise any rights of
contribution or exoneration from payment which it may have as a
matter of law or otherwise as against the other Borrowers
hereunder so long as any of the Obligations are outstanding, and
if by law any right of contribution or exoneration from payment
may not be postponed, then such right shall be subordinate to the
rights of Foothill against the Borrowers under this Agreement and
the Loan Documents. None of the Borrowers shall be subrogated in
whole or in part to the rights of Foothill, and if by law one is
so subrogated, such rights shall be subordinate and junior to the
rights of Foothill under this Agreement, the Loan Documents or
any other agreement or document referred to herein or therein,
until payment and discharge in full of all Obligations.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to Initial Advance. The
obligation of Foothill to make the initial advance is subject to
the fulfillment, to the satisfaction of Foothill and its counsel,
of each of the following conditions on or before the Closing
Date:
(a) the Bankruptcy Court order confirming the
Plan of Reorganization shall not have been appealed or subject to
reconsideration and shall remain in full force and effect;
(b) the "Effective Date" of the Plan of
Reorganization (as defined in the Plan of Reorganization) and all
conditions to the effectiveness of the Plan of Reorganization
shall have occurred and Foothill shall have received evidence of
the same in form and substance satisfactory to Foothill;
(c) the Closing Date shall occur on or before
June 7, 1996;
(d) Foothill shall have received searches
reflecting the filing of its financing statements and fixture
filings;
(e) Foothill shall have received each of the
following documents (or, where deemed applicable by Foothill,
amendments to such documents) in form and substance satisfactory
to Foothill, duly executed, and each such document (as amended)
shall be in full force and effect:
(i) this Agreement;
(ii) the Deposit Account Agreements;
(iii) the CG&E Continuing Guaranty;
(iv) the CG&E Security Agreement;
(v) the Trademark Security Agreements;
(vi) UCC-1 Financing Statements from
each of the Borrowers and CG&E;
(vii) Fixture filings from each of the
Borrowers;
(viii) the Mortgages;
(ix) the Option Agreement Assignment;
and
(x) the Consent to Hypothecation.
(f) Foothill shall have received a certificate
from the Secretary of each Borrower attesting to the resolutions
of such Borrower's Board of Directors authorizing its execution
and delivery of this Agreement and the other Loan Documents to
which such Borrower is a party and authorizing specific officers
of such Borrower to execute same;
(g) Foothill shall have received a certificate
from the Secretary of CG&E attesting to the resolutions of CG&E's
Board of Directors authorizing its execution and delivery of the
Loan Documents to which CG&E is a party and authorizing specific
officers of CG&E to execute same;
(h) Foothill shall have received copies of each
of the Borrower's and CG&E's By-laws and Certificate of
Incorporation, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower and
CG&E;
(i) Foothill shall have received a certificate of
corporate status with respect to each Borrower and CG&E, dated
within ten (10) days prior the Closing Date, by the Secretary of
State of Delaware, which certificate shall indicate that each
such Borrower and CG&E is in good standing in such state;
(j) Foothill shall have received certificates of
corporate status with respect to each Borrower and CG&E, each
dated within fifteen (15) days prior to the Closing Date, such
certificates to be issued by the Secretary of State of the states
in which such Borrower's or CG&E's failure to be duly qualified
or licensed would have a material adverse effect on the financial
condition or properties and assets of such Borrower or CG&E,
which certificates shall indicate that such Borrower and CG&E is
in good standing;
(k) Foothill shall have received certificates of
insurance evidencing the issuance of the policies of insurance,
together with the endorsements thereto, as are required by
Section 6.9 hereof and in the Mortgages, the form and substance
of which shall be satisfactory to Foothill and its counsel;
(l) Foothill shall have received duly executed
certificates of title with respect to that portion of the
Collateral that is subject to certificates of title, if any;
(m) Foothill shall have received a landlord
waiver from the lessor of Borrowers' warehouse facility located
at 15880 West 6th Avenue, Golden, Colorado 80401;
(n) Foothill shall have received ALTA Lender's
Policies of Title Insurance (the "Title Policy") from Lawyers
Title Insurance Company (the "Title Company"), in an amount
satisfactory to Foothill, insuring: (i) its first priority lien
upon each parcel of Real Property (including the Real Property
which is the subject of the Black Hawk Lease but excluding the
Silver Hawk Property), and (ii) its second priority lien upon the
Silver Hawk Property;
(o) an environmental report and real estate
survey shall have been completed on each parcel of Real Property
(including the Real Property which is the subject of the Black
Hawk Lease). The environmental consultants retained for the
environmental report, the scope of the report, and the results of
the report shall be acceptable to Foothill and its counsel, in
their sole discretion;
(p) Foothill shall have been satisfied with the
effect of the Gaming Regulations and the policies of the Gaming
Authorities as they relate to each of the Borrowers entering into
this Agreement and to the transactions governed by the Loan
Documents including, without limitation, the rights and remedies
of Foothill under the Loan Documents;
(q) Foothill shall have received evidence
satisfactory to Foothill of the establishment of the Gaming Tax
Escrow Accounts;
(r) Foothill shall have received copies of all
licenses issued to each of BWBH, BWCC and Silver Hawk (if
licensed on the Closing Date) by the Gaming Authorities as in
effect after May 20, 1996;
(s) Foothill shall have received a letter from
the Gaming Authorities with respect to each of BWBH, BWCC and
Silver Hawk (if licensed on the Closing Date), dated after May
20, 1996 and within ten (10) days prior to the Closing Date,
which letter shall indicate that each of BWBH, BWCC and Silver
Hawk (if licensed on the Closing Date) is duly licensed under the
Gaming Regulations and that each of their respective licenses
have been renewed through at least December 1, 1996;
(t) Foothill shall have received from Borrowers
and CG&E updated proforma financial statements of CG&E and the
Borrowers as of the Closing Date reflecting the effectiveness of
the Plan of Reorganization;
(u) Foothill shall have received from Borrowers a
copy of the final form of the Indenture, the Noteholder Documents
and CAI Notes and the Indenture, the Noteholders Documents and
the CAI Notes shall be in form and substance satisfactory to
Foothill in its sole discretion (including, without limitation,
all provisions in the Indenture and the Noteholder Documents
relating to the subordination of the security interests in the
Collateral granted to the holders of the PIK Notes);
(v) Foothill shall received executed UCC
termination statements, reconveyances of deeds of trust and other
documentation evidencing the termination of all security
interests, liens and other interests in and to the properties and
assets of each of the Borrowers and CG&E (except with respect to
those in favor of Foothill and Permitted Liens) including,
without limitation, executed UCC termination statements from IGT -
Colorado Corporation, International Game Technology and executed
Pay-Off Letters and UCC termination statements from Paine Webber
and RW Leasing;
(w) Foothill shall have received an opinion of
Borrowers' counsel with expertise in the Gaming Regulations in
form and substance satisfactory to Foothill in its sole
discretion;
(x) Foothill shall have received an opinion of
counsel to Borrowers and CG&E in form and substance satisfactory
to Foothill in its sole discretion; and
(y) all other documents and legal matters in
connection with the transactions contemplated by this Agreement
shall have been delivered or executed or recorded and shall be in
form and substance reasonably satisfactory to Foothill and its
counsel.
3.2 Conditions Precedent to Any Advance under the
Equipment Refinance/Finance Facility. The obligation of Foothill
to make any advance under the Equipment Refinance/Finance
Facility is subject to the fulfillment, to the satisfaction of
Foothill and its counsel, of each of the following conditions:
(a) in connection with the refinance on the
Closing Date of Equipment leased/financed by Paine Webber and RW
Leasing as provided in Section 7.20(b)(i), Foothill shall have
received executed Pay-Off Letters from Paine Webber and RW
Leasing together with UCC termination statements and other
documentation evidencing the termination of such Persons'
security interests, liens and other interests in and to the
properties and assets of each of the Borrowers and CG&E;
(b) in connection with the purchase of any new
Equipment:
(i) each advance shall be advanced
directly to the applicable vendor that is selling the
Equipment to Borrowers;
(ii) each advance shall be in a
principal amount of not less than (x) Two Hundred Fifty
Thousand Dollars ($250,000), or (y) such lesser amount as is
the then unfunded balance of the Equipment Refinance/Finance
Facility;
(iii) each advance shall be in an amount,
as determined by Foothill, not to exceed one hundred percent
(100%) of Borrowers' invoice cost (net of shipping, freight,
installation, sales tax and other so-called soft costs) of
the new Equipment that is to be purchased by Borrower with
the proceeds of such advance;
(iv) the new Equipment that is to be
purchased by Borrower must be acceptable to Foothill in all
respects, not be a fixture, and not be intended to be
affixed to real property or to become installed in or
affixed to other goods (except for other goods owned by
Borrowers and included in the Collateral); and
(v) the aggregate amount outstanding at
any time under the Equipment Refinance/Finance Facility
(including giving effect to any requested advance) shall not
exceed the lesser of cost or fair market value of all of the
Equipment acquired or financed with the proceeds of the
Equipment Refinance/Finance Facility.
3.3 Conditions Precedent to the Advance under the
Millsite Parking Lot Construction Facility. The obligation of
Foothill to make the advance under the Millsite Parking Lot
Construction Facility (and any disbursement from the Construction
Escrow Account described below) is subject to the fulfillment, to
the satisfaction of Foothill and its counsel, of each of the
following conditions:
(a) The Construction Escrow Account shall be
established on terms and conditions acceptable to Foothill in its
sole discretion into which the advance under the Millsite Parking
Lot Construction Facility is to be deposited. The Construction
Escrow Account shall be controlled by Foothill and disbursements
therefrom may only be authorized by Foothill;
(b) The advance under the Millsite Parking Lot
Construction Facility and the deposit thereof into the
Construction Escrow Account must be made by no later than
September 30, 1997;
(c) disbursements from the Construction Escrow
Account shall be made periodically upon completion of stages of
construction as verified pursuant to procedures and by a Person
acceptable to Foothill in its sole discretion;
(d) If requested by Foothill, prior to each
disbursement from the Construction Escrow Account, Foothill shall
have received an endorsement to the Title Policy reflecting the
date and the amount of the intended disbursement, or satisfactory
confirmation from the Title Company that it is in a position to
issue such an endorsement. If any intervening mechanics' liens
or other liens or bonded stop notices are filed against the
Project or served on Foothill at any time, Borrowers shall cause
the Title Company to provide affirmative coverage over such
liens, or Borrowers shall cause such liens or bonded stop notices
to be released, as Foothill may require;
(e) Prior to each disbursement for a construction
item, Borrowers' Architect must have certified that the portion
of the work for which a disbursement is requested has been
completed in accordance with the Plans and Specifications and in
a good and workmanlike manner. If Foothill determines that any
work or materials are not in conformity with the Plans and
Specifications approved by Foothill, or are not in conformity
with sound building practice, or otherwise depart from any of the
requirements of this Agreement, Foothill shall have the right to
stop the work and order disbursements withheld hereunder and to
order the replacement or correction of any such work or materials
regardless of whether or not such work or materials have been
incorporated in the Project;
(f) Foothill shall have received and approved a
construction schedule for the construction of the Improvements,
which schedule shall provide for completion of the Improvements
and all on and off site work by the Completion Date. Such
schedule shall show a trade-by-trade breakdown of the estimated
periods of commencement and completion of such work;
(g) Foothill shall have received and approved
assignments of all contracts, permits, licenses and approvals,
and the Borrowers' Architect Certificate;
(h) Foothill shall have received and approved
final Plans and Specifications, together with certificates, in
such detail as required by Foothill, from the architect(s) and
engineer(s) preparing or contributing to the Plans and
Specifications and such evidence of approval by all governmental
agencies as is required to complete and construct the Project in
Foothill's judgment;
(i) Foothill shall have received and approved a
certificate executed in duplicate by Borrowers' Architect,
containing (i) a detailed listing of the Plans and
Specifications, (ii) a statement that the Plans and
Specifications comply with all applicable laws and ordinances,
(iii) a statement that the Plans and Specifications are complete
in all respects and contain all detail requisite to construct the
Improvements which, when built in accordance therewith, shall be
in accordance with all applicable zoning and building ordinances
or regulations and with all other requirements of all
governmental instrumentalities in which the Millsite Property is
located and of any governmental body or agency having
jurisdiction thereof, and (iv) a statement that all permits
required to construct and complete construction of the Project in
compliance with all applicable laws and governmental regulations
have, as and when, and to the extent required, been duly and
validly issued;
(j) Foothill shall have received and approved
evidence which, in Foothill's sole judgment, confirms that the
Project conforms and will conform to all applicable building,
zoning, use and environmental laws and ordinances. Such evidence
shall include, but not be limited to, certified copies of all
building permits and all approvals, consents and permits of all
governmental authorities under all environmental protection, land
use and development laws, ordinances and regulations;
(k) Foothill shall have received evidence
satisfactory to it that all necessary utilities (including
without limitation such utilities as are necessary to secure a
certificate of occupancy or its equivalent) will be supplied to
the Project in a timely manner;
(l) Foothill shall have received and approved a
detailed budget specifying all costs of constructing and
completing the Project accompanied by such back-up data as
Foothill may require to assure itself of the accuracy thereof and
the sources of all funds to pay such costs; and
(m) No event or circumstance shall exist, in the
reasonable judgment of Foothill, which would preclude completion
of the Improvements by the Completion Date.
3.4 Conditions Precedent to the Advance under the
Silver Hawk Facility. The obligation of Foothill to make the
advance under the Silver Hawk Facility is subject to the
fulfillment, to the satisfaction of Foothill and its counsel, of
each of the following conditions:
(a) The advance under the Silver Hawk Facility
must be made within ninety (90) days after the Closing Date;
(b) Foothill shall have received executed UCC
termination statements, reconveyances of deeds of trust and other
documentation evidencing the termination of all security
interests, liens and other interests in and to the Silver Hawk
Property and the other properties and assets of each of the
Borrowers and CG&E from any Persons holding the note and first
deed of trust on the Silver Hawk Property; and
(c) Foothill shall have received any endorsements
to the Title Policy that Foothill may require.
3.5 Conditions Precedent to All Advances. The
following shall be conditions precedent to all advances
hereunder:
(a) the representations and warranties contained
in this Agreement and the other Loan Documents shall be true and
correct in all respects on and as of the date of such advance as
though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier
date);
(b) no Event of Default or event which with the
giving of notice or passage of time would constitute an Event of
Default shall have occurred and be continuing on the date of such
advance nor shall either result from the making of the advance;
(c) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly,
the making of such advance shall have been issued and remain in
force by any governmental authority against any Borrower,
Foothill, or any of their Affiliates; and
(d) nothing shall have occurred which could
adversely affect Foothill having a first priority security
interest in all of the Collateral (other than the Silver Hawk
Property with respect to which Foothill shall have a second
priority security interest so long as Millsite 20 Limited
Liability Company, LLC (or its permitted assignee) holds a note
and first deed of trust on the Silver Hawk Property), which such
security interests shall secure all present and future
Obligations.
3.6 Term; Automatic Renewal. This Agreement shall
become effective on the Closing Date and shall continue in full
force and effect for a term ending on the date (the "Renewal
Date") that is five (5) years from the Closing Date and
automatically shall be renewed for successive one (1) year
periods thereafter, unless sooner terminated pursuant to the
terms hereof. Borrowers or Foothill may terminate this Agreement
effective on the Renewal Date or on any one (1) year anniversary
of the Renewal Date by giving the other party at least ninety
(90) days prior written notice by registered or certified mail,
return receipt requested. The foregoing notwithstanding,
Foothill shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence
and during the continuation of an Event of Default.
3.7 Effect of Termination. On the date of
termination, all Obligations immediately shall become due and
payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrowers of
Borrowers' duties, Obligations, or covenants hereunder, and
Foothill's continuing security interests in the Collateral shall
remain in effect until all Obligations have been fully and
finally discharged and Foothill's obligation to provide advances
hereunder is terminated. If Borrowers have sent a notice of
termination pursuant to the provisions of Section 3.6, but fail
to pay all Obligations on the date set forth in said notice, then
Foothill may, but shall not be required to, renew this Agreement
for an additional term of one (1) year.
3.8 Early Termination by Borrower. The provisions of
Section 3.6 that allow termination of this Agreement by Borrowers
only on the Renewal Date and certain anniversaries thereof
notwithstanding, Borrowers have the option, at any time upon
ninety (90) days prior written notice to Foothill, to terminate
this Agreement by paying to Foothill, in cash, the Obligations
together with a premium (the "Early Termination Premium") equal
to the greater of: (a) the total interest for the immediately
preceding six (6) months; and (b) Seven Thousand Dollars ($7,000)
multiplied by the number of months remaining in the term of this
Agreement.
3.9 Termination Upon Event of Default. If Foothill
terminates this Agreement upon the occurrence of an Event of
Default, in view of the impracticability and extreme difficulty
of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Foothill's lost profits
as a result thereof, Borrower shall pay to Foothill upon the
effective date of such termination, a premium in an amount equal
to the Early Termination Premium. The Early Termination Premium
shall be presumed to be the amount of damages sustained by
Foothill as the result of the early termination and Borrower
agrees that it is reasonable under the circumstances currently
existing. The Early Termination Premium provided for in this
Section 3.9 shall be deemed included in the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each of the Borrowers
hereby grants to Foothill a continuing security interest in all
currently existing and hereafter acquired or arising Collateral
in order to secure prompt repayment of any and all Obligations
and in order to secure prompt performance by the Borrowers of
each of their covenants and duties under the Loan Documents.
Foothill's security interests in the Collateral shall attach to
all Collateral without further act on the part of Foothill or any
of the Borrowers. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, and other
than Permitted Equipment Sales and a Permitted Sale of
Bullwhackers Central City, Borrowers have no authority, express
or implied, to dispose of any item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any
Collateral, including proceeds, is evidenced by or consists of
Negotiable Collateral, Borrowers shall, immediately upon the
request of Foothill, endorse and assign such Negotiable
Collateral to Foothill and deliver physical possession of such
Negotiable Collateral to Foothill.
4.3 Collection of Accounts, General Intangibles,
Negotiable Collateral. At any time that an Event of Default has
occurred, subject to applicable Gaming Regulations, Foothill or
Foothill's designee may: (a) notify customers or Account Debtors
of any Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Foothill or that
Foothill has a security interest therein; and (b) collect the
Accounts, General Intangibles, and Negotiable Collateral directly
and charge the collection costs and expenses to Borrowers' loan
account. At any time that an Event of Default has occurred, each
of the Borrowers agrees, subject to applicable Gaming
Regulations, that it will hold in trust for Foothill, as
Foothill's trustee, any cash receipts, checks, and other items of
payment (including, proceeds of cash sales, rental proceeds, and
tax refunds) that it receives and, upon request by Foothill,
immediately will deliver said cash receipts, checks, and other
items of payment to Foothill in their original form as received
by each such Borrower.
4.4 Delivery of Additional Documentation Required. At
any time upon the request of Foothill, each of the Borrowers
shall execute and deliver to Foothill all financing statements,
continuation financing statements, fixture filings, security
agreements, chattel mortgages, pledges, assignments, endorsements
of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority,
and all other documents that Foothill may reasonably request, in
form satisfactory to Foothill, to perfect and continue perfected
Foothill's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated hereby and
under the other the Loan Documents.
4.5 Power of Attorney.
(a) At any time that an Event of Default has
occurred and is continuing, each of the Borrowers hereby
irrevocably makes, constitutes, and appoints Foothill (and any of
Foothill's officers, employees, or agents designated by Foothill)
as such Borrower's true and lawful attorney, with power, subject
to applicable Gaming Regulations, to: (a) if such Borrower
refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of Borrower on
any of the documents described in Section 4.4; (b) sign
Borrower's name on any drafts against Account Debtors, schedules
and assignments of Accounts, verifications of Accounts, and
notices to Account Debtors; (c) send requests for verification of
Accounts; (d) endorse Borrower's name on any checks, notices,
acceptances, money orders, drafts, or other item of payment or
security that may come into Foothill's possession; and (e) settle
and adjust disputes and claims respecting the Accounts directly
with Account Debtors, for amounts and upon terms which Foothill
determines to be reasonable, and Foothill may cause to be
executed and delivered any documents and releases which Foothill
determines to be necessary. The appointment of Foothill as each
Borrower's attorney, and each and every one of Foothill's rights
and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully and finally repaid and
performed and Foothill's obligation to extend credit hereunder is
terminated.
(b) With respect to the power of attorney granted
by BWBH, BWCC and Silver Hawk in this Section 4.5 and each and
every other power of attorney granted by BWBH, BWCC and Silver
Hawk elsewhere herein or in the other Loan Documents, Foothill
acknowledges that the Gaming Authorities may require that
Foothill or any other person granted a right to act for or on
behalf of BWBH, BWCC and Silver Hawk obtain approval of the
relevant Gaming Authorities before, during or after the exercise
thereof.
(c) Foothill acknowledges that if a power of
attorney is exercised by Foothill, the management and operations
of the Casinos only may be undertaken by a Person licensed under
applicable Gaming Regulations.
4.6 Right to Inspect.
(a) Subject to applicable Gaming Regulations,
Foothill (through any of its officers, employees, or agents)
shall have the right from time to time hereafter during normal
business hours to inspect each Borrower's Books and to check,
test, and appraise the Collateral in order to verify each
Borrower's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
(b) Foothill or any governmental agency, shall
have the right to enter onto and inspect the Project at any time
and from time to time and, if in Foothill's opinion, the
construction is not in conformance with the Plans and
Specifications, or is otherwise not satisfactory to Foothill,
Foothill has the right to stop construction progress, and to
require Borrowers or any of their agents, to promptly remedy such
unsatisfactory construction, whether or not unsatisfactory work
has already been incorporated into the Improvements, and Foothill
further reserves the right to withhold all further advances and
disbursements until such time as Foothill, in its sole and
absolute discretion, is satisfied with the remedies which
Borrowers have taken to correct such unsatisfactory construction
conditions. Borrowers further authorize Foothill, and all
government agencies to consult with any architect, engineer,
contractor, subcontractor or supplier performing services or
furnishing materials in connection with the Project. Foothill's
rights under this Section are for the sole purpose of protecting
its collateral interest in the Project.
(c) Foothill shall have no liability or
obligation whatsoever in connection with the Improvements or the
construction or completion thereof or work performed thereon and
shall not be liable for the performance or default of any
contractor or subcontractor, or for any failure to construct,
complete, protect or insure the Improvements or for the payment
of any costs or expenses incurred in connection therewith, or for
the performance or nonperformance of any obligation of Borrowers
to Foothill and nothing, including without limitation, any
disbursement hereunder or the deposit or acceptance of any
document or instrument, shall be construed as a representation or
warranty, express or implied, on behalf of Foothill.
4.7 Completion of the Work.
(a) Completion. Construction of the Improvements
on the Millsite Property must be completed on or before the
Completion Date, with the progress of construction being pursued
diligently until completion.
(b) Sufficiency of Millsite Parking Lot
Construction Facility. Anything contained in this Agreement to
the contrary notwithstanding, it is expressly understood and
agreed that the Millsite Parking Lot Construction Facility
provided for herein shall at all times be in balance. The
Millsite Parking Lot Construction Facility shall be deemed to be
"in balance" prior to the advance, and from time to time
thereafter, only if there are funds available under the Millsite
Parking Lot Construction Facility (and after the advance, in the
Construction Escrow Account) to assure Foothill, in its sole
judgment, that the undisbursed portion of such funds are
sufficient to pay on an item by item basis everything set forth
in the Approved Project Budget. Within five (5) days after
Foothill notifies Borrowers that it considers the Millsite
Parking Lot Construction Facility not in balance Borrowers shall
deposit the deficiency into the Construction Escrow Account,
which deposit shall first be disbursed pursuant to the provisions
set forth in this Agreement before any further disbursement shall
be made. The failure to make a decision to require an additional
deposit by Borrowers at one point shall not limit Foothill's
right to make such a decision at a later time. All such funds
are hereby assigned to Foothill as additional security for the
indebtedness of Borrowers arising hereunder and Foothill is
hereby granted a security interest therein.
5. REPRESENTATIONS AND WARRANTIES.
Each of the Borrowers, jointly and severally,
represents and warrants to Foothill as follows:
5.1 No Prior Encumbrances. Each of the Borrowers has
good and indefeasible title to its Collateral, free and clear of
liens, claims, security interests, or encumbrances, except for
Permitted Liens.
5.2 Location of Inventory and Equipment. The
Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party (without Foothill's prior written
consent) and are located only at the locations identified on
Schedule 6.12.
5.3 Inventory and Equipment Records. Each of the
Borrowers now keeps, and hereafter at all times shall keep,
correct and accurate records itemizing and describing the kind,
type, quality, and quantity of the Inventory and Equipment, and
such Borrower's cost therefor.
5.4 Location of Chief Executive Office; FEIN. The
chief executive office of each Borrower is located at the address
indicated in the preamble to this Agreement. Each of the
Borrower's FEIN is as follows:
Borrower FEIN
BWBH 84-1242691
BWCC 84-1243506
Millsite 84-1242692
Silver Hawk 84-1339843
5.5 Due Organization, Qualification and Compliance
with Law. Each of the Borrowers is duly organized and existing
and in good standing under the laws of the State of Delaware.
Each of the Borrowers is qualified and licensed to do business
in, and in good standing in, any other state where the failure to
be so licensed or qualified could reasonably be expected to have
a material adverse effect on the business, operations, condition
(financial or otherwise), finances, or prospects of such Borrower
or on the value of the Collateral to Foothill. Each of the
Borrowers is in compliance, in all material respects, with the
requirements of all applicable laws, rules, regulations, and
orders of governmental authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act. Each of
the Borrowers is in compliance with the requirements of all
applicable Gaming Regulations. Each of the Borrowers has been
duly and validly issued all licenses from the Gaming Authorities
that are necessary for the conduct of its business and all such
licenses are in full force and effect.
5.6 Due Authorization; No Conflict. The execution,
delivery, and performance of the Loan Documents are within each
Borrower's corporate powers, have been duly authorized, and are
not in conflict with nor constitute a breach of any provision
contained in such Borrower's Certificate of Incorporation, or By-
laws, nor will they constitute an event of default under any
material agreement to which such Borrower is a party or by which
its properties or assets may be bound.
5.7 Litigation. There are no actions or proceedings
pending by or against any Borrower before any court or
administrative agency and Borrowers do not have knowledge or
belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or
prosecutions involving any Borrower or any guarantor of the
Obligations, except for: (a) ongoing collection matters in which
a Borrower is the plaintiff; (b) proceedings in the Bankruptcy
Court; and (c) matters arising after the date hereof that, if
decided adversely to a Borrower, would not materially impair the
prospect of repayment of the Obligations or materially impair the
value or priority of Foothill's security interests in the
Collateral.
5.8 No Material Adverse Change in Financial Condition.
All financial statements relating to any Borrower or any
guarantor of the Obligations that have been delivered by a
Borrower to Foothill have been prepared in accordance with GAAP
and fairly present such Borrower's (or such guarantor's, as
applicable) financial condition as of the date thereof and such
Borrower's results of operations for the period then ended.
There has not been a material adverse change in the financial
condition of any Borrower since the date of the latest financial
statements submitted to Foothill on or before the Closing Date.
5.9 Employee Benefits. Each Plan is in compliance in
all material respects with the applicable provisions of ERISA and
the IRC. Each Qualified Plan and Multiemployer Plan has been
determined by the Internal Revenue Service to qualify under
Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under Section 501 of the
IRC, and, to the best knowledge of Borrowers, nothing has
occurred that would cause the loss of such qualification or tax-
exempt status. There are no outstanding liabilities under Title
IV of ERISA with respect to any Plan maintained or sponsored by a
Borrower or any ERISA Affiliate, nor with respect to any Plan to
which a Borrower or any ERISA Affiliate contributes or is
obligated to contribute which could reasonably be expected to
have a material adverse effect on the financial condition of any
Borrower. No Plan subject to Title IV of ERISA has any Unfunded
Benefit Liability which could reasonably be expected to have a
material adverse effect on the financial condition of any
Borrower. None of the Borrowers nor any ERISA Affiliate has
transferred any Unfunded Benefit Liability to a person other than
a Borrower or an ERISA Affiliate or has otherwise engaged in a
transaction that could be subject to Sections 4069 or 4212(c) of
ERISA which could reasonably be expected to have a material
adverse effect on the financial condition of any Borrower. None
of the Borrowers nor any ERISA Affiliate has incurred nor
reasonably expects to incur (x) any liability (and no event has
occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan, or (y) any
liability under Title IV of ERISA (other than premiums due but
not delinquent under Section 4007 of ERISA) with respect to a
Plan, which could, in either event, reasonably be expected to
have a material adverse effect on the financial condition of any
Borrower. No application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the IRC has
been made with respect to any Plan. No ERISA Event has occurred
or is reasonably expected to occur with respect to any Plan which
could reasonably be expected to have a material adverse effect on
the financial condition of any Borrower. Each of the Borrowers
and each ERISA Affiliate have complied in all material respects
with the notice and continuation coverage requirements of Section
4980B of the IRC.
5.10 Environmental Condition. None of any Borrower's
properties or assets has ever been used by a Borrower or, to the
best of Borrowers' knowledge except as previously disclosed in
writing to Foothill by Borrowers, by previous owners or operators
in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials unless stored in accordance
with the requirements of applicable law. Except as previously
disclosed in writing to Foothill by Borrowers, none of any
Borrower's properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate
for closure pursuant to any environmental protection statute. No
lien arising under any environmental protection statute has
attached to any revenues or to any real or personal property
owned or operated by any Borrower. None of the Borrowers have
received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by a
Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.11 Equipment Financing Contracts. Schedule E-1
contains a true and accurate description of all equipment leases
and/or equipment financing contracts that relate to any Equipment
and other property used by any of the Borrowers and the
outstanding balance of the obligations owed by each Borrower
thereunder.
5.12 Solvency. The Borrowers taken together on a
consolidated basis are Solvent. No transfer of property is being
made by any Borrower and no obligation is being incurred by any
Borrower in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder,
delay, or defraud either present or future creditors of any
Borrower.
5.13 Reliance by Foothill; Cumulative. Each warranty
and representation contained in this Agreement automatically
shall be deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Foothill
regardless of any investigation made or information possessed by
Foothill. The warranties and representations set forth herein
shall be cumulative and in addition to any and all other
warranties and representations that any of the Borrowers now or
hereafter shall give, or cause to be given, to Foothill.
5.14 Governmental Compliance. The Project and the use
thereof are in compliance with all applicable zoning and all
other laws, ordinances, rules, and regulations and Borrowers have
obtained and will obtain all required permits, authorizations and
approvals from appropriate governmental boards or agencies
(federal, state, regional, county and local), to enable them to
construct, own, operate and maintain the Project.
5.15 Plan Changes. The Project concept will not be
changed without the prior written consent of Foothill.
6. AFFIRMATIVE COVENANTS.
Each of the Borrowers, jointly and severally, covenants
and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations,
and unless Foothill shall otherwise consent in writing, each of
the Borrowers shall do all of the following:
6.1 Accounting System. Each of the Borrowers shall
maintain a standard and modern system of accounting in accordance
with GAAP with ledger and account cards or computer tapes, discs,
printouts, and records pertaining to the Collateral which contain
information as from time to time may be requested by Foothill.
Each of the Borrowers also shall keep proper books of account
showing all sales, claims, and allowances on its Inventory.
6.2 Collateral and Other Reports. Each of the
Borrowers agrees to deliver to Foothill each of the following
accompanied by a certificate signed by its chief financial
officer certifying that the information contained therein is
complete and accurate:
(a) As soon as available, but in any event not
later than on Wednesday of each week, a statement in form and
substance satisfactory to Foothill setting forth: (i) the balance
in the Gaming Tax Escrow Accounts as of the end of the prior
week, (ii) the dates and amounts of deposits in and disbursements
from the Gaming Tax Escrow Accounts during the prior week, (iii)
the Gaming Taxes that accrued in respect of each of the
Borrower's operations for the prior week, and (iv) the unpaid
balance, if any, of Gaming Taxes that were due and payable as of
the end of the prior week;
(b) As soon as available, but in any event within
forty five (45) days after the end of each month, a statement
that Borrowers and CG&E are in compliance with Section 6.10 and
setting forth the Minimum EBITDA and the Interest Coverage Ratio
calculations; and
(c) As soon as available, but in any event within
forty five (45) days after the end of each month, an updated
schedule of each of the Borrower's Equipment together with a
schedule detailing any additions or dispositions of Equipment
since the date of the last updated schedule of Equipment.
(d) No later than the tenth (10th) day of each
month during the term of this Agreement, a detailed report
concerning all pertinent information concerning the Millsite
Property and the Project, including, but not limited to the
following items:
(i) status of all taxes and insurance;
(ii) status of construction of
Improvements; and
(iii) such other information as Foothill
shall require from time to time.
6.3 Financial Statements, Certificates. Each of the
Borrowers agrees to deliver to Foothill: (a) as soon as
available, but in any event within forty five (45) days after the
end of each month during each of such Borrower's fiscal years, a
company prepared balance sheet, income statement, and cash flow
statement covering such Borrower's operations during such period,
an accounts payable aging, including the status of all equipment
leases; and (b) as soon as available, but in any event within one
hundred and five (105) days after the end of each of such
Borrower's fiscal years, financial statements of such Borrower
for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Foothill and
certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Foothill stating
that such accountants do not have knowledge of the existence of
any event or condition constituting an Event of Default, or that
would, with the passage of time or the giving of notice,
constitute an Event of Default. Such audited financial
statements shall include a balance sheet, profit and loss
statement, and cash flow statement, and, if prepared, such
accountants' letter to management. If a Borrower is a parent
company of one or more subsidiaries, or Affiliates, or is a
subsidiary or Affiliate of another company, then, in addition to
the financial statements referred to above, such Borrower agrees
to deliver financial statements prepared on a consolidating basis
so as to present such Borrower and each such related entity
separately, and on a consolidated basis.
Together with the above, Borrowers also shall
deliver to Foothill CG&E's Form 10-Q Quarterly Reports, Form 10-K
Annual Reports, and Form 8-K Current Reports, and any other
filings made by CG&E with the Securities and Exchange Commission,
if any, as soon as the same are filed, or any other information
that is provided by CG&E to its shareholders, and any other
report reasonably requested by Foothill relating to the
Collateral and financial condition of a Borrower.
Each month, together with the financial statements
provided pursuant to Section 6.3(a), each of the Borrowers shall
deliver to Foothill a certificate signed by its chief accounting
officer certifying that: (i) all reports, statements, or
computer prepared information of any kind or nature delivered or
caused to be delivered to Foothill hereunder have been prepared
in accordance with GAAP and fairly present the financial
condition of such Borrower; (ii) such Borrower is in timely
compliance with all of its covenants and agreements hereunder;
(iii) the representations and warranties of such Borrower
contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of
such certificate, as though made on and as of such date (except
to the extent that such representations and warranties relate
solely to an earlier date); and (iv) on the date of delivery of
such certificate to Foothill there does not exist any condition
or event that constitutes an Event of Default (or, in each case,
to the extent of any non-compliance, describing such non-
compliance as to which he or she may have knowledge and what
action such Borrower has taken, is taking, or proposes to take
with respect thereto).
Each of the Borrowers shall have issued written
instructions to its independent certified public accountants
authorizing them to communicate with Foothill and to release to
Foothill whatever financial information concerning such Borrower
that Foothill may request. Each of the Borrowers hereby
irrevocably authorizes and directs all auditors, accountants, or
other third parties to deliver to Foothill, at Borrowers'
expense, copies of such Borrower's financial statements, papers
related thereto, and other accounting records of any nature in
their possession, and to disclose to Foothill any information
they may have regarding such Borrower's business affairs and
financial conditions.
6.4 Tax Returns. Each of the Borrowers agrees to
deliver to Foothill copies of each of such Borrower's future
federal income tax returns, and any amendments thereto, within
thirty (30) days of the filing thereof with the Internal Revenue
Service.
6.5 Guarantor Reports. Each of the Borrowers agrees
to cause any guarantor of any of the Obligations to deliver its
annual financial statements at the time when the Borrowers
provides their audited financial statements to Foothill and
copies of all federal income tax returns as soon as the same are
available and in any event no later than thirty (30) days after
the same are required to be filed by law.
6.6 Title to Equipment. Upon Foothill's request, each
of the Borrowers immediately shall deliver to Foothill, properly
endorsed, any and all evidences of ownership of, certificates of
title, or applications for title to any items of Equipment owned
by Borrowers and appropriate assignments of leasehold and other
interests of Borrowers in any items of Equipment not owned by
Borrowers.
6.7 Maintenance of Equipment. Each of the Borrowers
shall keep and maintain the Equipment in good operating condition
and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the value and operating
efficiency thereof shall at all times be maintained and
preserved. Each of the Borrowers shall not permit any item of
Equipment to become a fixture to real estate or an accession to
other property, and the Equipment is now and shall at all times
remain personal property. Borrowers shall take such actions as
may be requested by Foothill from time to time to enable Foothill
to have access to the locations where Borrowers' Equipment is
located.
6.8 Taxes. All assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or
assessed against any Borrower or any of its property have been
paid, and shall hereafter be paid in full, before delinquency or
before the expiration of any extension period. Each of the
Borrowers shall make due and timely payment or deposit of all
federal, state, and local taxes, assessments, or contributions
required of it by law, and will execute and deliver to Foothill,
on demand, appropriate certificates attesting to the payment
thereof or deposit with respect thereto. Each of the Borrowers
will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request,
furnish Foothill with proof satisfactory to Foothill indicating
that such Borrower has made such payments or deposits.
6.9 Insurance.
(a) Each of the Borrowers, at its expense, shall
keep the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as are ordinarily insured against by other
owners in similar businesses. Each of the Borrowers also shall
maintain business interruption, public liability, product
liability, and property damage insurance relating to such
Borrower's ownership and use of the Collateral, as well as
insurance against larceny, embezzlement, and criminal
misappropriation.
(b) All such policies of insurance shall be in
such form, with such companies, and in such amounts as may be
reasonably satisfactory to Foothill. All such policies of
insurance (except those of public liability and property damage)
shall contain a 438BFU lender's loss payable endorsement, or an
equivalent endorsement in a form satisfactory to Foothill,
showing Foothill and the trustee under the Indenture as the sole
loss payees thereof (as their interests may appear) and shall
contain a waiver of warranties, and shall specify that the
insurer must give at least ten (10) days prior written notice to
Foothill before canceling its policy for any reason. Each of the
Borrowers shall deliver to Foothill certified copies of such
policies of insurance and evidence of the payment of all premiums
therefor. All proceeds payable under any such policy shall be
payable to Foothill to be applied on account of the Obligations.
(c) Each of the Borrowers hereby irrevocably
makes, constitutes, and appoints Foothill (and any of Foothill's
officers, employees, or agents designated by Foothill) as such
Borrower's true and lawful attorney, with power, subject to
applicable Gaming Regulations, to make, settle, and adjust all
claims that individually or in the aggregate involve more than
Twenty Five Thousand Dollars ($25,000) under Borrowers' policies
of insurance and to make all determinations and decisions with
respect to such policies of insurance. Notwithstanding the
immediately preceding sentence, so long as no Event of Default
has occurred and is continuing, during the first one hundred and
twenty (120) days after the occurrence of an event giving rise to
a claim involving more than Twenty Five Thousand Dollars
($25,000) under Borrowers' policies of insurance, Borrowers may
negotiate the settlement of the claim with the insurance
carrier(s); provided, however, that the terms of settlement of
any such claim shall be subject to the prior written approval of
Foothill in its sole and absolute discretion. Upon the
expiration of such one hundred and twenty (120) day period or
upon the occurrence of an Event of Default, whichever occurs
first, Foothill shall have the sole and exclusive authority to
make, settle, and adjust all claims under Borrowers' policies of
insurance and to make all determinations and decisions with
respect to such policies of insurance. Each of the Borrowers
agrees, subject to applicable Gaming Regulations, that it will
hold in trust for Foothill, as Foothill's trustee, any insurance
proceeds with respect to any claims that individually or in the
aggregate involve more than Twenty Five Thousand Dollars
($25,000) that any Borrower receives and, upon request by
Foothill, immediately will deliver said insurance proceeds to
Foothill in the original form as received by each such Borrower.
(d) Within thirty (30) days after the Closing
Date, Borrowers shall deliver to Foothill certified copies of the
policies of insurance, together with the endorsements thereto, as
are required by this Section 6.9 and in the Mortgages, the form
and substance of which shall be satisfactory to Foothill and its
counsel.
6.10 Financial Covenants.
(a) Minimum EBITDA. Borrowers and CG&E shall
maintain a combined Minimum EBITDA of not less than Nine Million
Dollars ($9,000,000).
(b) Interest Coverage Ratio. Borrowers and CG&E
shall maintain a ratio of combined Minimum EBITDA divided by
Interest Expense of not less than five to one (5.00:1:00) for the
previous twelve (12) calendar months, calculated as of the end of
each calendar month.
6.11 No Setoffs or Counterclaims. All payments
hereunder and under the other Loan Documents made by or on behalf
of any Borrower shall be made without setoff or counterclaim and
free and clear of, and without deduction or withholding for or on
account of, any federal, state, or local taxes.
6.12 Location of Inventory and Equipment. Borrowers
shall keep the Inventory and Equipment only at the locations
identified on Schedule 6.12.
6.13 Compliance with Laws. Each of the Borrowers shall
comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including
the Fair Labor Standards Act and the Americans With Disabilities
Act, other than laws, rules, regulations, and orders the
noncompliance with which, individually or in the aggregate, would
not have and could not reasonably be expected to have a material
adverse effect on the business, operations, condition (financial
or otherwise), finances, or prospects of Borrower or on the value
of the Collateral to Foothill. Each of the Borrowers shall
comply with the requirements of all Gaming Regulations. Each of
the Borrowers shall maintain in full force and effect all
licenses from the Gaming Authorities that are necessary for the
conduct of its business.
6.14 Employee Benefits.
(a) Each of the Borrowers shall deliver to
Foothill a written statement by the chief accounting officer of
such Borrower specifying the nature of any of the following
events and the actions which such Borrower proposes to take with
respect thereto promptly, and in any event within ten (10) days
of becoming aware of any of them, and when known, any action
taken or threatened by the Internal Revenue Service, PBGC,
Department of Labor, or other party with respect thereto: (i) an
ERISA Event with respect to any Plan; (ii) the incurrence of an
obligation to pay additional premium to the PBGC under Section
4006(a)(3)(E) of ERISA with respect to any Plan; and (iii) any
lien on the assets of any Borrower arising in connection with any
Plan.
(b) Each of the Borrowers shall also promptly
furnish to Foothill copies prepared or received by such Borrower
or an ERISA Affiliate of: (i) at the request of Foothill, each
annual report (Internal Revenue Service Form 5500 series) and all
accompanying schedules, actuarial reports, financial information
concerning the financial status of each Plan, and schedules
showing the amounts contributed to each Plan by or on behalf of
such Borrower or its ERISA Affiliates for the most recent three
(3) plan years; (ii) all notices of intent to terminate or to
have a trustee appointed to administer any Plan; (iii) all
written demands by the PBGC under Subtitle D of Title IV of
ERISA; (iv) all notices required to be sent to employees or to
the PBGC under Section 302 of ERISA or Section 412 of the IRC;
(v) all written notices received with respect to a Multiemployer
Plan concerning (x) the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, (y) a termination
described in Section 4041A of ERISA, or (z) a reorganization or
insolvency described in Subtitle E of Title IV of ERISA; (vi) the
adoption of any new Plan that is subject to Title IV of ERISA or
Section 412 of the IRC by such Borrower or any ERISA Affiliate;
(vii) the adoption of any amendment to any Plan that is subject
to Title IV of ERISA or Section 412 of the IRC, if such amendment
results in a material increase in benefits or Unfunded Benefit
Liability; or (viii) the commencement of contributions by such
Borrower or any ERISA Affiliate to any Plan that is subject to
Title IV of ERISA or Section 412 of the IRC.
6.15 Gaming Tax Escrow Accounts. Each of the Borrowers
shall establish an escrow account at the Deposit Account Bank on
terms and conditions acceptable to Foothill for the purposes of
reserving and paying Gaming Taxes (the "Gaming Tax Escrow
Accounts"). Borrowers shall, not less frequently than each week,
deposit in the Gaming Tax Escrow Accounts funds in an amount
sufficient to pay the Gaming Taxes that have accrued in respect
of each of the Borrower's operations for the prior week. Each of
the Borrowers shall cause all Gaming Taxes to be duly and timely
paid from the Gaming Tax Escrow Accounts.
6.16 Construction of Improvements. The construction
work to be performed on the Millsite Property will be performed
in a good and workmanlike manner with materials of high quality,
strictly in accordance with the Plans and Specifications, and all
applicable building, zoning, subdivisions and other applicable
governmental regulations, including pollution control
regulations, and that such construction will be prosecuted with
due diligence and completed within the time requirements of any
applicable law, rule or regulation or any governmental agency and
as required by any contractual time requirements (taking account
of extensions permitted by reason of Force Majeure).
6.17 Mechanic's Liens and Contest Thereof. Borrowers
will not suffer or permit any mechanics' lien or bonded stop
notice claims to be filed or otherwise asserted against any part
of the Project or against any funds covered by this Agreement and
Borrowers will promptly discharge the same, or, in case of the
filing of any bonded stop notice claims, post any bond required
by applicable law; provided that in connection with any such
lien, claim or stop notice which Borrowers may in good faith
desire to contest, Borrowers may contest the same by appropriate
legal proceedings diligently prosecuted, but only if Borrowers
shall furnish to Foothill such security or indemnity as the Title
Company may require to induce it to issue its title insurance
policy insuring against all such claims or liens or Foothill
shall require with respect to bonded stop notices; and provided
further, that Foothill will not be required to make any further
advances or disbursements until any mechanics' lien claims shown
by preliminary report on title or interim binder have been so
insured against by the Title Company. Borrowers agree, upon
demand by Foothill, to defend, indemnify and hold Foothill
harmless against costs, expense and attorneys' fees incurred by
Foothill in connection with any such claim and/or stop notice
and/or any action filed or asserted against Foothill for any
reason in connection therewith.
6.18 Personal Property. All of the personal property,
fixtures, attachments and equipment, delivered upon, attached to,
or used in connection with the Improvements or the operation
thereof shall be owned by Borrowers and will be kept free and
clear of all chattel mortgages, conditional vendor's liens and
all liens, encumbrances and security interests whatsoever, and
from time to time Borrowers will furnish Foothill with
satisfactory evidence of such ownership, including searches of
applicable public records.
6.19 Silver Hawk Property Appraisal. Borrowers agree
to obtain and deliver to Foothill by not later than June 15, 1996
an appraisal of the Silver Hawk Property in form and substance
satisfactory to Foothill.
7. NEGATIVE COVENANTS.
Each of the Borrowers, jointly and severally, covenants
and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, no
Borrower will do any of the following:
7.1 Indebtedness. Create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly,
liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement;
(b) Indebtedness evidenced by the CAI Notes;
(c) Indebtedness evidenced by the Indenture and
the PIK Notes;
(d) Indebtedness secured by Permitted Liens; and
(e) up to Three Million Dollars ($3,000,000) of
additional unsecured Indebtedness, subject to Foothill's approval
of the use of the proceeds of such Indebtedness and Borrowers'
demonstrating to Foothill's satisfaction that Borrowers' cash
flow is and will be adequate to service such Indebtedness.
7.2 Restrictions on Equipment Financing. Refinance
any Equipment or purchase any Equipment with financing except
with the proceeds of the Equipment Refinance/Finance Facility or
enter into any Equipment lease.
7.3 Liens. Create, incur, assume, or permit to exist,
directly or indirectly, any lien on or with respect to any of its
property or assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for
Permitted Liens.
7.4 Restrictions on Fundamental Changes. Enter into
any acquisition, merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock, or liquidate,
wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business,
property, or assets (except for a Permitted Sale of Bullwhackers
Central City), whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or substantially all of the
properties, assets, stock, or other evidence of beneficial
ownership of any Person.
7.5 Extraordinary Transactions and Disposal of Assets.
Enter into any transaction not in the ordinary and usual course
of a Borrower's business, including the sale, lease, or other
disposition of, moving, relocation, or transfer, whether by sale
or otherwise, of any of such Borrower's properties or assets,
except for a Permitted Sale of Bullwhackers Central City.
7.6 Change Name. Change any Borrower's FEIN, business
structure, or identity. Change any Borrower's name or add any
new trade name unless the Borrower gives Foothill at least twenty
(20) days prior written notice of such new name and, at the time
of such written notice, the Borrower provides to Foothill any
amendments to financing statements and any other Loan Documents
necessary to perfect and continue perfected Foothill's security
interests, all in form and substance satisfactory to Foothill.
7.7 Guarantee. Guarantee or otherwise become in any
way liable with respect to the obligations of any third Person,
except: (i) by endorsement of instruments or items of payment for
deposit to the account of a Borrower or which are transmitted or
turned over to Foothill, and (ii) the guarantee by Borrowers of
the obligations of CG&E as set forth in the Indenture.
7.8 Restructure. Make any change in any Borrower's
financial structure, the principal nature of a Borrower's
business operations, or the date of its fiscal year.
7.9 Purchase of CAI Notes or PIK Notes; Prepayments.
(i) Prepay, purchase, redeem, repurchase or acquire any of the
CAI Notes; (ii) voluntarily prepay, purchase, redeem, repurchase
or acquire any of the PIK Notes or otherwise make any voluntary
prepayments of any amounts under the Noteholder Documents, or
(iii) otherwise prepay any Indebtedness owing to any third Person
(other than (i) subject to the provisions of Section 1112 of the
Indenture, any amounts required to be paid under the Noteholder
Documents in accordance with the terms of the Indenture and the
other Noteholder Documents, and (ii) the existing note and deed
of trust on the Silver Hawk Property).
7.10 Change of Control. Cause, permit, or suffer,
directly or indirectly, any Change of Control.
7.11 Capital Expenditures. Make any capital
expenditure, or any commitment therefor, where the aggregate
amount of such capital expenditures, made or committed for in any
year ending on each anniversary of the Closing Date, is in excess
of Three Million Dollars ($3,000,000), except for: (i) the
construction of the Improvements on the Millsite Property in
accordance with the Plans and Specifications, (ii) up to Five
Hundred Thousand Dollars ($500,000) for designing and
refurbishing Silver Hawk's Casino located in Black Hawk,
Colorado, and (iii) up to One Million Seven Hundred Thousand
Dollars ($1,700,000) for purchasing Equipment for Silver Hawk's
Casino located in Black Hawk, Colorado.
7.12 Distributions. Except as permitted by this
Section 7.12, make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem,
or retire any of CG&E's or a Borrower's capital stock, of any
class, whether now or hereafter outstanding, or otherwise
directly or indirectly make funds available to CG&E.
Notwithstanding anything contained herein or in any of the Loan
Documents to the contrary, but subject to the provisions of
Section 1112 of the Indenture, Borrowers may make distributions
to, or otherwise make funds available to, CG&E to pay amounts
required to be paid by CG&E under the Noteholder Documents in
accordance with the terms of the Indenture and the other
Noteholder Documents; provided, however, Borrowers may not
distribute to CG&E the amount that would otherwise be payable as
interest under the Indenture and the PIK Notes in the event the
option to pay such interest by the issuance of additional PIK
Notes has been exercised. Without in any way limiting the
immediately preceding sentence, so long as no Event of Default
has occurred or would result therefrom, Borrowers may make
distributions to CG&E for the following purposes:
(a) To pay CG&E's general corporate and overhead
expenses; provided, however, that the amount of such
distributions to CG&E in any calendar quarter shall not exceed
the sum of Seven Hundred Fifty Thousand Dollars ($750,000);
(b) To pay Reorganization Expenses in an aggregate
amount not to exceed Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000);
(c) To pay regularly scheduled payments of interest
and principal under the CAI Notes; provided, however, that the
amount of such distributions to CG&E in any fiscal quarter shall
not exceed the sum of One Hundred Eighty Seven Thousand Dollars
($187,000); and
(d) To, in conjunction with the advance under the
Silver Hawk Facility, prepay in full the remaining outstanding
balance of the existing note and deed of trust on the Silver Hawk
Property.
From and after the occurrence of an Event of Default, Borrowers
shall not make any payments in cash or property under the CAI
Notes or to CAI or make distributions, funds or property
available to CG&E to make payments under the CAI Notes or to CAI.
7.13 Amendments to Debt Instruments. Agree to or
permit any amendment to or modification of the Noteholder
Documents, the CAI Notes or the note or first deed of trust
relating to the Silver Hawk Property; provided, however, that so
long as no Event of Default has occurred or would result
therefrom, Borrowers may agree to or permit amendments to or
modifications of the Noteholder Documents which do not and would
not have the effect, directly or indirectly, of any of the
following: shortening the maturity date; increasing the interest
rate; increasing the principal amount outstanding under the
Noteholder Documents; increasing the amount or rate of payments,
premiums, fees or other amounts payable under the Noteholder
Documents; shortening the time for any payment under the
Noteholder Documents; adversely affecting Borrowers' cash flow;
adversely affecting Borrowers' financial condition; impairing the
prospect of repayment of any portion of the Obligations owing to
Foothill; impairing the value or priority of Foothill's security
interests in the Collateral; or adversely affecting the rights of
Foothill under Section 1112 of the Indenture. As a condition to
Borrowers' agreeing to or permitting any amendments to or
modifications of the Noteholder Documents that are permitted by
this Section 7.13, Borrowers shall give Foothill written notice,
along with copies of the final form of any such proposed
amendments or modifications, at least fifteen (15) days prior to
the effectiveness thereof.
7.14 Accounting Methods. Modify or change its method
of accounting or enter into, modify, or terminate any agreement
currently existing, or at any time hereafter entered into with
any third party accounting firm or service bureau for the
preparation or storage of any Borrower's accounting records
without said accounting firm or service bureau agreeing to
provide Foothill information regarding the Collateral or any
Borrower's financial condition. Each of the Borrowers waives the
right to assert a confidential relationship, if any, it may have
with any accounting firm or service bureau in connection with any
information requested by Foothill pursuant to or in accordance
with this Agreement, and agrees that Foothill may contact
directly any such accounting firm or service bureau in order to
obtain such information.
7.15 Investments. Directly or indirectly make or
acquire any beneficial interest in (including stock, partnership
interest, or other securities of), or make any loan, advance, or
capital contribution to, any Person; provided, however, that so
long as no Event of Default has occurred, Borrowers may make
loans to their employees which do not exceed Two Hundred Thousand
Dollars ($200,000) per fiscal year or Four Hundred Thousand
Dollars ($400,000) in the aggregate outstanding at any time.
7.16 Transactions with Affiliates. Directly or
indirectly enter into or permit to exist any material transaction
with any Affiliate of any Borrower except for transactions that
are in the ordinary course of such Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Foothill, and
that are no less favorable to such Borrower than would be
obtained in arm's length transaction with a non-Affiliate.
7.17 Suspension. Except for a Permitted Casino Shut
Down, suspend or go out of a substantial portion of its business.
7.18 Compensation. Increase the annual fee or per-
meeting fees paid to directors during any year by more than
fifteen percent (15%) over the prior year; or pay or accrue total
cash compensation, during any year, to officers and senior
management employees in an aggregate amount in excess of one
hundred fifteen percent (115%) of that paid or accrued in the
prior year, excluding the amount of any bonuses payable pursuant
to the "Cash Bonus Plan" approved by an independent committee of
the Board of Directors of Borrowers. Schedule 7.19 attached
hereto describes the current compensation arrangements applicable
to Borrowers' current officers and senior management employees
and the "Cash Bonus Plan."
7.19 Use of Proceeds. Use the proceeds of the advances
made hereunder for any purpose other than as follows:
(a) The proceeds of the Revolving Advance
Facility shall be used: (i) on the Closing Date, to repay in full
the outstanding principal, accrued interest, and accrued fees and
expenses owing to Foothill under the DIP Loan and Security
Agreement, other than the outstanding balance of the "Equipment
Refinance Facility" (as defined in the DIP Loan and Security
Agreement); (ii) to pay transactional fees, costs and expenses
incurred in connection with this Agreement; and (iii) thereafter,
consistent with the terms and conditions hereof, for Borrowers'
lawful and permitted corporate purposes, including satisfying the
obligations pursuant to the Plan of Reorganization.
(b) The proceeds of the Equipment
Refinance/Finance Facility shall be used: (i) on the Closing
Date, to (x) to repay in full the outstanding balance of the
"Equipment Refinance Facility" (as defined in the DIP Loan and
Security Agreement), (y) refinance Borrowers' Equipment that is
currently leased/financed by Paine Webber in an amount not to
exceed Nine Hundred Thousand Dollars ($900,000) as approved by
the Bankruptcy Court; provided, however, in no event shall such
amount exceed the remaining outstanding balance owed under the
agreements with Paine Webber pursuant to which such Equipment was
leased/financed by Paine Webber, and (z) if not paid off by
Borrowers from available cash on hand, refinance Borrowers'
Equipment that is currently leased/financed by RW Leasing in an
amount not to exceed One Hundred Eighty Thousand Dollars
($180,000) as approved by the Bankruptcy Court; provided,
however, in no event shall such amount exceed the remaining
outstanding balance owed under the agreements with RW Leasing
pursuant to which such Equipment was leased/financed by RW
Leasing, and (ii) to purchase new Equipment.
(c) The proceeds of the Millsite Parking Lot
Construction Facility shall be used to pay the costs incurred
after the Closing Date of constructing the Improvements on the
Millsite Property strictly in accordance with the Plans and
Specifications and subject to the terms of this Agreement.
(d) The proceeds of the Silver Hawk Facility
shall be used, together with other funds available to the
Borrowers, to prepay in full the remaining outstanding balance of
the existing note and deed of trust on the Silver Hawk Property
in favor of Millsite 20 Limited Liability Company LLC.
Anything contained in this Agreement to the contrary
notwithstanding, no portion of the proceeds of the advances made
hereunder shall be used for purposes of developing, constructing
or operating a day care facility.
7.20 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees. Each of the Borrowers
covenants and agrees that it will not relocate its chief
executive office to a new location unless: (a) the Borrower gives
Foothill prior written notice of such new location which such new
location shall remain in the State of Colorado, and (b) at the
time of such written notice, the Borrower provides to Foothill
any fully executed financing statements and fixture filings
necessary to perfect and continue perfected Foothill's security
interests and a fully executed landlord's waiver, all in form and
substance satisfactory to Foothill. The Inventory and Equipment
shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Foothill's prior written
consent.
7.21 Limitation On Accounts. Not maintain any deposit
accounts other than the Construction Escrow Account, the Gaming
Tax Escrow Accounts and the Pledged Accounts.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall
constitute an event of default (each, an "Event of Default")
under this Agreement:
8.1 If any Borrower fails to pay when due and payable
or when declared due and payable, any portion of the Obligations
(whether of principal, interest, fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting
Obligations);
8.2 If any Borrower fails or neglects to perform,
keep, or observe any term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between
such Borrower and Foothill; provided, however, that any
Borrower's failure or neglect to comply with Sections 6.2, 6.3,
6.4 or 6.5 shall not constitute an Event of Default hereunder
unless such failure or neglect continues for five (5) or more
days;
8.3 If any Borrower fails to comply with any Gaming
Regulations and Foothill reasonably determines that such failure
to comply could materially impair the business of any Borrower or
could result in the loss of any Borrower's gaming license; or if
the Gaming Authorities issue an order to show cause to any
Borrower with respect to any matter that Foothill reasonably
determines could materially impair the business of any Borrower
or could result in the loss of any Borrower's gaming license; or
if any license issued to any Borrower by the Gaming Authorities
is suspended, expires or otherwise fails to remain in full force
and effect;
8.4 If any license issued to any Borrower by the
Gaming Authorities is not renewed for a full one year term each
time such license comes up for renewal commencing with the
renewal in December 1996 or if any restrictions are imposed on or
are applicable to any such license;
8.5 If any liquor license issued to any Borrower is
suspended, expires or otherwise fails to remain in full force and
effect or if any restrictions are imposed on any such license;
8.6 If Borrowers fail to operate any of the Casinos
for more than five (5) consecutive days, except during a
Permitted Casino Shut Down;
8.7 If there is a material impairment of the prospect
of repayment of any portion of the Obligations owing to Foothill
or a material impairment of the value or priority of Foothill's
security interests in the Collateral;
8.8 If any material portion of any Borrower's
properties or assets is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession
of any third Person;
8.9 If an Insolvency Proceeding is commenced by any
Borrower;
8.10 If an Insolvency Proceeding is commenced against
any Borrower and any of the following events occur: (a) any
Borrower consents to the institution of the Insolvency Proceeding
against it; (b) the petition commencing the Insolvency Proceeding
is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within forty-five (45)
calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Foothill shall
be relieved of its obligation to make additional advances
hereunder; (d) an interim trustee is appointed to take possession
of all or a substantial portion of the properties or assets of,
or to operate all or any substantial portion of the business of,
any Borrower; or (e) an order for relief shall have been issued
or entered therein;
8.11 If any Borrower is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or
any material part of its business affairs;
8.12 If a notice of lien, levy, or assessment is filed
of record with respect to any of any Borrower's properties or
assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes
a lien, whether choate or otherwise, upon any of any Borrower's
properties or assets and the same is not paid on the payment date
thereof;
8.13 If one or more judgments or other claims involving
more than Twenty Five Thousand Dollars ($25,000) in the aggregate
become a lien or encumbrance upon any material portion of any
Borrower's properties or assets (notwithstanding the foregoing,
Foothill always shall have the right to reserve against any
amounts that may otherwise be available to be advanced to
Borrowers under this Agreement the amount of any judgments, liens
or encumbrances);
8.14 If there is a default in any material agreement
(including under the Plan of Reorganization or the Indenture) to
which any Borrower is a party with one or more third Persons
resulting in a right by such third Persons, irrespective of
whether exercised, to accelerate the maturity of any Borrower's
obligations thereunder;
8.15 If there is an "Event of Default" under the
Indenture (as defined in the Indenture);
8.16 If there is a default in any agreement to which
any Borrower is a party with one or more third Persons and the
obligations under such agreement are secured by a lien which is
senior to any Foothill lien (including, without limitation, any
agreement with the seller of Silver Hawk Property);
8.17 If any Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent
such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;
8.18 If construction of the Improvements on the
Millsite Property is not completed by the Completion Date;
8.19 If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation,
statement, or report made to Foothill by any Borrower or any
officer, employee, agent, or director of any Borrower, or if any
such warranty or representation is withdrawn;
8.20 If the obligation of any guarantor or other third
Person under any Loan Document is limited or terminated by
operation of law or by the guarantor or other third Person
thereunder; or
8.21 If (a) with respect to any Plan, there shall occur
any of the following which could reasonably be expected to have a
material adverse effect on the financial condition of any
Borrower: (i) the violation of any of the provisions of ERISA;
(ii) the loss by a Plan intended to be a Qualified Plan of its
qualification under Section 401(a) of the IRC; (iii) the
incurrence of liability under Title IV of ERISA; (iv) a failure
to make full payment when due of all amounts which, under the
provisions of any Plan or applicable law, a Borrower or any ERISA
Affiliate is required to make; (v) the filing of a notice of
intent to terminate a Plan under Sections 4041 or 4041A of ERISA;
(vi) a complete or partial withdrawal of a Borrower or an ERISA
Affiliate from any Plan; (vii) the receipt of a notice by the
plan administrator of a Plan that the PBGC has instituted
proceedings to terminate such Plan or appoint a trustee to
administer such Plan; (viii) a commencement or increase of
contributions to, or the adoption of or the amendment of, a Plan;
and (ix) the assessment against a Borrower or any ERISA Affiliate
of a tax under Section 4980B of the IRC; or (b) there shall be
any Unfunded Benefit Liability under any of the Plans of any of
the Borrowers or their ERISA Affiliates.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence of an
Event of Default Foothill may, at its election, without notice of
its election and without demand, do any one or more of the
following, all of which are authorized by each of the Borrowers:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to
or for the benefit of Borrowers under this Agreement, under any
of the Loan Documents, or under any other agreement between any
Borrower and Foothill;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of
Foothill, but without affecting Foothill's rights and security
interests in the Collateral and without affecting the
Obligations;
(d) Subject to applicable Gaming Regulations,
appoint one or more Persons licensed under applicable Gaming
Regulations to manage and operate the Casinos;
(e) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Foothill
considers advisable, and in such cases, Foothill will credit
Borrowers' loan account with only the net amounts received by
Foothill in payment of such disputed Accounts after deducting all
Foothill Expenses incurred or expended in connection therewith;
(f) Cause each of the Borrowers to hold all
returned Inventory in trust for Foothill, segregate all returned
Inventory from all other property of such Borrower or in such
Borrower's possession and conspicuously label said returned
Inventory as the property of Foothill;
(g) Without notice to or demand upon any Borrower
or any guarantor, make such payments and do such acts as Foothill
considers necessary and reasonable to protect its security
interests in the Collateral. Each of the Borrowers agrees to
assemble the Collateral if Foothill so requires, and to make the
Collateral available to Foothill as Foothill may designate. Each
of the Borrowers authorizes Foothill to enter the premises where
the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or
compromise any encumbrance, charge, or lien that in Foothill's
determination appears to conflict with its security interests and
to pay all expenses incurred in connection therewith. With
respect to any of each Borrower's owned premises, such Borrower
hereby grants Foothill a license to enter into possession of such
premises and to occupy the same, without charge, for up to one
hundred twenty (120) days in order to exercise any of Foothill's
rights or remedies provided herein, at law, in equity, or
otherwise;
(h) Without notice to any Borrower (such notice
being expressly waived), and without constituting a retention of
any collateral in satisfaction of an obligation (within the
meaning of Section 9505 of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of each of the
Borrowers held by Foothill (including any amounts received in the
Pledged Accounts), or (ii) indebtedness at any time owing to or
for the credit or the account of each of the Borrowers held by
Foothill;
(i) Hold, as cash collateral, any and all
balances and deposits of each of the Borrowers held by Foothill,
and any amounts received in the Pledged Accounts, to secure the
full and final repayment of all of the Obligations;
(j) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell
(in the manner provided for herein) the Collateral. Foothill is
hereby granted a license or other right to use, without charge,
each Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and each
Borrower's rights under all licenses and all franchise agreements
shall inure to Foothill's benefit;
(k) Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such
places (including each Borrower's premises) as Foothill
determines is commercially reasonable. It is not necessary that
the Collateral be present at any such sale;
(l) Foothill shall give notice of the disposition
of the Collateral as follows:
(1) Foothill shall give Borrowers, the
trustee under the Indenture and each other holder of a security
interest in the Collateral who has filed with Foothill a written
request for notice, a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the
Collateral, then the time on or after which the private sale or
other disposition is to be made;
(2) The notice shall be personally delivered
or mailed, postage prepaid, to Borrowers as provided in Section
12, at least five (5) days before the date fixed for the sale, or
at least five (5) days before the date on or after which the
private sale or other disposition is to be made; no notice needs
to be given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized
market. Notice to Persons other than Borrowers claiming an
interest in the Collateral shall be sent to such addresses as
they have furnished to Foothill;
(3) If the sale is to be a public sale,
Foothill also shall give notice of the time and place by
publishing a notice one time at least five (5) days before the
date of the sale in a newspaper of general circulation in the
county in which the sale is to be held;
(m) Foothill may credit bid and purchase at any
public sale; and
(n) Any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and
subject to the rights of third Persons, by Foothill to Borrowers.
9.2 Remedies Cumulative. Foothill's rights and
remedies under this Agreement, the Loan Documents, and all other
agreements shall be cumulative. Foothill shall have all other
rights and remedies not inconsistent herewith as provided under
the Code, by law, or in equity. No exercise by Foothill of one
right or remedy shall be deemed an election, and no waiver by
Foothill of any Event of Default shall be deemed a continuing
waiver. No delay by Foothill shall constitute a waiver,
election, or acquiescence by it.
9.3 Gaming Regulations. Each of the provisions of
this Agreement that is applicable to BWBH, BWCC or Silver Hawk is
subject to, and shall be enforced in compliance with, the
provisions of the Gaming Regulations. Each of the Borrowers
agrees to fully cooperate with Foothill (including, without
limitation, providing to Foothill any and all financial and other
information) to facilitate Foothill's compliance with all Gaming
Regulations in connection with Foothill's exercise of its rights
and remedies under this Agreement and as provided under the Code,
by law, or in equity.
10. TAXES AND EXPENSES REGARDING THE COLLATERAL.
If any Borrower fails to pay any monies (whether taxes,
rents, assessments, insurance premiums, or otherwise) due to
third Persons, or fails to make any deposits or furnish any
required proof of payment or deposit, all as required under the
terms of this Agreement, then, to the extent that Foothill
determines that such failure by such Borrower could have a
material adverse effect on Foothill's interests in the
Collateral, in its discretion and without prior notice to
Borrowers, Foothill may do any or all of the following: (a) make
payment of the same or any part thereof; (b) set up such reserves
in Borrowers' loan account as Foothill deems necessary to protect
Foothill from the exposure created by such failure; or (c) obtain
and maintain insurance policies of the type described in Section
6.9, and take any action with respect to such policies as
Foothill deems prudent. Any such amounts paid by Foothill shall
constitute Foothill Expenses. Any such payments made by Foothill
shall not constitute an agreement by Foothill to make similar
payments in the future or a waiver by Foothill of any Event of
Default under this Agreement. Foothill need not inquire as to,
or contest the validity of, any such expense, tax, security
interest, encumbrance, or lien and the receipt of the usual
official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each of the Borrowers
waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments,
chattel paper, and guarantees at any time held by Foothill on
which any Borrower may in any way be liable.
11.2 Foothill's Liability for Collateral. So long as
Foothill complies with its obligations, if any, under Section
9207 of the Code, Foothill shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising
in any manner or fashion from any cause; (c) any diminution in
the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person. All
risk of loss, damage, or destruction of the Collateral shall be
borne by Borrowers.
11.3 Indemnification. Each of the Borrowers, jointly
and severally, agrees to defend, indemnify, save, and hold
Foothill and its officers, employees, and agents harmless
against: (a) all obligations, demands, claims, and liabilities
claimed or asserted by any other Person arising out of or
relating to the transactions contemplated by this Agreement or
any other Loan Document, and (b) all losses (including attorneys
fees and disbursements) in any way suffered, incurred, or paid by
Foothill as a result of or in any way arising out of, following,
or consequential to the transactions contemplated by this
Agreement or any other Loan Document; provided, however, that
Borrowers shall not be required to indemnify or hold Foothill
harmless where such obligations, demands, claims, liabilities, or
losses are found, by a final determination of a court of
competent jurisdiction, to be the result of Foothill's wilful
misconduct or gross negligence. This provision shall survive the
termination of this Agreement.
11.4 Suretyship Waivers and Consents.
(a) Each Borrower agrees that it is jointly and
severally, directly and primarily liable to Foothill for payment
in full of all Obligations and that such liability is independent
of the duties, obligations, and liabilities of the other
Borrowers. Foothill may bring a separate action or actions on
each, any, or all of the Obligations against any Borrower,
whether action is brought against the other Borrowers or whether
the other Borrowers are joined in such action. In the event that
any Borrower fails to make any payment of any Obligations on or
before the due date thereof, the other Borrowers immediately
shall cause such payment to be made or each of such Obligations
to be performed, kept, observed, or fulfilled.
(b) The Loan Documents are a primary and original
obligation of each Borrower, are not the creation of a surety
relationship, and are an absolute, unconditional, and continuing
promise of payment and performance which shall remain in full
force and effect without respect to future changes in conditions,
including any change of law or any invalidity or irregularity
with respect to the Loan Documents. Each Borrower agrees that
its liability under the Loan Documents shall be immediate and
shall not be contingent upon the exercise or enforcement by
Foothill of whatever remedies it may have against the other
Borrowers, or the enforcement of any lien or realization upon any
security Foothill may at any time possess. Each Borrower
consents and agrees that Foothill shall be under no obligation to
marshal any assets of any Borrower against or in payment of any
or all of the Obligations.
(c) The liability of each Borrower under the Loan
Documents includes Obligations arising under successive
transactions continuing, compromising, extending, increasing,
modifying, releasing, or renewing the Obligations, changing the
interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Obligations after prior
Obligations have been satisfied in whole or in part. To the
maximum extent permitted by law, each Borrower hereby waives any
right to revoke its liability under the Loan Documents as to
future indebtedness, and in connection therewith, each Borrower
hereby waives any rights it may have under Section 2815 of the
California Civil Code. If such a revocation is effective
notwithstanding the foregoing waiver, each Borrower acknowledges
and agrees that (a) no such revocation shall be effective until
written notice thereof has been received by Foothill, (b) no such
revocation shall apply to any Obligations in existence on such
date (including, any subsequent continuation, extension, or
renewal thereof, or change in the interest rate, payment terms,
or other terms and conditions thereof), (c) no such revocation
shall apply to any Obligations made or created after such date to
the extent made or created pursuant to a legally binding
commitment of Foothill in existence on the date of such
revocation, (d) no payment by such Borrower or from any other
source prior to the date of such revocation shall reduce the
maximum obligation of the other Borrowers hereunder, and (e) any
payment by such Borrower or from any source other than Borrowers,
subsequent to the date of such revocation, shall first be applied
to that portion of the Obligations as to which the revocation is
effective and which are not, therefore, guaranteed hereunder, and
to the extent so applied shall not reduce the maximum obligation
of each Borrower hereunder.
(d) (1) Each Borrower absolutely,
unconditionally, knowingly, and expressly waives:
(a) (1) notice of acceptance hereof;
(2) notice of any loans or other financial accommodations
made or extended under the Loan Documents or the creation or
existence of any Obligations; (3) notice of the amount of
the Obligations, subject, however, to each Borrower's right
to make inquiry of Foothill to ascertain the amount of the
Obligations at any reasonable time; (4) notice of any
adverse change in the financial condition of the other
Borrowers or of any other fact that might increase such
Borrower's risk hereunder; (5) notice of presentment for
payment, demand, protest, and notice thereof as to any
instruments among the Loan Documents; (6) notice of any
unmatured event of default or event of default under the
Loan Documents; and (7) all other notices (except if such
notice is specifically required to be given to Borrowers
hereunder or under the Loan Documents) and demands to which
such Borrower might otherwise be entitled.
(b) its right, under Sections 2845 or
2850 of the California Civil Code, or otherwise, to require
Foothill to institute suit against, or to exhaust any rights
and remedies which Foothill has or may have against, the
other Borrowers or any third party, or against any
collateral for the Obligations provided by the other
Borrowers, or any third party. In this regard, each
Borrower agrees that it is bound to the payment of all
Obligations, whether now existing or hereafter accruing, as
fully as if such Obligations were directly owing to Foothill
by such Borrower. Each Borrower further waives any defense
arising by reason of any disability or other defense (other
than the defense that the Obligations shall have been fully
and finally performed and indefeasibly paid) of the other
Borrowers or by reason of the cessation from any cause
whatsoever of the liability of the other Borrowers in
respect thereof.
(c) (1) any rights to assert against
Foothill any defense (legal or equitable), set-off,
counterclaim, or claim which such Borrower may now or at any
time hereafter have against the other Borrowers or any other
party liable to Foothill; (2) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the
Obligations or any security therefor; (3) any defense such
Borrower has to performance hereunder, and any right such
Borrower has to be exonerated, provided by Sections 2819,
2822, or 2825 of the California Civil Code, or otherwise,
arising by reason of: the impairment or suspension of
Foothill's rights or remedies against the other Borrowers;
the alteration by Foothill of the Obligations; any discharge
of the other Borrowers' obligations to Foothill by operation
of law as a result of Foothill's intervention or omission;
or the acceptance by Foothill of anything in partial
satisfaction of the Obligations; (4) the benefit of any
statute of limitations affecting such Borrower's liability
hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of
limitations applicable to the Obligations shall similarly
operate to defer or delay the operation of such statute of
limitations applicable to such Borrower's liability
hereunder.
(2) Each Borrower absolutely,
unconditionally, knowingly, and expressly waives any defense
arising by reason of or deriving from (i) any claim or defense
based upon an election of remedies by Foothill including any
defense based upon an election of remedies by Foothill under the
provisions of Sections 580a, 580b, 580d, and 726 of the
California Code of Civil Procedure or any similar law of
California or any other jurisdiction; or (ii) any election by
Foothill under Bankruptcy Code Section 1111(b) to limit the
amount of, or any collateral securing, its claim against the
Borrowers. Pursuant to California Civil Code Section 2856(b):
"Each Borrower waives all rights and
defenses arising out of an election of remedies by the creditor,
even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation,
has destroyed such Borrower's rights of subrogation and
reimbursement against the other Borrowers by the operation of
Section 580(d) of the California Code of Civil Procedure or
otherwise."
If any of the Obligations at any time are secured by a mortgage
or deed of trust upon real property, Foothill may elect, in its
sole discretion, upon an Event of Default, to foreclose such
mortgage or deed of trust judicially or nonjudicially in any
manner permitted by law, before or after enforcing the Loan
Documents, without diminishing or affecting the liability of any
Borrower hereunder except to the extent the Obligations are
repaid with the proceeds of such foreclosure. Each Borrower
understands that (a) by virtue of the operation of California's
antideficiency law applicable to nonjudicial foreclosures, an
election by Foothill nonjudicially to foreclose such a mortgage
or deed of trust probably would have the effect of impairing or
destroying rights of subrogation, reimbursement, contribution, or
indemnity of such Borrower against the other Borrowers or other
guarantors or sureties, and (b) absent the waiver given by such
Borrower, such an election would prevent Foothill from enforcing
the Loan Documents against such Borrower. Understanding the
foregoing, and understanding that such Borrower is hereby
relinquishing a defense to the enforceability of the Loan
Documents, such Borrower hereby waives any right to assert
against Foothill any defense to the enforcement of the Loan
Documents, whether denominated "estoppel" or otherwise, based on
or arising from an election by Foothill nonjudicially to
foreclose any such mortgage or deed of trust. Each Borrower
understands that the effect of the foregoing waiver may be that
each Borrower may have liability hereunder for amounts with
respect to which such Borrower may be left without rights of
subrogation, reimbursement, contribution, or indemnity against
the other Borrower or other guarantors or sureties. Each
Borrower also agrees that the "fair market value" provisions of
Section 580a of the California Code of Civil Procedure shall have
no applicability with respect to the determination of such
Borrower's liability under the Loan Documents.
(3) Each Borrower hereby absolutely,
unconditionally, knowingly, and expressly waives: (i) any right
of subrogation such Borrower has or may have as against the other
Borrowers with respect to the Obligations; (ii) any right to
proceed against the other Borrowers or any other person or
entity, now or hereafter, for contribution, indemnity,
reimbursement, or any other suretyship rights and claims, whether
direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which
such Borrower may now have or hereafter have as against the other
Borrowers with respect to the Obligations; and (iii) any right to
proceed or seek recourse against or with respect to any property
or asset of the other Borrowers.
(4) WITHOUT LIMITING THE GENERALITY OF ANY
OTHER WAIVER OR OTHER PROVISION SET FORTH HEREIN, EACH BORROWER
HEREBY ABSOLUTELY, KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY
WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES
ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815,
2819, 2820, 2821, 2822, 2825, 2839, 2845, 2848, 2849, AND 2850,
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c,
580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL
CODE.
(e) Each Borrower consents and agrees that,
without notice to or by such Borrower, and without affecting or
impairing the liability of such Borrower hereunder, Foothill may,
by action or inaction:
(1) compromise, settle, extend the duration
or the time for the payment of, or
discharge the performance of, or may
refuse to or otherwise not enforce the
Loan Documents, or any part thereof,
with respect to the other Borrowers;
(2) release the other Borrowers or grant
other indulgences to the other Borrowers
in respect thereof; or
(3) release or substitute any other
guarantor, if any, of the Obligations,
or enforce, exchange, release, or waive
any security for the Obligations or any
other guaranty of the Obligations, or
any portion thereof.
(f) Foothill shall have the right to seek
recourse against each Borrower to the fullest extent provided for
herein, and no election by Foothill to proceed in one form of
action or proceeding, or against any party, or on any obligation,
shall constitute a waiver of Foothill's right to proceed in any
other form of action or proceeding or against other parties
unless Foothill has expressly waived such right in writing.
Specifically, but without limiting the generality of the
foregoing, no action or proceeding by Foothill under the Loan
Documents shall serve to diminish the liability of any Borrower
under the Loan Documents except to the extent that Foothill
finally and unconditionally shall have realized indefeasible
payment by such action or proceeding.
(g) The Obligations shall not be considered
indefeasibly paid for purposes of the Loan Documents unless and
until all payments to Foothill are no longer subject to any right
on the part of any person, including any Borrower, any Borrower
as a debtor in possession, or any trustee (whether appointed
pursuant to 11 U.S.C., or otherwise) of any Borrowers' assets to
invalidate or set aside such payments or to seek to recoup the
amount of such payments or any portion thereof, or to declare
same to be fraudulent or preferential. Upon such full and final
performance and indefeasible payment of the Obligations, Foothill
shall have no obligation whatsoever to transfer or assign its
interest in the Loan Documents to any Borrower. In the event
that, for any reason, any portion of such payments to Foothill is
set aside or restored, whether voluntarily or involuntarily,
after the making thereof, then the obligation intended to be
satisfied thereby shall be revived and continued in full force
and effect as if said payment or payments had not been made, and
each Borrower shall be liable for the full amount Foothill is
required to repay plus any and all costs and expenses (including
attorneys' fees and attorneys' fees incurred pursuant to 11
U.S.C.) paid by Foothill in connection therewith.
12. NOTICES.
Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any
other Loan Document shall be in writing and (except for financial
statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered
or sent by registered or certified mail, postage prepaid, return
receipt requested, or by prepaid telex, TWX, telefacsimile, or
telegram (with messenger delivery specified) to Borrowers or to
Foothill, as the case may be, at their address set forth below:
If to Borrowers: c/o Hemmeter Enterprises, Inc.
One Norwest Center
1700 Lincoln Street, 49th Floor
Denver, Colorado 80203
Attn: Alan Mayer
Telefacsimile No. (303) 863-2401
If to Foothill: FOOTHILL CAPITAL CORPORATION
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025-3333
Attn: Business Finance Division Manager
Telefacsimile No. (310) 478-9788
The parties hereto may change the address at which they
are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other. All notices or demands sent
in accordance with this Section 12, other than notices by
Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual
receipt or three (3) days after the deposit thereof in the mail.
Each of the Borrowers acknowledges and agrees that notices sent
by Foothill in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or transmitted by
telefacsimile or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. THE PARTIES
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT
IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS
AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. EACH OF BORROWERS AND FOOTHILL WAIVES, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13. EACH OF BORROWERS AND FOOTHILL HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF BORROWERS AND FOOTHILL REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other
papers delivered to Foothill may be destroyed or otherwise
disposed of by Foothill four (4) months after they are delivered
to or received by Foothill, unless Borrowers request, in writing,
the return of said documents, schedules, or other papers and
makes arrangements, at Borrowers' expense, for their return.
15. GENERAL PROVISIONS.
15.1 Effectiveness. This Agreement shall be binding
and deemed effective on the Closing Date. Upon the effectiveness
of this Agreement, the DIP Loan and Security Agreement is amended
and restated in its entirety by this Agreement. Borrowers
acknowledge and agree that the security interests and assignments
granted by them pursuant to the DIP Loan and Security Agreement
and maintained pursuant to this Agreement continue without
interruption in full force and effect in favor of Foothill. Each
of the Borrowers hereby assumes all of the obligations of the
Borrowers under the DIP Loan and Security Agreement as amended
and restated by this Agreement. All references to the Borrowers
(other than Silver Hawk) and CG&E in the Loan Documents shall
include such entities operating as debtors and debtors-in-
possession and as reorganized debtors under the Plan of
Reorganization.
15.2 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the respective successors and assigns
of each of the parties; provided, however, that no Borrower may
assign this Agreement or any rights or duties hereunder without
Foothill's prior written consent and any prohibited assignment
shall be absolutely void. No consent to an assignment by
Foothill shall release any Borrower from its Obligations.
Foothill may assign this Agreement and its rights and duties
hereunder and no consent or approval by any Borrower is required
in connection with any such assignment. Foothill reserves the
right to sell, assign, transfer, negotiate, or grant
participations in all or any part of, or any interest in
Foothill's rights and benefits hereunder. In connection with any
such assignment or participation, Foothill may disclose all
documents and information which Foothill now or hereafter may
have relating to any Borrower or any Borrower's business. To the
extent that Foothill assigns its rights and obligations hereunder
to a third Person, Foothill shall thereafter be released from
such assigned obligations to Borrowers and such assignment shall
effect a novation between each of the Borrowers and such third
Person.
15.3 Section Headings. Headings and numbers have been
set forth herein for convenience only. Unless the contrary is
compelled by the context, everything contained in each section
applies equally to this entire Agreement.
15.4 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved
against Foothill or any of the Borrowers, whether under any rule
of construction or otherwise. On the contrary, this Agreement
has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all
parties hereto.
15.5 Severability of Provisions. Each provision of
this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal
enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be
amended by a writing signed by both Foothill and the Borrowers.
15.7 Counterparts; Telefacsimile Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver a manually executed counterpart
of this Agreement but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.
15.8 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by any Borrower or any
guarantor of the Obligations or the transfer by either or both of
such parties to Foothill of any property of either or both of
such parties should for any reason subsequently be declared to be
void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Foothill
is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice
of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that Foothill is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys
fees of Foothill related thereto, the liability of such Borrower
or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had
never been made.
15.9 Integration. Upon the effectiveness of this
Agreement, this Agreement, together with the other Loan
Documents, reflect the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or
written, before the date hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in Los Angeles, California.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By_________________________________
Title:
BWBH, INC.,
a Delaware corporation,
By_________________________________
Title:
BWCC, INC.,
a Delaware corporation,
By_________________________________
Title:
MILLSITE 27, INC.,
a Delaware corporation,
By_________________________________
Title:
SILVER HAWK CASINO, INC.,
a Delaware corporation
By_________________________________
Title:
SCHEDULE E-1
Equipment Financing Contracts
SCHEDULE P-1
Permitted Liens
1. Security interests in favor of the trustee under the
Indenture and the holders of the PIK Notes in accordance with the
Indenture which such security interests shall at all times be
junior and subordinate to those of Foothill.
2. Security interests in favor of the equipment providers
on the Equipment which is the subject of the Equipment Financing
Contracts set forth on Schedule E-1.
3. A purchase money security interest granted to the prior
owner of the Silver Hawk Property to secure the obligation to pay
a purchase price balance of not more than One Million Eight
Hundred Thousand Dollars ($1,800,000).
SCHEDULE R-1
Real Property
See attached legal descriptions of owned and leased real
property.
SCHEDULE 6.12
Location of Inventory and Equipment
Chief Executive Office:
One Norwest Center
1700 Lincoln Street, 49th Floor
Denver, Colorado 80203
Bullwhackers Black Hawk:
101 Gregory Street
Black Hawk, Colorado 80422
Bullwhackers Silver Hawk:
100 Chase Street
Black Hawk, Colorado 80422
Bullwhackers Central City:
130 Main Street
Central City, Colorado 80427
Warehouse Facility:
15880 West 6th Avenue
Golden, Colorado 80401
Storage Facility:
Mountain Mini Storage, Inc.
190 Hyland Drive
Evergreen, Colorado 80439
SCHEDULE 7.16
Executive Compensation